COSTA RICA · ECONOMY
Key Facts
- —What is happening Costa Rica’s Monthly Economic Activity Index, a monthly proxy for gross domestic product, rose 2.2% year on year in August, down from 5.6% a year earlier, the central bank reported on Tuesday, 13 October.
- —Why it matters The free zones that make medical devices for the United States nearly stalled, which the bank blamed on shrinking manufacturing after exceptional exports in 2025 and on the closure of electronics component plants.
- —The numbers Free zones grew 0.7%, against roughly 16% a year earlier, and supplied only 4.7% of growth, while the domestic economy grew 3.2% and supplied 95.3%, central bank data show.
- —Who is who The Banco Central de Costa Rica publishes the index; its special regimes are free zones where mainly foreign manufacturers get tax benefits, while the definitive regime covers the domestic economy and the bulk of output.
- —What to watch The September reading is expected in November, and investors will watch it for the first sign of the free zone recovery the central bank expects in the last quarter of 2026.
- —What it means for you The United States is Costa Rica’s largest trading partner and main buyer of its free zone medical devices, many made in US company plants, while firm construction reassures US investors and retirees.
Costa Rica’s economy grew 2.2% in August as free zones selling to the United States nearly stalled. The domestic economy held up better, and the central bank says the export slump should start to ease before the year ends.
Costa Rica’s free zones, which make the medical devices the country ships to the United States, grew just 0.7% in August. That pulled overall growth down to 2.2%, according to central bank data released on Tuesday, 13 October.
The figures come from the trend-cycle series of the bank’s Monthly Economic Activity Index, a monthly proxy for gross domestic product. CRHoy and Delfino.cr, two independent Costa Rican news sites, reported the same numbers from the bank’s release.
What the August Data Show
The index rose 2.2% year on year in August, a slowdown of 3.4 percentage points from the 5.6% recorded in August 2025. The bank blamed weaker activity in the special regimes, the legal term for free zones.
The special regimes grew 0.7%, compared with roughly 16% a year earlier, when exports of medical devices were booming. They accounted for only 4.7% of total growth in August, the bank said.
The so-called definitive regime, which covers the domestic economy and the bulk of output, grew 3.2%. That was faster than the 2.7% of August 2025, and it supplied 95.3% of all growth in the month.
Why the Free Zones Slowed
The central bank tied the free zone slowdown to shrinking manufacturing after exceptional medical device exports in 2025. It described the weakness as largely temporary, because the comparison is with very high growth a year earlier.
Free zone growth had already fallen to 1.4% in July, La Nación and Semanario Universidad reported in September. The slowdown has now run for more than a year after a peak of about 17% in mid-2025.
The bank also cited the closure of electronics component plants, which has weighed on the index since late 2025. US chipmakers Intel and Qorvo announced in 2025 that they would move manufacturing processes from Costa Rica to Asia, La Nación reported.
Róger Madrigal, then the bank’s president, tied its weaker 2026 outlook to those departures, Semanario Universidad reported in 2025. He said the loss of electronics output would reduce exports of manufacturing services.
The Domestic Economy Holds Up
Construction led the domestic side, with new industrial buildings, shopping centres, offices and social housing projects. Professional services, retail trade and financial services also added to growth, the bank said.
What It Means for US Readers
The United States is Costa Rica’s largest trading partner and the main buyer of the medical devices made in its free zones. Many of those factories belong to US companies, so a slowdown there reaches American supply chains.
For US investors and the large American retiree community, the steadier domestic economy is the more reassuring signal. Firm construction points to steady demand for housing and offices.
What Is Not Known
The headline growth rate for July was not given in the sources reviewed. Detailed sector growth rates appeared in a single news report and are left out here.
The bank’s release does not name the electronics firms whose closures weighed on output. Only one outlet tied the August data directly to Intel and Qorvo, so that link is unconfirmed.
What Comes Next
The central bank expects growth in the special regimes to recover in the last quarter of 2026, its release said. It attributes part of the slump to the very high comparison base of 2025, which should fade in the coming months.
The next index reading, for September, is expected in November. Investors will watch it for the first sign that the free zone recovery the bank expects has begun.
Frequently Asked Questions
What is the IMAE?
The IMAE is the Monthly Economic Activity Index published by the Banco Central de Costa Rica. It tracks output month by month and serves as an early guide to gross domestic product.
How fast did Costa Rica’s economy grow in August?
The index rose 2.2% from August 2025, down from 5.6% growth a year earlier. The slowdown came mainly from the free zones.
What are Costa Rica’s special regimes?
Special regimes are mainly free zones, where exporters receive tax benefits in exchange for investment and jobs. They host many foreign manufacturers of medical devices and electronics.
Why does this matter to the United States?
The United States is Costa Rica’s largest trading partner and the main market for its free zone exports. Weaker output there affects US supply chains and the American firms that run many of the plants.
Will growth recover?
The central bank expects the free zones to recover in the last quarter of 2026. It sees part of the current weakness as temporary because of very high growth in 2025.
Sources: Banco Central de Costa Rica; CRHoy; Delfino.cr; La Nación; Semanario Universidad (all accessed 13 October 2026).