Experts anticipate that public investment will be pivotal in driving recovery in critical sectors such as agriculture and construction. In recent studies, the Organization for Economic Cooperation and Development (OECD) and the International Monetary Fund (IMF) agree that Costa Rica will experience economic growth of around 3.5% in the coming year.
This optimistic projection sets the tone for 2025, following a robust 2024 expected to close with a growth rate of nearly 4%. According to Malberth Cerdas, an economist and lecturer at Universidad Fidélitas, exports in the agricultural and technological sectors and tourism will be crucial to sustaining economic momentum over the next 12 months.
Strength in Agricultural and Technological Exports
Cerdas emphasizes the importance of consolidating growth in key export sectors. “The continued expansion of pineapple, banana, and coffee exports, as well as the growth in tourism and medical supplies, indicates a strong and stable economy. If these indicators maintain their current trajectory, we’ll see solid economic results,” he stated.
Agriculture has long been a cornerstone of Costa Rican economic growth, with pineapple, banana, and coffee as flagship exports. These products contribute significantly to the country’s GDP, support rural communities, and sustain employment. Moreover, the demand for Costa Rican coffee in niche markets, such as specialty and organic coffee, continues to rise globally.
Costa Rica is solidifying its position as a hub for innovation in the technology sector. Cerdas highlighted the potential for the country to attract more foreign direct investment (FDI) in the semiconductor industry. The country’s strategic location, skilled workforce, and favorable investment climate have made it a magnet for high-tech industries.
“This aligns with the U.S.’s nearshoring strategy, which aims to relocate supply chains closer to home rather than relying on Asia or other distant regions. Costa Rica could become a key player in this shift, attracting industries that produce these essential components,” he added.
The Role of Tourism in Costa Rican Economic Growth
Tourism remains a pillar of Costa Rican economic growth. The country’s abundant natural beauty, including its rainforests, beaches, and biodiversity, attracts millions of visitors annually. Efforts to promote eco-tourism and sustainable travel have further bolstered this sector. Additionally, infrastructure improvements, such as upgraded airports and expanded road networks, have enhanced accessibility for international travelers.
Costa Rica’s tourism industry generates significant economic linkages and drives direct revenue. Increased tourist spending benefits local businesses, such as hotels, restaurants, and tour operators. Furthermore, the sector’s success stimulates demand for local products, such as artisanal crafts and agricultural goods.
Public Investment and Debt Management: Catalysts for Growth
Public investment and effective debt management will also be instrumental in sustaining economic growth in 2025. Cerdas pointed out that infrastructure development could create significant local economic linkages, while reductions in public debt could lead to lower interest rates.
“Lower interest rates are critical for stimulating economic activity. Cheaper borrowing costs encourage factory investments, home purchases, and car sales. This, in turn, boosts overall consumption,” Cerdas explained.
Infrastructure projects, such as highway expansions and public transportation upgrades, are expected to play a key role in driving Costa Rican economic growth. These initiatives create immediate jobs and improve long-term economic efficiency by reducing logistical costs and enhancing connectivity.
Debt management remains a priority for the government, as high public debt levels can constrain economic growth. Costa Rica aims to reduce its debt-to-GDP ratio by implementing fiscal reforms and improving tax collection. This, in turn, could bolster investor confidence and attract additional foreign capital.
Challenges Ahead: Global Economic Slowdown and Domestic Sector Stagnation
Despite the positive outlook, 2025’s growth is expected to fall short of 2024’s performance. Economist and former Deputy Finance Minister Fernando Rodríguez warns of a global economic slowdown that could temper Costa Rican economic growth.
“A trend that began in 2024 is the moderation in the growth rate of companies within the free trade zone regime. These companies were a major driver of economic expansion over the past few years but are now showing signs of slowing down,” Rodríguez explained.
Additionally, specific national sectors, particularly construction and agriculture, remain stagnant. Rodríguez attributed part of this stagnation to climate emergencies that affected the agricultural industry in November, disrupting production and supply chains. Prolonged periods of drought and heavy rains have also challenged crop yields, highlighting the need for climate-resilient farming practices.
The construction sector faces hurdles, including rising material costs and regulatory bottlenecks. Addressing these challenges will be crucial for reinvigorating domestic economic activity.
Political Uncertainty and Its Economic Implications
Political uncertainty may affect economic growth as Costa Rica enters a pre-electoral year. Rodríguez noted that the lack of clear economic policies could deter investments in specific sectors.
“We need to focus on revitalizing certain economic activities to achieve higher growth in 2025 and return to a stronger growth trajectory for 2026. However, these measures don’t appear to be on the political horizon. The electoral climate leading up to the February 2026 elections could create uncertainty, further complicating economic decision-making,” Rodríguez concluded.
Political stability has traditionally been an asset for Costa Rican economic growth. However, prolonged uncertainty can disrupt planning and deter domestic and foreign investors. Clear and consistent policy signals will be essential for maintaining economic confidence.
Fostering Resilience in Key Sectors
The government and private sector must address sector-specific challenges to ensure sustainable Costa Rican economic growth. Investing in technology and climate-resilient practices in agriculture can mitigate the effects of weather-related disruptions. Streamlining permitting processes and encouraging public-private partnerships can drive new projects for the construction sector.
Policies fostering innovation and diversification will be critical in the free trade zone regime. Supporting small and medium-sized enterprises (SMEs) within this regime can also enhance their contribution to the broader economy.
A Balanced Approach to Economic Recovery
Costa Rica’s path to sustainable growth in 2025 hinges on its ability to balance public investment, export growth, and effective debt management with strategies to address sectoral stagnation and political uncertainties. The country can build a resilient economy that attracts foreign investment and fosters local development by focusing on these areas.
The government’s role in promoting Costa Rican economic growth cannot be overstated. Strategic investments in infrastructure, education, and innovation will be pivotal. Additionally, fostering international trade partnerships and leveraging the country’s reputation as a green and stable economy will open new avenues for growth.
In conclusion, while challenges remain, Costa Rica is well-positioned to achieve steady economic progress in 2025. Through coordinated efforts across sectors, the nation can ensure its growth trajectory benefits all citizens and cements its position as a regional leader.