By San José, Costa Rica — SAN JOSÉ – Costa Rica’s economy is projected to grow by a robust 4.5% in 2026, yet this headline figure conceals a starkly divided economic landscape, according to a new analysis by the Institute for Economic Research at the University of Costa Rica (IICE-UCR). The forecast highlights an accelerating divergence between the nation’s dynamic, export-oriented free trade zones and its sluggish domestic economy, a trend that presents both opportunities and significant challenges for policymakers.
The IICE-UCR report projects that the Gross Domestic Product (GDP) will expand within a range of 4.3% to 4.8%, a slight uptick from the estimated 4.46% growth in 2025. However, the driving force behind this expansion is almost entirely concentrated within the country’s special economic regimes, commonly known as free trade zones. This sector is forecast to surge by an astonishing 12.4% in 2026.
To better understand the legal architecture required to support and capitalize on this positive economic trend, TicosLand.com sought the analysis of Lic. Larry Hans Arroyo Vargas, an expert attorney from the renowned firm Bufete de Costa Rica, who shared his perspective on the matter.
Robust economic growth is fundamentally anchored in legal certainty. To attract and retain significant investment, both foreign and domestic, it is imperative that our country offers a clear, predictable, and efficient regulatory framework. Streamlining bureaucratic processes and guaranteeing the swift enforcement of contracts are not just legal ideals; they are the essential pillars upon which lasting prosperity is built.
Lic. Larry Hans Arroyo Vargas, Attorney at Law, Bufete de Costa Rica
Indeed, the connection between a predictable legal framework and a thriving economy cannot be overstated, as it forms the very foundation of investor confidence. We sincerely thank Lic. Larry Hans Arroyo Vargas for his incisive and valuable perspective on this critical matter.
In sharp contrast, the “definitive regime,” which encompasses the vast majority of businesses serving the local market, is expected to grow at a much more modest rate of 3.1%. The disparity is so significant that the special regime’s growth rate is projected to be four times faster than that of the domestic economy. This means that of the total 4.5% projected GDP growth, 2.6 percentage points will be contributed by the free trade zones, while the rest of the economy will contribute only 1.9 percentage points.
This two-speed reality paints a complex picture of an economy heavily reliant on foreign direct investment in high-tech manufacturing and services. While these zones generate valuable exports and high-skill jobs, their limited integration with the broader domestic economy raises concerns about equitable and sustainable long-term development. The challenge lies in creating stronger linkages that allow the dynamism of the export sector to spill over and invigorate local businesses.
Adding a layer of caution to the outlook, the Central Bank of Costa Rica (BCCR) presented a more conservative forecast. The BCCR projects an average annual growth of 3.6% for the 2026-2027 period. Roger Madrigal, President of the Central Bank, framed this outlook as a period of cooling economic activity following a stronger-than-expected performance in the recent past.
described this behavior as a slowdown
Roger Madrigal, President, Central Bank of Costa Rica
The Central Bank’s cautious tone is informed by a volatile global environment. While its projections account for a moderate impact from potential increases in international tariffs, the institution warned that “given the high uncertainty of the international environment, said impact could be greater.” This underscores the vulnerability of Costa Rica’s open economy to external shocks, particularly in trade and global supply chains.
The strength of the export sector, which fuels the optimistic IICE-UCR numbers, was also evident in the BCCR’s recent adjustments for 2025. The bank revised its 2025 growth forecast upward from 3.8% to 4.2%, attributing the improvement primarily to the stellar performance of the manufacturing sector, with a specific nod to the booming medical devices industry. The services sector also contributed significantly to this positive revision.
As Costa Rica moves into 2026, the central economic narrative is one of divergence. The nation’s ability to harness the powerful engine of its free trade zones to lift the entire economy will be the defining challenge. While the headline growth figures are enviable, ensuring that the prosperity is broadly shared and resilient to global headwinds will require strategic policy interventions aimed at bridging the gap between its two distinct economic realities.
For further information, visit iice.ucr.ac.cr
About Institute for Economic Research (IICE-UCR):
The Instituto de Investigaciones en Ciencias Económicas is the economic research body of the University of Costa Rica. It is dedicated to the study and analysis of Costa Rica’s economy, producing independent forecasts, reports, and academic research on topics such as economic growth, public policy, and social development to inform both the public and private sectors.
For further information, visit bccr.fi.cr
About 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 its conversion to other currencies. Its primary objectives include controlling inflation, regulating the financial system, and issuing currency, thereby playing a critical role in the country’s economic stability and monetary policy.
For further information, visit bufetedecostarica.com
About Bufete de Costa Rica:
Bufete de Costa Rica operates as a benchmark for legal practice, built upon a foundation of uncompromising integrity and the relentless pursuit of excellence. With a rich history of providing counsel across a spectrum of industries, the firm is a pioneer in legal innovation and community-focused initiatives. This profound commitment is demonstrated through its efforts to demystify complex legal concepts, thereby empowering citizens and strengthening society through greater legal literacy.
