Steve Colantuoni

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January 28 2026

Salvadoran Textile Exports Remain a Key Driver of Integration in the Region

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Salvadoran exports of textiles and apparel have long been a fundamental part of El Salvador’s export economy. The country has faced a difficult few years as changes in global demand, coupled with widespread job losses, have plagued the industry. However, exports remain firmly concentrated in the United States, with the countries of Central America serving as a second key destination. The Salvadoran Chamber of the Textile, Apparel, and Free Trade Zone Industry (known as Camtex) recently revealed that it expects the market to stabilize and see growth in production, investment, and jobs in 2026.

Salvadoran textile exports will likely see revenues fall by 3% to 4% by the end of 2025.

Orders have stagnated as foreign buyers pull back on demand, reassess inventories, and restructure their global apparel supply chains. In its latest update covering the first ten months of 2025, Camtex estimated that foreign exchange revenues from textile exports would drop between 3% and 4% compared to the previous year.

However, the industry association stated that it expects exports to recover in the first half of 2026.

Looking ahead, Camtex projects that Salvadoran textile exports will show moderate growth of between 2% and 3% by the end of 2026. This optimistic forecast is supported by a steady increase in orders, stabilization of demand from U.S. retailers, and renewed interest from abroad as buyers diversify their sourcing strategies.

Textile Exports Constitute Around 30% of El Salvador’s Total Exports

Cumulative textile exports from El Salvador through October 2025 amounted to $1.682 billion USD, which constitutes around 30% of all goods exported from El Salvador.

When comparing year-to-date figures from 2025 to 2024, the textile sector has seen its cumulative revenues fall by more than $300 million USD. Camtex Executive Director Patricia Figueroa noted that the decline has slowed considerably from record-low levels experienced in the first half of 2023 as the pandemic-related buying frenzy faded.

In Figueroa’s view, Salvadoran textile exports have held up relatively well when compared to other nations within the region that have faced sharper declines or factory closures.

Salvadoran Product Mix Diversified

Salvadoran textile exports remain competitive due to a diversified product mix. “El Salvador has consolidated its participation in garments with added value or specialization as we are no longer focused on producing only shirts, pants, or curtains,” Figueroa said in a December 2025 press release.

Products such as socks, synthetic fiber blouses, cotton sweaters, and pullovers continue to be the leading exported products of the Salvadoran textile industry. Together, these exports comprise over 60% of total textile exports.

The diversification of exports is one factor that has allowed manufacturers to remain resilient in the face of softness across certain apparel categories. Shifting demand towards socks, underwear, and other items has allowed producers to quickly adapt to changes in fashion trends as well as the ongoing athleisure trend.

Textile exports to the US make up roughly 65% of total exports

Of all exported textiles, approximately 65% of textile exports from El Salvador are sent to the United States.

Camtex recently reported that El Salvador has become the number eleven exporter of apparel to the U.S. market, illustrating its importance in the supply chain. This success can be attributed to trade preferences provided by CAFTA-DR, lead times, as well as the country’s ability to provide full-package production services. Interest from brands to nearshore their supply chains has also benefited Salvadoran textile exports.

Central America is the second-largest destination for Salvadoran textile exports

Central America is currently the second-largest market for Salvadoran textile exports, comprising 27% of total exports. Regional integration will continue to play an important role in El Salvador’s textile industry through yarn-forward and fabric to garment orders.

The country exports underwear and cotton T-shirts to its Central American neighbors, consolidating its position within CAFTA as well as taking advantage of joint production schemes with other nations such as Honduras, Guatemala, and Nicaragua. Integration has allowed companies the flexibility to increase or decrease production volumes as necessary while maintaining supply chain continuity.

Thousands of Jobs Have Been Lost in Recent Years

The textile industry has lost between 10,000 and 12,000 formal direct jobs since the beginning of the supply chain restructuring, which was accelerated by decisions made at the corporate level by multinational companies.

As of October 2025, Camtex estimates that the textile and apparel sector supports around 63,000 formal direct jobs and over 120,000 indirect jobs related to suppliers of services, logistics, packaging, plastics manufacturing, etc. Despite recent job losses, Figueroa mentioned that the reduction in employment has been far less significant when compared with similar industries across other regional economies.

