Q COSTARICA — Costa Rica is expected to conclude the second half of 2025 with a moderately growing economy, inflation contained below Costa Rica’s Central Bank (BCCR) target range, and a relatively stable exchange rate.
All of this is happening amid a global environment affected by trade tensions between the United States and its main trading partners.
This is indicated by the most recent revision of the Economic Projections Report by Grupo Financiero Mercado de Valores, which highlights that the Costa Rican economy is always exposed to the international economic environment, and particularly to the trade policy decisions of the United States, its main trading partner.
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Pablo González Sánchez, Junior Manager of Stock Market Portfolios, reported that the country’s Gross Domestic Product (GDP) is expected to grow 3.5% this year, driven primarily by domestic demand, and 3.8% by 2026. He also expects domestic consumption to maintain a similar increase to that seen in 2024.
“Our revised projections consider a scenario of uncertainty and volatility. While exports will face a complex international environment, they will continue to contribute positively to the country’s growth, albeit to a lesser extent. We expect consumption to remain dynamic thanks to a low inflation environment, higher real incomes, and favorable credit conditions,” González noted.
Regarding inflation, it is expected to remain contained and reach positive territory by the end of the year, ending the period at 0.2%. Although a return to the Central Bank’s target range (3% with a one percentage point variation) is projected until the fourth quarter of 2026, this trend is due to external factors, such as the drop in international oil prices, but the final result could vary depending on climatic factors that offset a rise in food prices during the rainy season.
Therefore, the Central Bank is expected to continue making prudent decisions regarding the Monetary Policy Rate (MPR), which is expected to remain at 3.75% throughout 2025. Looking ahead, any downward changes to the MPR will be due to favorable changes in inflation risk scenarios, which depend on the international situation.
Exchange rate and fiscal results. Grupo Financiero Mercado de Valores (Financial Market Group) has lowered its exchange rate projection against the Colon, estimating that the dollar will range between ¢505 and ¢515 by the end of 2025. Although the movements observed in the first half of the year have not been as large as expected at the beginning of the year, the entity maintains its analysis of upward pressure in the third quarter, followed by an appreciation of the colon in October, November, and December, in line with seasonal market patterns.
The inflow of dollars into the country from the private sector continues to be one of the main reasons why the exchange rate remains stable and even trending downward. Although factors that increase demand for foreign currency could arise in the coming months, their effect is still uncertain.
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In this scenario, it is important for both individuals and companies to consider the possibility that the price of the dollar will continue to fluctuate, as exchange rate volatility will be part of the financial environment for the remainder of the year.
Regarding the fiscal dimension, Grupo Financiero Mercado de Valores estimates that the primary balance will reach 1.1% of GDP at the end of the year, similar to that shown the previous year. A slight increase in the debt-to-GDP ratio is also projected, which would be around 59.9%.
“This situation requires a clear strategy from the Ministry of Finance to strengthen tax collection, especially considering that no new external Eurobond placements or significant tax reforms have been implemented in 2025. Active debt management, compliance with the fiscal rule, and a sound budget allocation will continue to be key to maintaining the stability achieved,” González indicated.
Emerging Risks
For Grupo Financiero Mercado de Valores, there are six main risks that could affect the performance of domestic economic variables.
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- Slower export growth: Foreign sales could grow less due to the uncertain global environment, despite better-than-expected growth in the main trading partners.
- Compliance with the fiscal rule: Central Government revenues are growing slowly, and spending has increased. Revenue is growing less than the economy, limiting fiscal space.
- Insecurity: This can reverse investment projects, leading to lower spending.
- Monetary policy pass-through to financial system rates: Lending rates remain high, and the impact of the MPR on credit has been slow.
- Exchange rate volatility: The flow of foreign currency continues to push for appreciation. Uncertainty persists regarding the impact of demand components.
- Social tensions and the start of an election year: Political and campaign tensions could slow the progress of bills in Congress.
Turbulent international situation
Pablo González noted that global economic conditions have been strongly affected by the trade policy decisions of the United States, where the Trump administration reactivated a tariff agenda that has led to tensions with its main partners, including China, the European Union, and Mexico.
“In the United States, the first effects of this trade policy on the real economy have already been evident. During the first quarter of the year, US GDP contracted by -0.5% year-on-year, driven by a larger trade deficit and a drop in investment, as households postponed spending decisions due to uncertainty,” González explained.
The report also notes that, while inflation in the United States has eased, upside risks from tariffs persist. The Federal Reserve (FED) has kept its benchmark rate unchanged, but the market still expects at least two cuts during the remainder of the year.
The situation is also tense in other regions. Europe remains modestly growing, while in China, domestic measures have managed to sustain GDP growth, without yet reflecting the real impacts of Trump’s tariff policy. Latin America, meanwhile, faces fiscal pressures and monetary policy challenges amid a fragmented international environment.
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