Narayan AmmachchiA surging colon and new 15% U.S. tariffs are battering Costa Rica’s economy, forcing the Central American country to endure slower growth for faults that aren’t its own.
In the first half of 2025, Costa Rica attracted US$2.06 billion in foreign direct investment (FDI), a 7% decline from the same period in 2024.
Considering the ongoing geopolitical tensions—particularly following President Donald Trump’s return to the White House for a second term—this drop is relatively modest. In fact, the US$2.06 billion still represents the second-highest FDI inflow of the past decade, surpassed only by the record level reached in 2024.
Still, the weakening economy is turning up the political heat on President Rodrigo Chaves, whose term ends in February 2026 when the next presidential election takes place.
“The main bottleneck lies not in a lack of investment appetite, but in a shortage of specialized talent and the sluggish response of public institutions,” said Mrs. Claudia Dobles, who is running for president representing the Citizen Agenda Coalition party.
The skills gap has become a serious concern. Reports indicate “wage wars” in several special economic zones, where firms are competing for talent by offering exorbitant salaries.
But the shortage of skilled workers is not unique to Costa Rica. According to the latest Manpower study, seven out of ten companies worldwide report they can’t find the talent they need. Costa Rica stands at 7.2 — almost identical to the global average.
With fewer than 8 million people, Costa Rica has limited room to maneuver. Yet the government is doing everything possible to address the talent crunch. Last year, it launched an $8 million training fund aimed at preparing 8,000 people in technical fields, bilingualism, and soft skills. More recently, Procomer and the National Learning Institute (INA) partnered to train 14,000 people annually.
Dobles argues that the government must work more closely with private companies to align educational curricula with labor market demand. Local reports confirm that Procomer, the country’s investment promotion agency, is pursuing this goal — though no concrete plan has yet been unveiled.
But the main culprit behind Costa Rica’s current economic headwinds is the strong colon. The currency has surged nearly 30%, from ₡700 per USD in 2022 to around ₡500 today.
The stronger colon has made the country expensive for foreign investors. Investments in free zones have slowed, and tourist inflows have dipped. Tourism contributes about 8.2% of Costa Rica’s GDP and 8.8% of total employment.
Despite these pressures — the rising colon and Trump’s tariffs — exports to the United States have still grown in recent months, noted Roxana Morales Ramos, economist and Coordinator of the Observatorio Económico y Social at UNA.
“Cumulative exports through July 2025 grew 16% compared to the same period last year, while sales to the United States increased 21%,” she said. “Furthermore, reinvestment of profits by foreign companies operating in Costa Rica grew 13.9% year-on-year (an additional US$283.6 million) during the first half of the year.”
However, Roxana warned that export growth may lose steam soon, largely due to Intel’s gradual closure of its microprocessor assembly and testing plant.
President Trump is also threatening a 100% tariff on semiconductor imports. “There is also a risk of increased tariffs on equipment, consumables, and medical devices, which represent approximately 40% of the country’s merchandise exports,” she added.
In its May report, the International Monetary Fund (IMF) actually praised Costa Rica for its sound economic policies. The country’s economy has grown at an average annual rate of 5% since 2021. But this year, growth is expected to ease to around 3.5%, according to the IMF.
With inflation remaining well within the Central Bank’s comfort range, the IMF says Costa Rica has room to further cut interest rates to stimulate growth.
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