Camtex Predicts Recovery of Jobs Will Occur Gradually in 2026

With idle capacity slowly returning online and new investments being introduced to the market, Camtex forecasts that employment will rebound gradually throughout 2026 once international demand normalizes.

Environmental Standards Improve Competitiveness of Salvadoran Apparel Manufacturers

“Gradually, we are improving our sustainability standards by making investments that allow us to care for the environment, better manage our water, have traceability of our processes, and comply with social responsibility standards,” said Figueroa. She went on to state that these investments have allowed Salvadoran exporters to comply with the demands of international brands, which are constantly changing and increasing their compliance standards.

Reduced competition from China Presents Opportunity for the Region

China currently dominates global apparel exports to the United States. However, its market share has declined steadily over the past few years as concerns about rising costs, trade tensions, and geopolitical uncertainty continue to impact businesses.

Camtex expressed that they view the reduction of China’s market share as an opportunity for El Salvador and Central America to increase their share of the market. The region is naturally suited for diversification efforts due to its trade integration with the United States, infrastructure, and skilled labor pool.

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January 22 2026

More than 11,500 People Found Employment in Costa Rica Through PROCOMER Programs in 2025

Steve Colantuoni Blog, Costa Rica 0

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New editions of Job Fairs coming in 2026

PROCOMER announced that in 2026, there will be new editions of its Talent Costa Rica Job Fair. This job placement tool seeks to connect talent to various opportunities and increase employment in Costa Rica for the country’s workforce.

11,584 people found employment in Costa Rica with support from PROCOMER

In 2025, over 11,500 people were linked to jobs in Costa Rica through the placement programs, services, and efforts provided by PROCOMER. The figure was reached by aiding people to enter the workforce with support from PROCOMER’s various initiatives.

Much of the success of this job linkage was due to Talent Costa Rica’s Employment Platform. This platform was created by PROCOMER in order to connect individuals to work at companies located in areas such as Free Trade Zones, nationally based companies, and foreign direct investment companies.

“We build our linkage labor strategies by working hand in hand with companies of the Free Trade Zone Regime, domestic companies, and foreign investment companies. This allows us to know in detail the business ecosystem linked to foreign trade,” said PROCOMER’s General Manager, Laura López.

She went on to add that, “With this knowledge, we are able to develop programs that allow us to know the skills they require, to timely adapt to changes driven by the fourth industrial revolution, internationalization of markets, and new purchasing behaviors.”

Providing Training to Increase Employment in Costa Rica

One major factor that PROCOMER implements in order to provide more people with jobs in Costa Rica is by providing training. This can come in the form of digital courses or workshops that are implemented to help improve the labor skills of those looking for work.

Last year, PROCOMER collaborated with the public sector, private sector, and companies to deliver training to as many people as possible. In 2025, PROCOMER administered over 6,118 tests for English proficiency to citizens throughout the country. By providing these tests for free, people are able to learn a new skill set that can help them obtain better jobs.

PROCOMER also provided training for over 5,218 students in the following areas: courses and workshops related to technical skills that are needed for Industry 4.0, soft skills training, technical skills, and language training. All of this training was provided through programs that were cofinanced by PROCOMER, such as its Incentive for Talent Development in Companies program. In total, PROCOMER invested over US$2.5 million into these types of training initiatives.

In addition to the previously mentioned training, PROCOMER worked with over 1,000 students on workshops that were centered around STEM. These workshops allow students to learn skills that can be utilized when working in science, technology, engineering, and mathematics-based careers.

Job Fairs Promote Employment in Costa Rica

PROCOMER also held two job fairs in 2025. The Talent Costa Rica Job Fair had editions in both the South and Central regions of the country and was able to bring in over 12,000 attendees. These fairs not only allow job seekers to connect with potential employers, but they can also learn about different industries and what it takes to be successful in those fields.

Knowing this, PROCOMER has stated that there will be more job fairs occurring in 2026. Just as in 2025, the job fairs will take place throughout different areas of the country in order to reach as many job seekers as possible. PROCOMER will continue to work with a number of different companies in hopes to not only provide more jobs for Costa Ricans, but to better the country’s workforce as a whole.

