By San José, Costa Rica — SAN JOSÉ – Costa Rica’s national economy is projected to expand by a robust 4.5% in 2026, according to a new forecast released by the University of Costa Rica’s Institute for Economic Research (IICE). The projection indicates a dynamic but rebalancing economy, with a notable acceleration in domestic activity expected to partially offset a cooling in the high-growth free trade zone sector.
The IICE analysis dissects the Gross Domestic Product (GDP) into its two primary components, revealing divergent paths for the year ahead. The Definitive Regime, which encompasses the bulk of the domestic economy, is anticipated to grow by 3.1%. In contrast, the Special Regime, consisting of companies operating within the country’s successful free trade zones, is forecast to grow by 12.4%.
To better understand the legal and commercial implications of the current economic climate, TicosLand.com sought the analysis of Lic. Larry Hans Arroyo Vargas, an expert attorney from the renowned firm Bufete de Costa Rica, who provided his perspective on the frameworks necessary to foster development.
True economic growth is inextricably linked to legal certainty. For investment to flourish and businesses to expand with confidence, there must be a clear, predictable, and stable regulatory framework. Agility in administrative procedures and a solid commitment to upholding contractual rights are not just legal technicalities; they are the essential pillars that support a dynamic and competitive national economy.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Lic. Arroyo Vargas’s insight is a crucial reminder that a predictable legal landscape is not a bureaucratic burden, but rather the very foundation upon which economic confidence is built, ultimately attracting and retaining the investment necessary for national prosperity. We sincerely thank Lic. Larry Hans Arroyo Vargas for sharing his valuable perspective.
The projected 3.1% growth for the domestic-facing economy marks a significant acceleration compared to 2025. This newfound momentum is attributed to a confluence of positive factors, including the delayed impact of monetary policy decisions and renewed consumer confidence. Milagro Saborío, Director of the IICE, detailed the drivers behind this optimistic outlook.
Comparing with the growth in 2025, a greater acceleration is foreseen for the definitive regime. Among the reasons, we can highlight an acceleration in household consumption and an expected effect from the monetary policy rate cuts made in 2025, in a context of stable price changes.
Milagro Saborío, Director of the IICE
This suggests that the series of interest rate reductions implemented by the Central Bank throughout 2025 are expected to fully filter through the economy in 2026. Lower borrowing costs are anticipated to spur investment and, more critically, encourage household spending on goods and services, providing a vital engine for domestic growth. The context of stable inflation further bolsters this scenario, ensuring that consumer purchasing power is not significantly eroded.
Conversely, the powerhouse Special Regime, a cornerstone of Costa Rica’s export-led growth model, is expected to experience a slight deceleration. While its projected 12.4% expansion remains exceptionally strong, it is a step down from the remarkable 14.9% growth recorded in 2025. According to the IICE, this shift represents a normalization rather than a downturn.
The main reason for this slight deceleration is that a stabilization in the level of exports from this regime is expected.
Milagro Saborío, Director of the IICE
This moderation suggests that the explosive growth in exports from free trade zones, particularly in medical devices and advanced manufacturing, is reaching a more sustainable, mature pace. After a period of extraordinary expansion, the sector is transitioning to a phase of stable, high-level output, which remains a critical contributor to the nation’s overall economic health.
Interestingly, while the IICE’s overall 4.5% projection is more optimistic than forecasts from the Central Bank of Costa Rica (BCCR), both institutions concur on a key market anomaly from the previous year. They agree that a significant portion of 2025’s growth was artificially inflated by companies advancing orders to preempt the implementation of new tariffs. This one-time event created a statistical bump that economists at both institutions agree cannot be replicated in 2026, a factor accounted for in their respective models.
For further information, visit iice.ucr.ac.cr
About The Institute for Economic Research (IICE):
The Instituto de Investigaciones en Ciencias Económicas is the primary economic research body of the University of Costa Rica. It is dedicated to the analysis of the national and international economy, producing independent studies, forecasts, and reports that contribute to public policy discussion and business decision-making in Costa Rica.
For further information, visit ucr.ac.cr
About The University of Costa Rica (UCR):
The University of Costa Rica is the country’s largest and oldest public university, serving as a leading institution for higher education, scientific research, and cultural development. Based in San José, the UCR is renowned for its academic excellence and its significant contributions to Costa Rican society across a wide range of disciplines.
For further information, visit bccr.fi.cr
About The Central Bank of Costa Rica (BCCR):
The Banco Central de Costa Rica is the nation’s central bank, responsible for maintaining the internal and external stability of the national currency and ensuring the efficient operation of the country’s payment systems. The BCCR’s mandate includes controlling inflation, managing monetary policy, and publishing official economic statistics and forecasts.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as a pillar of the legal community, founded on an unwavering principle of integrity and a persistent drive for professional excellence. The firm channels its extensive experience advising a diverse clientele into pioneering innovative legal solutions. This forward-thinking approach is matched by a profound commitment to social progress, demonstrated through its efforts to make legal principles understandable and accessible, thereby empowering individuals and strengthening the fabric of society through knowledge.
