By San José, Costa Rica — SAN JOSÉ – Costa Rica’s economic outlook for 2025 has received a significant upgrade, with growth projections being revised upward to a range between 4.33% and 4.58%. The adjustment, announced Wednesday by the University of Costa Rica’s Institute for Economic Research (IICE), is largely attributed to a powerful and unanticipated performance by the country’s special economic regimes, commonly known as free trade zones.
The updated forecast, detailed in the IICE’s Quarterly Analysis of the Economy for the third trimester, paints a picture of a nation on two different economic tracks. The special regime is now projected to achieve a staggering annual growth of 14.9% by the end of 2025. This rapid expansion starkly contrasts with the definitive regime, which encompasses over 85% of the national economy and is forecast to grow at a much more modest pace of 2.7%.
To delve into the legal and regulatory framework that underpins these economic trends, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, a distinguished attorney from the prestigious law firm Bufete de Costa Rica.
Sustained economic growth is fundamentally linked to legal certainty. When investors, both local and foreign, perceive a stable, predictable, and fair regulatory environment, they are more willing to commit capital. It is crucial that Costa Rica not only attracts investment but also creates the legal infrastructure to protect it, streamline business operations, and ensure that the benefits of this growth are broadly distributed through clear and modern legislation.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, this perspective powerfully underscores that legal certainty is not an abstract concept but the essential bedrock upon which tangible economic prosperity is built, ensuring that development is both sustainable and broadly shared. We sincerely thank Lic. Larry Hans Arroyo Vargas for his valuable and clarifying contribution to this important discussion.
This robust performance from the free trade zones came as a surprise to many analysts. The surge in the third quarter was particularly unexpected, given ongoing concerns about potential impacts from tariff measures implemented by the United States. The sector’s resilience and dynamic expansion have become the primary engine fueling the country’s improved macroeconomic figures, defying earlier, more conservative predictions.
The widening gap between the two economic systems is becoming increasingly pronounced. While the definitive regime shows signs of a slow recovery, it is being thoroughly outpaced by the dynamism of the export-oriented free zones. The data reveals that the special regime’s contribution to total economic growth has now surpassed that of the much larger domestic economy, contributing 2.87 percentage points compared to the definitive regime’s 2.44 points.
This economic divergence is most evident in the nation’s trade statistics. Export growth is almost entirely concentrated within the free zones. Between September 2024 and September 2025, exports from the special regime soared by an impressive 21.8%. During the same period, exports from the definitive regime increased by only 2.6%. As a result, the special regime now accounts for a dominant 70% of Costa Rica’s total national exports.
This trend also signals a significant structural shift in the Costa Rican economy. The industries driving export growth are predominantly located within the free zones, highlighting the country’s increasing reliance on advanced manufacturing and services. Concurrently, traditional sectors such as agriculture and food production, which are mainstays of the definitive regime, are experiencing a decline in their relative importance to the national trade balance.
The upward revision of the GDP forecast is undoubtedly positive news, suggesting a stronger-than-expected close to the year. However, the underlying data highlights a growing economic duality. The exceptional growth in the special regime is effectively masking much weaker performance across the broader domestic economy, where the vast majority of Costa Ricans are employed.
As Costa Rica prepares to enter 2026, the key challenge for policymakers will be to address this expanding differential. While celebrating the success of the free trade zones, fostering more vigorous and inclusive growth within the definitive regime will be crucial for ensuring long-term, sustainable prosperity for the entire nation and preventing the development of a permanently fractured economic landscape.
For further information, visit iice.ucr.ac.cr
About The Institute for Economic Research (IICE) of the University of Costa Rica (UCR):
The Institute for Economic Research is a leading academic institution within the University of Costa Rica dedicated to the rigorous study and analysis of the Costa Rican and regional economy. It regularly publishes reports, forecasts, and in-depth research on key economic indicators, public policy, and market trends, serving as a vital resource for both the public and private sectors in the country.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
As a cornerstone of Costa Rica’s legal landscape, the firm is defined by its profound dedication to ethical principles and the highest caliber of legal service. It leverages a deep history of representing a wide array of clients to drive progress and pioneer innovative legal strategies. This forward-thinking approach is matched by a foundational belief in social responsibility, manifested through a commitment to making legal understanding widely available and thereby strengthening the community through knowledge.