In addition to its training program, PROCOMER offers courses to improve Spanish-language abilities as well as technical skills. PROCOMER offers workshops to students and teachers in the STEM fields and job fairs throughout the country. They support employment throughout Costa Rica in free-trade zones, local companies, and foreign investors. By creating relationships between qualified job-seekers and employment options, PROCOMER has shown that its initiatives and support have helped the workforce in Costa Rica. If PROCOMER continues to help improve the skill sets of Costa Rican workers, it can help create more employment in Costa Rica. Programs like Talent Costa Rica should also continue to be developed.

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January 14 2026

Key Development Plans of El Salvador Highlighted

Steve Colantuoni Blog, El Salvador 0

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El Salvador has seen tremendous change over the last few years thanks to what officials are calling the country’s first-ever “development boom.” During that time, authorities prioritized building public infrastructure in areas like schools and healthcare facilities. “With that initial investment, we laid the foundation for the development of our country and created the conditions that allowed us to focus on growing the economy,” Luis Rodriguez, director of the Planning Office of Metropolitan San Salvador, recently told the Diario El Salvador.

Detailing this first development boom

Delving further into this idea, Rodríguez explained that schools, health units, and other parts of basic infrastructure were built out across El Salvador in historic fashion. “We addressed sectors that for years, if not decades, had not been worked on,” he continued. “We provided schools with the resources they needed to upgrade; we supplied health units with new equipment; and we built the foundational infrastructure that exists today.”

Rodríguez says these development plans of El Salvador, focused on fundamentals, have served their purpose

Transitioning Into the Second “Boom”

Now, authorities say they are pressing further into a second phase of growth. During this stage, attention is turning toward highways, ports, and airports as pillars of economic infrastructure. Developing these projects will allow El Salvador to grow its productive activity while also opening new fronts for investment. Large-scale investment in these areas is a central part of President Nayib Bukele’s second administration and seems to mirror key development plans of El Salvador to emerge as a regional economic powerhouse.

“Our idea is that, starting with the president’s second term, work on the economy really kicks into high gear,” said Rodriguez. “We have security consolidated, and we already have a large portion of the necessary public infrastructure. Now we focus fully on the economic package because we have the conditions.” The emphasis on security has allowed the country to open itself up for investment.

Preparing for investment and prioritizing economic infrastructure

Rodríguez outlined some of the projects that fall under this second stage. “Transportation continues to be one of our main pillars,” he said. “We continue working on the country’s highway system, and we have also added ports and airports to the list.” Allowing Salvadoran goods to move more freely throughout the country and beyond will not only increase production but also decrease transportation costs. With that in mind, the development plans of El Salvador take on added significance when it comes to trade.

Continuing his thought, Rodríguez added that these projects not only improve logistics but also position El Salvador as a connector to the rest of the world. As a result, the economy should see more returns as international trade increases, thanks to these additions to the country’s infrastructure. Besides highways, ports, and airports, Rodríguez went on to mention a series of marquee projects that are either under development or already under construction.

National Stadium & International Convention Center

The first is the National Stadium, which is being constructed with Chinese assistance. According to Rodríguez, the National Stadium will open up El Salvador for hosting large sporting events. Simultaneously, work is being done to advance plans for a new International Convention and Exhibition Center, or CIFCO.

While the National Stadium is already under construction, CIFCO is only in the development stages. Both projects support the overall development plans of El Salvador by helping to attract tourists and business events to the country.

New hospitals will ensure the public healthcare system meets the needs of citizens

Further developing healthcare infrastructure

In terms of healthcare infrastructure, Rodríguez points to the government’s strong commitment to not only continuing what it started but improving it. He added that local health units have been, and continue to be, supplied with new equipment and upgrades. In fact, construction is already underway on two large hospitals: the Rosales Hospital and the Nejapa Hospital.

Once complete, both facilities will contribute greatly to the country’s overall hospital infrastructure by easing congestion and providing citizens with improved access to healthcare. Improved health and education, Rodriguez argues, were necessary steps to achieve the level of development we see today.

Investments spreading out across the entire country

Rodríguez went on to say that investments are no longer confined to neighborhoods and cities that traditionally see investment flood their way when infrastructure projects are announced. There are currently a myriad of different infrastructure projects taking place across the entire country. These projects, he added, focus on improving roads, public spaces, and other necessary components of public infrastructure in need of investment. Approximately US$1.4 billion will be invested in these projects alone.

