Costa Rica’s fiscal position has improved, with the public debt ratio projected to decline to just below 60% of GDP in 2026. Fiscal consolidation remains a priority, requiring strict adherence to spending rules and efforts to broaden the tax base. The financial sector is stable, with manageable inflation and interest rates, but the government faces challenges in balancing fiscal discipline with the need for public investment. While insolvency data for 2026 is limited, there is no indication of a systemic rise in bankruptcies; however, sectors exposed to US demand and those outside the free-trade zones may face increased stress. The high level of dollarization in public debt (about two-thirds) exposes the country to currency risk. Competition for domestic financing between the Treasury and private sector could pressure interest rates if external shocks materialize. Continued access to international markets and prudent debt management are essential to mitigate refinancing risks.

Costa Rica’s business environment benefits from a robust legal framework and political stability, which continue to attract FDI, particularly in high-value manufacturing and services. However, persistent infrastructure bottlenecks – especially in roads, ports and energy – remain a drag on competitiveness. The productivity gap with OECD peers is still wide, and the domestic economy lags behind the dynamic export sector. Regulatory complexity and slow bureaucratic processes can hinder business operations, while the education system struggles to align skills with labor market needs. The government is encouraged to prioritize investment in strategic infrastructure, digitalization and education reform to sustain competitiveness. Efforts to diversify export markets and reduce dependence on the US are ongoing but remain incomplete. The energy sector, while a global leader in renewables, faces modernization challenges and vulnerability to climate shocks.

The political landscape is characterized by stability but also by growing polarization and social tensions. President Chaves’ market-oriented reforms have improved fiscal discipline but face resistance from unions and opposition parties, especially amid rising crime and persistent poverty. The controversial proposal to lift the ban on open-pit mining has sparked societal debate, testing Costa Rica’s environmental credentials. Social challenges – including stagnant poverty, high youth unemployment and an aging population – continue to strain public services and could fuel unrest. Rising insecurity, with homicide rates at historic highs, is a growing concern for both citizens and investors. Maintaining the rule of law, securing orderly post-electoral transitions and preserving effective governance will be critical to Costa Rica’s reputation as a stable and attractive destination for investment.