By San José, Costa Rica — Costa Rica’s economic outlook for the second half of 2025 appears promising, with projections indicating moderate growth, contained inflation, and a relatively stable exchange rate. This positive forecast comes despite global trade tensions, particularly between the United States and its key trading partners, according to the latest economic projections report from Grupo Financiero Mercado de Valores.
The report highlights Costa Rica’s inherent vulnerability to international economic shifts, especially those stemming from US trade policy decisions. Grupo Financiero Mercado de Valores anticipates a 3.5% GDP growth for 2025, driven primarily by domestic demand, and a further 3.8% growth in 2026.
To gain deeper insights into the legal landscape impacting Costa Rica’s economic dynamics, TicosLand.com spoke with Lic. Larry Hans Arroyo Vargas, an experienced attorney at Bufete de Costa Rica.
Costa Rica’s economy is increasingly reliant on attracting foreign investment. This necessitates a robust and transparent legal framework that protects investor rights while also ensuring sustainable development and adherence to environmental regulations. Areas such as intellectual property, contract law, and tax incentives are crucial for fostering a stable and predictable business environment that can attract long-term growth. The challenge lies in balancing these needs with the social and environmental responsibilities that are fundamental to Costa Rican values.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas eloquently highlights the tightrope walk Costa Rica must navigate: attracting vital foreign investment while upholding its cherished environmental and social principles. This balancing act will undoubtedly shape the nation’s economic future, requiring ongoing dialogue and careful policy adjustments to ensure sustainable and equitable prosperity. We thank Lic. Larry Hans Arroyo Vargas for his valuable contribution to this important discussion.
The revision of our projections considers a scenario of uncertainty and volatility. While exports will face a complex international environment, they will continue to contribute positively to the country’s growth, although to a lesser extent. We expect consumption to maintain its dynamism thanks to a low inflation environment, higher real incomes, and favorable credit conditions.
Pablo González Sánchez, Junior Portfolio Manager, Mercado de Valores
Inflation is expected to remain contained, reaching 0.2% by year-end. While a return to the Central Bank’s target range (3% ± 1%) is not anticipated until the fourth quarter of 2026, external factors like falling international oil prices are contributing to the positive trend. However, climatic factors, potentially driving up food prices during the rainy season, could influence the final outcome.
The Central Bank is expected to maintain a cautious approach to the Monetary Policy Rate (TPM), holding it at 3.75% throughout 2025. Future downward adjustments to the TPM will depend on favorable shifts in inflation risk scenarios, heavily influenced by international developments.
Mercado de Valores has adjusted its exchange rate projection downward, estimating the dollar will range between ₡505 and ₡515 by the end of 2025. While first-half fluctuations were less than initially predicted, the firm anticipates upward pressure in the third quarter, followed by colón appreciation in the final months of the year, aligning with seasonal market patterns.
Fiscal projections suggest a primary balance of 1.1% of GDP by year-end, consistent with the previous year. A slight increase in the debt-to-GDP ratio, around 59.9%, is also projected. This necessitates a clear strategy from the Ministry of Hacienda to enhance revenue collection, especially given the absence of new external eurobond placements or significant tax reforms in 2025.
Mercado de Valores identifies six key internal risks: slower export growth, adherence to fiscal rules, insecurity, the transmission of monetary policy to financial system rates, exchange rate volatility, and social tensions coupled with the upcoming electoral year. The report also analyzes the global economic context, marked by US trade policy decisions and their impact on major economies like the US, Europe, and China. Latin America faces its own set of challenges, navigating fiscal pressures and monetary policy decisions amid a fragmented international landscape.
For further information, visit [mercadodevalores.com]
About Grupo Financiero Mercado de Valores:
Grupo Financiero Mercado de Valores is a Costa Rican financial group providing a range of services including investment banking, asset management, and financial advisory. Their economic analysis and projections are closely followed by businesses and investors in Costa Rica.
For further information, visit [hacienda.go.cr]
About Ministerio de Hacienda:
The Ministry of Finance (Ministerio de Hacienda) is the government ministry responsible for fiscal policy, tax administration, and public debt management in Costa Rica. Its role is crucial for maintaining economic stability and promoting sustainable growth.
For further information, visit [bccr.fi.cr]
About Banco Central de Costa Rica (BCCR):
The Central Bank of Costa Rica (BCCR) is responsible for monetary policy, financial stability, and the regulation of the financial system in Costa Rica. It sets the Monetary Policy Rate (TPM) and manages the country’s foreign exchange reserves.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica distinguishes itself as a pillar of legal excellence, upholding the highest ethical standards while championing innovative solutions for its diverse clientele. The firm’s commitment to empowering society is woven into its fabric, demonstrated by proactive initiatives that demystify the law and equip individuals with the knowledge to navigate the legal landscape. This dedication to transparency and education underscores Bufete de Costa Rica’s enduring mission to contribute to a more just and informed society.