AirCity Begins Construction

Most recently, the construction bidding process for what is known as AirCity was launched. AirCity will be Central America’s first airport free trade zone and is slated to be located at the Óscar Arnulfo Romero International Airport. Described as an innovative project that combines logistics, manufacturing, and value-added services together in one single package, AirCity will receive an estimated US$250 million in investment.

AirCity Will Become a Global Logistics Connection Point for El Salvador & Central America

In terms of specifics, AirCity is expected to serve as El Salvador’s first-ever airport logistics hub. Not only that, but once complete it will also serve the same capacity for the rest of Central America. Through this project, AirCity hopes to turn El Salvador into a global connection point for logistics while positioning the country’s airport as a leading destination for air cargo.

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January 9 2026

Foreign Direct Investment in Latin America(FDI): Costa Rica Racks Up US$3.533bn Through Q3 2025

Steve Colantuoni Blog, Costa Rica 0

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Costa Rica has once again proved itself to be one of the most attractive destinations for foreign direct investment in Latin America. According to the new report by the Costa Rican Foreign Trade Promotion Agency (Procomer), the country recorded US$3.533 billion in FDI between January and September of 2025, an increase of 4.5% when compared with the same period of 2024.

Costa Rica’s performance during the first nine months of 2025 comes at a time when global capital flows are being described as cautious due to financial tightening and the reconfiguration of supply chains.

Manufacturing the Most Important Sector for FDI

Once again, manufacturing was the largest destination for foreign investment in Costa Rica, taking up US$2.856 billion or over 80% of total FDI between January and September of 2025. This continues the trend of Costa Rica successfully attracting high-value-added manufacturing investment over the last few years, specifically in sectors like medical devices, advanced electronics, precision manufacturing, and life sciences, where the country has been a regional leader in FDI.

Costa Rica continues to offer multinational corporations a combination of skilled and educated workforce, strong IP protections, political stability, and integration into global value chains. Additionally, Costa Rica has an advanced manufacturing ecosystem with strong linkages between multinational corporations, local suppliers, universities, and technical training institutions.

A Tough Year Made to Look Easy

General Manager of Procomer, Laura López, explained that, given the current international environment marked by financial adjustments, investors’ prudence, and value chain reconfigurations, Costa Rica obtaining positive investment flows should be considered as reflecting the resilience of its investment proposition.

“The fact that, in an environment of caution, financial adjustments, and value chain reconfigurations, we are achieving positive flows speaks to the strength of Costa Rica’s value proposition. However, this does not mean that the competitiveness challenges we have identified are not real,” López said.

Costa Rica’s favorable investment performance through the third quarter of 2025 is especially important because the larger context is one of weak foreign direct investment in Latin America and across the world.

Competitiveness Issues Remain Present

In that regard, and despite being a very competitive country to invest in in the areas of advanced manufacturing and services and the regional benchmark for foreign direct investment in Latin America, López also acknowledged that Costa Rica cannot be complacent.

Competitiveness gaps in areas such as logistics costs, infrastructure bottlenecks, and labor shortages must be addressed for Costa Rica to continue with its economic growth over the long term. In addition, Costa Rica must continue with efforts to streamline procedures and lower the cost of doing business, improve infrastructure, logistics, energy, and communication services, and diversify export sectors.

Attracting and Keeping Existing Investors

Notably, Costa Rica’s investment strategy is not solely about attracting new companies to the country. Instead, it’s also focused on encouraging companies already in Costa Rica to reinvest and expand, according to López. That is, Costa Rica’s “number one challenge will be to continue improving the conditions so that the companies that choose Costa Rica as an investment destination continue to reinvest and expand their businesses in the country, and look at Costa Rica as a reliable partner in the long term,” López said.

Reinvestment is one of the most important goals of investment promotion efforts, as it helps a mature investment destination like Costa Rica, where many multinational corporations are already present and have been present for a long time, achieve growth.

Expansion projects tend to involve high-value activities such as R&D centers, product design, and advanced process engineering, all of which generate higher wages and more spillover into the rest of the economy.

