Costa Rica’s economy looks strong despite challenges

Significance

The economy thrived on the back of vigorous external demand last year, resulting in a 12.2% expansion driven by free trade zones and a robust recovery of fixed investment.

Impacts

• The government, lacking a legislative majority, will have to offer concessions to critics, particularly on the left, to advance policies.
• Austerity measures and ongoing debates over unpopular IMF-related fiscal action will keep strike and protest risks elevated in 2023.
• The likelihood of farmer groups engaging in protests will rise if Costa Rica becomes a member of the Pacific Alliance.