Róger Madrigal López, president of the Central Bank of Costa Rica, is keeping a close eye on inflation expectations as the country looks to weather external shocks and continue to attract foreign direct investment.
Global Finance: Costa Rica has continued to display strong macroeconomic fundamentals despite heightened global uncertainty. What are your expectations for GDP growth and inflation during the remainder of 2026 and 2027?
Róger Madrigal López: As detailed in the July 2026 Monetary Policy Report from the Central Bank of Costa Rica (BCCR), the Costa Rican economy is expected to grow at a more moderate pace than in 2025. The central bank projects GDP growth of 3.4% in 2026 and 3.5% in 2027, slightly below the projections presented in April.
Over the monetary policy horizon (2026-2027), average inflation is expected to be between 2% and 3%. This outlook is consistent with the central bank’s commitment to preserving low and stable inflation while acknowledging that inflation dynamics continue to be influenced by external factors including upward pressure from energy prices, geopolitical tensions, trade policy uncertainty, climate events (El Niño), and the evolution of domestic demand.
Overall, the outlook for Costa Rica remains positive. The economy continues to benefit from sound macroeconomic fundamentals, robust external buffers, strong foreign direct investment (FDI), and a stable financial system.
GF: What are the main risks facing Costa Rica’s economy over the next 12 to 18 months?
Madrigal: The main risks derive from the heightened uncertainty in the international environment and the possibility that external shocks affect inflation, growth, and financial conditions. On the external front, the most relevant risks include a further escalation of geopolitical conflicts, disruptions to global supply chains, higher and more persistent prices for energy and other commodities, and uncertainty surrounding trade policies.
These risks could translate into higher imported inflation, weaker external demand, and tighter international financial conditions, having an impact on this country’s economy. They could also affect its terms of trade, given it is a small, open economy and net importer of hydrocarbons.
On the domestic side, the central bank is closely monitoring inflation expectations, the pace of transmission of monetary policy to market interest rates, credit growth, labor market conditions, and the evolution of liquidity in the financial system, as well as risks from the potential effects of the El Niño-Southern Oscillation on weather conditions, agricultural production, food prices, and electricity prices. The risk of an increase in credit defaults and a larger concentration of credit in some sectors, such as consumption, requires continued monitoring from a financial stability perspective.
For the BCCR, the risk of inflation is broadly balanced. Still, uncertainty remains high, so a prudent, data-dependent, and forward-looking monetary policy stance is required.
GF: How do you assess the outlook for Central America over the coming year?
Madrigal: It is broadly positive, although subject to a challenging and uncertain external environment. Regional economies continue to benefit from domestic demand, remittances, tourism, FDI, and relatively stable inflation. However, growth prospects could be affected by weaker global demand, higher energy prices, geopolitical tensions, and uncertainty regarding trade policy.
GF: Costa Rica has become an increasingly attractive FDI destination. How is it sustaining this momentum?
Madrigal: Costa Rica’s ability to attract FDI reflects a long history of a combination of macroeconomic stability, institutional credibility, human capital, openness to trade, and integration into global value chains. To sustain this momentum, it is essential to preserve a stable macroeconomic environment with low inflation, sound public finances, adequate external buffers, and a credible monetary policy framework.
In addition, policies to keep improving the business climate and raise overall productivity are critical. These include continued investment in education and technical training, particularly in skills required by advanced manufacturing, life sciences, digital services, and other high-value activities. Infrastructure improvements, more efficient logistics, greater energy reliability, and regulatory simplification are also important to reduce costs and facilitate investment.