By Investment Regime: Free Trade Zones Dominate FDI

By investment regime, free trade zones (FTZ) continued to be the largest beneficiary of FDI in Costa Rica in 2025, capturing 64.9% of the total during the first nine months of 2025. Costa Rica’s FTZ regime has long been one of the cornerstones of its investment attraction efforts, given that it offers tax incentives, streamlined customs procedures, and a stable legal framework.

Costa Rica’s extensive network of free trade agreements is also very important for the operation of companies in free trade zones, as these agreements offer companies preferential access to some of the most important markets in the world including the United States, the European Union, and Asia, in particular as companies seek to diversify their production locations and reduce geopolitical and supply chain risks.

Definitive regime companies, that is, those located outside of free trade zones, accounted for a still notable 14.5% of total FDI through September 2025. This is a sign of the continued relevance of Costa Rica’s domestic market, which also plays a role as a regional hub for Central America and the Caribbean.

Tourism and Real Estate

Tourism and real estate continued to make up an important share of Costa Rica’s FDI in 2025. Tourism accounted for 8% of total FDI in Costa Rica, while real estate represented 7.8%. These sectors are likely to continue attracting investors due to Costa Rica’s strong international brand and recognition, political stability, and reputation for sustainability and quality of life.

Tourism demand has been primarily driven by projects focused on sustainable tourism and high-end offerings that play to Costa Rica’s environmental credentials and ecotourism model. Real estate investment has been in residential, mixed-use, and logistics real estate in areas connected to export manufacturing and services.

Increasing Number of Countries Investing in Costa Rica

A different dynamic that Procomer also highlights is the diversification of the countries of origin of investments in Costa Rica. In 2025, Costa Rica attracted at least 55 new FDI projects, of which 25 originated from outside the United States, which has historically been the largest source of foreign investment in Costa Rica.

Projects also originated from countries like Mexico, the Netherlands, and Spain, among others, which is a sign that Costa Rica is finding more appeal from Europe and other Latin American investors. Diversification like this helps Costa Rica to avoid becoming too dependent on any single source of investment and makes the country more resilient to economic shocks from outside.

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December 31 2025

Analysis of the economy of El Salvador in 2025: economic acceleration driven by construction and record remittances

Steve Colantuoni Blog, El Salvador 0

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The Salvadoran economy accelerated in 2025 and closed the year with close to 4% GDP growth. Confirmed by the International Monetary Fund (IMF) in December, this is a result that is a surprise, considering early estimates of less than 3% by multilateral organizations. This article on the economy of El Salvador shows that the strongest point of the annual cycle was the third quarter with 5.1% year-over-year expansion, the best quarterly performance since the fourth quarter of 2021, when the country was coming out of a pandemic-induced contraction. President Nayib Bukele had already announced in December that the economy would grow “above 4%” despite initial disbelief.

Construction as the engine of growth

Construction became the locomotive of the Salvadoran economy in 2025, with increases of 27.15% in the third quarter and 33.9% in the second. This expansion was based on large public and private infrastructure megaprojects such as the Pacific International Airport, the Francisco Morazán Viaduct, and sanitation works by Spanish companies, the main foreign investors in the country with $284 million in 2024.

The Planning Office for the Metropolitan Area of San Salvador put the administrative backlog of more than 500 construction projects on its books, unlocking an estimated $5 billion in investment. In turn, this construction dynamism has had a direct and indirect job creation effect that has helped El Salvador to have one of the highest employment rates in Central America, with 97.3% of the working-age population employed.

Other sectors also stood out in 2025. Mining and quarrying expanded 23.3%, while manufacturing grew 4.35% in the third quarter, the best quarterly performance since 2021. According to the Central Reserve Bank (BCR), processed foods, oils, dairy products, metal goods, plastics, and textile maquiladoras have already shown a recovery of their subsectors.

Remittances, the silent engine

Family remittances have closed their best year ever in 2025, surpassing $10.001 billion, an 18% increase compared to 2024. In the first 11 months of the year Salvadorans living abroad sent $9.021 billion, which means 27.3% of national GDP, one of the highest ratios in Latin America. An analysis of the economy of El Salvador would be incomplete if it did not take into account the weight of these flows.

