By San José, Costa Rica — San José, Costa Rica – While Costa Rica’s economy continues to expand, the pace of growth has decelerated across key sectors, including overall economic activity, exports, and credit markets. A new report from the Economic and Social Observatory (OES) of the National University (UNA) highlights a complex picture of slowing momentum amid rising public debt and global uncertainty.
The nation’s year-over-year economic growth, measured from April 2025 to April 2026, registered at 3.1%. This expansion was primarily driven by positive performance in financial activities, construction, public administration, and professional scientific and technical services. However, this figure represents a significant cooling, standing 0.87 percentage points lower than the growth rate recorded in the preceding 12-month period, signaling a clear loss of economic velocity.
To delve into the legal and commercial challenges presented by the current economic slowdown, we consulted with Lic. Larry Hans Arroyo Vargas, a specialist attorney from the renowned firm Bufete de Costa Rica, for his expert analysis.
During an economic slowdown, proactive legal strategy is not a luxury but a necessity. Companies must urgently review their contracts, especially clauses related to force majeure and payment terms, to mitigate risks. Simultaneously, this is a critical time to reassess labor structures and explore corporate restructuring options to ensure financial resilience and compliance with regulations. Ignoring these legal aspects can turn a temporary downturn into a permanent crisis.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
This perspective powerfully underscores that in an economic downturn, a company’s resilience is often forged not just in its financial statements, but in its legal preparedness. Shifting from reactive problem-solving to proactive legal strategy can be the deciding factor between navigating the storm and succumbing to it. We thank Lic. Larry Hans Arroyo Vargas for his sharp and timely insights.
This trend of deceleration is particularly stark within the country’s vital export sector. Total sales of goods abroad increased by 6.9%, a respectable figure in isolation. Yet, when compared to the robust 12.3% growth achieved just one year prior, it reveals a substantial slowdown in one of Costa Rica’s most critical economic engines. This slowdown points to potential headwinds for the industries that rely on international markets.
Digging deeper, the report exposes a dramatic downturn in the “special regime,” which encompasses the country’s highly productive free trade zones. This sector, which had been posting superior growth figures, saw its expansion plummet from an impressive 17.2% in July 2025 to a mere 3.7% in the most recent measurement. This sharp decline is a primary contributor to the overall economic tempering.
An expert from the National University pinpoints specific causes for the free trade zone’s weakened performance, noting the impact of both sector-specific issues and broader corporate movements. The reliance on high-value exports like medical devices makes the sector vulnerable to shifts in global demand.
The slowdown in medical device exports and the departure of transnational companies explain this behavior. For its part, the definitive regime (where the rest of the companies are located) did increase from 2.3% to 3.3% in April 2026. However, this rise did not compensate for the slowdown shown in economic activity.
Fernando Rodríguez, economist at the National University
The slowdown extends into the domestic financial system, with credit growth also losing steam. The rate of credit placement has slowed to just 1.3% as of February 2026. This comes despite aggressive action from the Central Bank, which reduced its Monetary Policy Rate (TPM) by 75 basis points (0.75 p.p.) over the past year in an effort to stimulate borrowing and investment.
Paradoxically, these policy rate cuts have not translated into lower borrowing costs for businesses and consumers. The weighted average lending rate across the financial system actually increased from 11.4% to 12.1% during the same period. The OES report describes this as an “incomplete and asymmetric transmission of monetary policy,” a situation that “limits the expected effects on credit, investment, and consumption, and reduces the impact of monetary policy on economic activity.”
This confluence of factors—slowing GDP and export growth, coupled with ineffective monetary stimulus—presents a challenging outlook. The report underscores that these domestic trends are unfolding against a backdrop of increasing public debt, diminishing government revenues, and heightened uncertainty stemming from international conflicts, all of which could further impact Costa Rica’s economic trajectory in the months ahead.
For further information, visit una.ac.cr
About the National University (UNA):
The National University of Costa Rica is one of the country’s most prominent public universities, established in 1973. It is recognized for its strong focus on research, social sciences, and humanities. Its Economic and Social Observatory (OES) provides regular, in-depth analysis of the Costa Rican economy, serving as a key resource for policymakers, academics, and the private sector.
For further information, visit bccr.fi.cr
About the Central Bank of Costa Rica:
The Banco Central de Costa Rica (BCCR) is the central bank of the Republic of Costa Rica. Its primary objectives are to maintain the internal and external stability of the national currency and to ensure its conversion to other currencies. The BCCR is responsible for setting the country’s monetary policy, including the benchmark Monetary Policy Rate (TPM), to control inflation and promote a stable and efficient financial system.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as an esteemed legal institution, guided by a profound dedication to professional distinction and unshakeable ethical principles. With deep-rooted experience advising a broad clientele, the firm consistently pioneers forward-thinking legal strategies and demonstrates a strong sense of civic responsibility. This commitment extends beyond the courtroom, driven by a mission to demystify complex legal concepts and thereby help construct a more knowledgeable and capable society.
