05.06.2026
Costa Rica’s economy performed strongly in 2025, supported by resilient goods exports, especially medical devices and other free-trade-zone manufacturing. Growth is expected to moderate in 2026–2027 as export growth slows from a high base, global trade uncertainty rises and private consumption eases. Inflation remained negative in 2025 but is projected to return gradually toward the Central Bank of Costa Rica’s target range. Fiscal consolidation has continued, although progress is gradual and public debt remains high. The external position remains manageable, supported by foreign direct investment and services exports, but it is vulnerable to US demand, oil prices, medical-device trade policy and perceptions of domestic security.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 4.6 | 3.6 | 3.7 |
| Inflation (%, yoy) | -0.1 | 1.0 | 2.2 |
| Employment rate (% of working-age population, 15+) | 52.0 | 52.1 | 52.1 |
| Fiscal balance (% of GDP) | -1.4 | -1.3 | -1.2 |
| Gross public debt (% of GDP) | 72.3 | 71.5 | 70.6 |
| Current account balance (% of GDP) | -0.7 | -1.4 | -1.6 |
Growth moderates after a strong export-led year
Costa Rica’s real GDP growth accelerated to 4.6% in 2025, supported by strong goods exports and manufacturing activity in free trade zones. Medical devices and other high-value exports helped offset weakness in agriculture, which was affected by weather-related disruptions.
Growth is projected to slow to 3.6% in 2026 and 3.7% in 2027. Export growth is expected to decelerate from the unusually strong 2025 performance, while private consumption should moderate as inflation returns and real interest rates remain elevated. Investment should remain supported by foreign direct investment, but global trade uncertainty could weigh on new projects.
Free trade zones remain the main growth engine
Costa Rica’s free-trade-zone sector remains central to the outlook. It has generated strong productivity gains, export growth and high-skilled employment, particularly in medical devices, advanced manufacturing and business services. Net FDI inflows are expected to remain around 5% of GDP, supporting external financing and reserves.
However, the dual structure of the economy remains a challenge. Firms outside special regimes generate most domestic employment but have weaker productivity growth. Reducing inequality and sustaining long-term growth will require better infrastructure, skills, education quality and a stronger business environment for domestic firms.
Inflation returns gradually toward target
Consumer prices contracted slightly in 2025, with inflation averaging -0.1%, helped by lower global fuel prices and appreciation of the colón. Core inflation was also low, allowing the central bank to ease monetary policy.
Inflation is projected to rise to 1.0% in 2026 and 2.2% in 2027, returning gradually toward the 2%–4% target range. The main upside risks come from higher oil prices, freight costs and imported food prices, while prolonged deflation could weaken competitiveness and complicate debt dynamics.
Fiscal consolidation continues slowly
The non-financial public sector deficit narrowed to 1.4% of GDP in 2025 and is projected to decline gradually to 1.3% in 2026 and 1.2% in 2027. The primary balance remains in surplus, reflecting prudent spending under the fiscal rule and ongoing tax-administration improvements.
Public debt remains high, at 72.3% of GDP in 2025, but is projected to decline to 70.6% by 2027. Further debt reduction will require stronger revenue mobilisation, better spending efficiency and more predictable access to external financing to reduce borrowing costs.
External position remains manageable
The current account deficit narrowed to 0.7% of GDP in 2025, supported by strong goods exports and high reinvested earnings. It is projected to widen to 1.4% in 2026 and 1.6% in 2027 as export growth slows and fuel import costs rise.
The external position remains supported by FDI, services exports, tourism and large international reserves. However, Costa Rica remains exposed to US demand, medical-device trade policy, oil prices, global financial conditions and security perceptions that could affect tourism and investment.
Overall outlook
Costa Rica’s outlook remains positive, but growth is expected to moderate after the strong export-led performance of 2025. Inflation should return gradually toward target, while fiscal consolidation and debt reduction continue slowly. The main medium-term challenges are raising productivity outside free trade zones, improving infrastructure, increasing female labour-force participation, reducing inequality and preserving fiscal credibility. Sustained progress will depend on reforms that broaden the benefits of export-led growth across the domestic economy.
Sources:
World Bank, Costa Rica Macro Poverty Outlook, April 2026.
International Monetary Fund, Costa Rica: 2026 Article IV Consultation and Mid-Term Review Under the Flexible Credit Line Arrangement, May 2026.
International Monetary Fund, World Economic Outlook, April 2026.
Central Bank of Costa Rica, Monetary Policy and Inflation Developments, 2025–2026.
Central Bank of Costa Rica, Economic Indicators and Balance of Payments Statistics, 2025–2026.