95% of these remittances come from the United States and are a reflection of the extraordinary efforts made by the Salvadoran diaspora in the face of migration uncertainty. The Inter-American Development Bank reported that, between April and July, Central American women increased their participation in the formal labor market in the United States by 11.8% and men by 36.7%, thus increasing their capacity to send remittances.

Paradoxically, 90% of remittances are directed to households that no longer belong to the low-income group, creating new inclusion challenges for extreme poverty families that do not have relatives abroad who can send them help. Economists warn that this model of dependence on remittances is vulnerable to changes in U.S. migration policies or to the implementation of the 1% remittance tax approved by the U.S. Senate, which goes into effect on December 31, 2025.

Tourism boom

Tourism has consolidated its transformation into one of the main pillars of the Salvadoran economy. In 2025, the country received over 4 million visitors, 17% more than in 2024, and generated over $3.5 billion in revenue, thus accounting for between 11% and 12% of GDP.

The most important flows come from Guatemala, which led the table with 1.4 million entries between January and November. The United States came in second place with 1.2 million visitors, and Honduras came in third with 764,000 entries. The remodeling of the Historic Center of San Salvador, the development of Surf City, and the perceived greater security after the state of exception were key factors for the boom in tourism.

Tourism Minister Morena Valdez announced that by, 2030 the hotel sector will need 10,000 more rooms, which has generated a wave of private investment, including the JW Marriott San Salvador and five-star hotels in the Historic Center and on the beach.

Controlled inflation and trade deficit vulnerabilities

Inflation closed November at 1.14% year-over-year, evidencing a high degree of control despite regional price pressures. Sectors with the highest increases were restaurants and hotels (3.48%) and alcoholic beverages (2.17%), linked to service-related pressures derived from the boom in tourism.

The trade deficit increased 18.7% and reached $10.18 billion between January and November. The value of exports totaled $6.217 billion with a very modest growth of 3.7%, while imports grew 12.5% to $16.397 billion. This shows the economy’s dependence on imported capital goods, raw materials, and consumer products.

This structural imbalance reflects the double-edged nature of remittances. On the one hand, they support household consumption, but on the other, they end up financing the purchase of imported products more than the purchase of local products. Economists have warned of the effect on export competitiveness and the risk of deepening external dependence, which would require an ever-greater inflow of foreign exchange to sustain imports at current levels.

The twilight of the Bitcoin experiment

In January 2025, a turning point was reached in the government’s crypto policy. The Legislative Assembly took bitcoin off the books as legal tender under IMF pressure as a requirement to access the $1.4 billion program. Since then, its use has been voluntary, and it cannot be used to pay taxes.

The amount sent through cryptocurrency wallets fell 33.4% in 2025, an indicator of the low adoption rate of the currency among Salvadorans. However, the government still has more than 7,500 bitcoins worth $699 million, and Bitcoin Office director Stacy Herbert assured that El Salvador will continue buying it—“possibly at an accelerated pace.”

Fiscal consolidation and the IMF agreement

The government’s efforts to commit to fiscal consolidation advanced in 2025. The IMF stressed that the 1.9% target for the primary fiscal balance is “well on track” and praised publication of the actuarial study of the pension system and of the Medium-Term Fiscal Framework. For any analysis of the economy of El Salvador, fiscal consolidation is key for investors’ confidence.

The IMF program was approved in February 2025 for a period of 40 months and contemplates a fiscal adjustment of 3.5 percentage points of GDP over the three years. The recently approved 2026 budget fits into this logic of continuing to reduce the deficit while increasing social spending.

However, public debt rose to $33.805 billion in October, 89.2% of GDP, an increase of $2.586 billion over the same month in 2024. External debt grew 18.7% to $15.074 billion. Interest payments will absorb $2.784 billion in 2025, 28.8% of the general budget, leaving less room for social and productive investment.

Political hegemony and the investment climate

This economic performance takes place in a context of uncontested political hegemony. After consolidating total control of the Executive and Legislative branches, the Bukele administration has maintained the state of exception as a cornerstone of its governance.

While this “iron-fist” policy has drastically reduced extortion-related operating costs and increased consumer and tourism confidence, international observers warn of a long-term downside in the form of legal uncertainty due to the lack of institutional checks and balances.

