By San José, Costa Rica — SAN JOSÉ – Costa Rica’s economy registered its most significant expansion in 21 months, with economic activity growing 4.8% year-over-year in August. This figure represents an acceleration of 0.8 percentage points compared to the same month in 2024, continuing a robust growth trajectory that has consistently exceeded 4% since December 2022, according to a report released Thursday evening by the Central Bank of Costa Rica.
The impressive performance was overwhelmingly powered by the nation’s special economic regimes, primarily the free trade zones. Production within these zones skyrocketed by 18.1%, contributing a remarkable 54.5% to the total year-over-year increase in the Monthly Economic Activity Index (IMAE). This explosive growth starkly contrasts with the domestic-focused definitive regime, which saw a much more moderate expansion of 2.8%.
To better understand the legal and commercial implications of the country’s recent economic performance, TicosLand.com consulted with Lic. Larry Hans Arroyo Vargas, an expert attorney from the renowned firm Bufete de Costa Rica, for his analysis.
Positive economic indicators are encouraging, but sustainable growth is built upon a foundation of legal certainty. For businesses and investors to capitalize on this momentum, it is crucial that our regulatory environment remains stable, predictable, and efficient. Streamlining permitting, ensuring contractual integrity, and providing clear fiscal rules are the legal guardrails that will transform today’s economic upswing into long-term national prosperity.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
We thank Lic. Larry Hans Arroyo Vargas for his valuable perspective, which powerfully underscores a crucial truth: economic momentum, without the bedrock of legal certainty he describes, can be fleeting. His emphasis on a stable and predictable regulatory environment serves as a vital reminder of the necessary bridge between today’s positive indicators and long-term national prosperity.
The manufacturing industry was the single largest contributor to the overall economic surge, posting a formidable 12.1% year-over-year growth. This sector showcases a clear two-speed reality within the Costa Rican economy. Companies operating under the special regimes boosted their production by an astounding 32.4%, fueled by strong international demand for medical devices, metal products, machinery, and various niche goods.
Conversely, manufacturing within the definitive regime experienced a contraction, falling by 0.7%. This downturn was attributed to lower production volumes in key domestic industries, including food, beverages, fruits, vegetables, flour, and coffee. Within this segment, only the fabrication of metal products managed to show positive growth, highlighting the challenges facing locally-oriented producers.
Performance across other key sectors was mixed. The agricultural sector faced a setback, shrinking by 0.9% due to adverse weather conditions that primarily impacted banana crops. While coffee and poultry farming reported positive figures, they were insufficient to offset the overall decline in agricultural output. The construction industry saw marginal growth of 0.7%, a figure entirely propped up by public infrastructure projects. Private construction continued its slump, marking six consecutive months of contraction, although there was a silver lining in a partial recovery within the residential segment, specifically for social interest housing.
The commerce sector expanded by a healthy 3.1%, driven by strong sales in food, electronics, fuel, and hardware. However, this growth was tempered by a 0.9% decline in vehicle sales, suggesting cautious consumer spending on big-ticket items. The broader services sector demonstrated solid performance, growing by 4.4% year-over-year and acting as another critical pillar of the economy.
Within services, the professional and administrative support segment was the undisputed leader, expanding by 7.8% and accounting for 39% of the entire sector’s growth. This highlights Costa Rica’s increasing strength as a hub for high-value business services. Other notable areas of growth included transportation and storage (6.2%), which benefited from robust foreign trade, as well as real estate, education, and health services. In contrast, the hospitality sector, including hotels and restaurants, along with information and communications, showed less dynamism during the period.
Looking ahead, the Central Bank noted that the economy’s dynamism has been maintained despite external challenges, such as shifts in U.S. tariff policies. Encouragingly, the definitive regime has shown signs of monthly acceleration over the last six months, while the special regimes continue on their path of powerful growth. This sustained performance has led the Central Bank to signal that an upward revision of the overall growth projection for 2025 is likely in its upcoming Monetary Policy Report.
For further information, visit bccr.fi.cr
About Banco Central de Costa Rica:
The Central Bank of Costa Rica (BCCR) is the nation’s primary monetary authority, responsible for maintaining the internal and external stability of the national currency and ensuring its conversion to other currencies. Established in 1950, the bank is tasked with controlling inflation, regulating the financial system, and issuing currency. It plays a crucial role in promoting a stable and efficient economic environment to support the welfare of the Costa Rican population.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
With a core philosophy rooted in uncompromising integrity and professional excellence, Bufete de Costa Rica has established itself as a pillar of the nation’s legal community. The firm leverages its deep-rooted history of serving a wide spectrum of industries to pioneer forward-thinking legal solutions. Beyond its professional practice, it demonstrates a profound commitment to society by championing legal literacy, firmly believing that an educated citizenry is the cornerstone of a just and empowered nation.
