Caribbean & Central America - February 2026

Costa Rica’s outgoing President Rodrigo Chaves is set to pass on the office to his hand-picked successor Laura Fernández following the latter’s election victory on 1 February, and he leaves with a mixed record on the economy.

On the positive side, goods exports were worth a record US$22.86bn in 2025, up 14% on 2024, according to figures from the export promotion agency Procomer. Medical devices accounted for 48% of the total, equivalent to US$10.93bn, up 25% year-on-year. The second-largest sector was agriculture (US$3.78bn), followed by food (US$2.72bn), with the US receiving 47% of exports and Europe 21%, with Central America the third-largest export market (17%). Foreign direct investment (FDI) has also increased, with inflows worth US$3.53bn in the first three quarters of 2025, up 4.5% compared to the same period in 2024, according to figures from the central bank (BCCR) released 5 January.

Economic growth has remained relatively strong, at 4.3% of GDP in 2024 and 4.4% in the first three quarters of 2025, according to the Organisation for Economic Co-operation and Development (OECD), although growth is projected to slow to 3.5% in 2026 and 3.4% in 2027. Private consumption has been resilient and is expected to remain so, with disposable income forecast to increase moderately. Chaves has presided over a period of negative inflation, although this is projected to reach 0.8% in 2026 and 2.1% in 2027, according to the OECD, within the 3% target range.

Chaves also continued efforts to liberalise the economy, including signing a free trade agreement (FTA) with Israel in December. This means that Costa Rica has 18 trade agreements with countries and economic blocs around the world, although Chaves’ trade liberalisation drive drew the ire of the agricultural lobby, which brought thousands of demonstrators onto the streets of San José in November [EB-25-12]. Among the grievances aired were accusations that reduced import tariffs had led to a greater availability of cheap foreign imports, negatively affecting farmers and reducing domestic production of food. Rice producers are particularly worried about Chaves’ decision to apply for membership of the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), an Asia-Pacific trade bloc whose members include major rice producers Vietnam and Malaysia. 

• FTA with Israel

On 8 December Costa Rica and Israel signed a free trade agreement (FTA), ending talks which began in March 2023. Under the agreement over 90% of tariff lines will be immediately abolished, and about 95% of products will receive benefits. Official figures cited in the Costa Rican media at the time estimate that exports to Israel were worth US$20.86m in 2024; imports, US$34.43m.

However while the agricultural lobby has taken aim at Chaves’ policies, the greater threat to their livelihoods may in fact be a structural shift in Costa Rica’s economy, which successive governments have been trying to move towards value-added manufacturing and away from a reliance on agriculture. At the same time, he has also faced growing disquiet in the country’s significant tourism industry, which has blamed a strong colón and growing insecurity for falling visitor numbers.

Fernández, who served as Chaves’ minister of the presidency (2024-2025) and planning (2022-2025), ran as a continuity candidate and has promised to continue her predecessor’s political project. She is therefore unlikely to make major departures from a policy programme that has produced some strong headline figures that nonetheless mask growing problems under the hood. This means that further protests are likely during Fernández time in office, particularly if the agriculture and tourism sectors continue to suffer.

The incoming president also faces a number of other challenges, according to the Economic and Social Observatory (OES) at Costa Rica’s Universidad Nacional (UNA), a public university. “Costa Rica needs more inclusive growth and less inequality, with particular attention for the agricultural sector, rural jobs, food security and regional balance,” said the OES in a statement published on 27 January. In addition to highlighting falling agricultural production due to changing weather patterns and disease, the OES underlines the need for efficient, accessible public transport; improvements in road and port infrastructure to boost competitiveness; and mechanisms to ensure that reductions in the central bank base rate are reflected in lower interest rates on loans, in order to boost consumption and investment.