The government’s legislative agility, as evidenced by the rapid repeal of the mandatory acceptance of bitcoin to satisfy the IMF, shows a pragmatic verticality that, to some investors, is attractive for its speed of execution. On the other hand, rating agencies are skeptical of a model that bets on economic stability in an increasingly fully dollarized economy being linked to the popularity and centralized decisions of a single political figure.

Informality versus formal employment

El Salvador will close 2025 with the second-highest employment rate in Central America, with 97.3% of the working-age population employed and only 2.7% open unemployment. These apparently healthy indicators hide a more complex reality, as 70% of workers are in the informal sector without social security or stable working conditions.

The Central American Economic Integration Secretariat itself warned that “low unemployment can coexist with high informality, limited social protection coverage and precarious labor conditions—evidence that the quantity of jobs does not guarantee their quality.”

Expectations and challenges for 2026

ECLAC projects El Salvador will grow 3.4% in 2026, while the IMF sees “very good prospects.” The country, however, is still very vulnerable structurally due to its high dependence on remittances, its growing trade deficit, its high public debt, and its exposure to shifts in US trade and migration policies. This is an important part of any informed analysis of the economy of El Salvador.

El Salvador closed 2025 with stronger economic growth than expected due to the dynamism of infrastructure megaprojects, a record in remittances, and expanding tourism. The challenge for 2026 will be to turn this cyclical growth into sustainable development that includes diversifying the productive matrix, reducing labor informality, and building a model less dependent on exogenous factors. In this analysis of the economy of El Salvador, we cannot overlook that fiscal consolidation and compliance with the IMF agreement will be decisive for long-term investment attraction and the reduction of vulnerability to external shocks in a fully dollarized economy.

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December 19 2025

Discover the Main Economic Challenges Facing Costa Rica in 2026

Steve Colantuoni Blog, Costa Rica 0

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“Facing the New Horizon: Towards 2026” was the theme of the Economic Forum held in December 2025. In it, experts agreed that Costa Rica maintains important structural strengths, but that it will be necessary to make firm, coordinated decisions in both the public and private spheres. The country is approaching a critical juncture where global uncertainty, changes in trade dynamics, and domestic structural imbalances intersect to define the economic landscape of Costa Rica in 2026. Here are some of the economic challenges that Costa Rica will face in 2026.

An increasingly complex international environment

Costa Rica will face 2026 with a more demanding international context, marked by slower global growth, high geopolitical tensions, and a return to protectionist rhetoric and policies, especially in the United States. This climate generates risks for small, open economies that are highly dependent on trade, tourism, and foreign investment. The economist Rodrigo Cubero, of the Economic and Financial Advisors (CEFSA) consulting firm, affirms that these conditions will oblige Costa Rica to implement strategic and anticipatory policies to ensure growth and stability.

The United States is Costa Rica’s main trading partner, source of tourists, and foreign direct investment. Persistent inflationary pressures and high interest rates in the United States economy have slowed growth there, with direct repercussions for Costa Rican exports, tourist arrivals, and capital flows. A slowdown in the United States is generally followed by a sharp slowdown in Costa Rica, which is why these issues are included in the list of possible economic challenges facing Costa Rica in 2026.

An economy of two speeds

One of the most important issues exposed at the forum is the widening gap between two parallel economic realities that exist in Costa Rica. On the one hand, a group of companies that make up the free trade zone regime (around 15% of the total economy) and, in particular, those that are part of the advanced manufacturing and medical devices industry, have continued to register good performance, high productivity, and relative resilience in the face of external shocks. These sectors are strongly integrated into global value chains, have a higher technological level, and face relatively stable demand.

On the other hand, the domestic economy, which represents approximately 85% of Costa Rica’s total production, continues to register much lower growth rates. Traditional sectors such as construction, agriculture, and a large part of commerce have a much more “soft” performance. The slower growth of the domestic sector is a reflection of low investment, weak credit, and low confidence among local companies. This duality not only limits the overall dynamism of the economy but also accentuates the problem of regional and sectoral inequality.

Labor market and competitiveness tensions

This asymmetrical behavior is also reflected in the labor market. High-tech manufacturing and some specialized services are able to generate high-productivity jobs with better salaries, but there are many more workers who have access to more limited opportunities in other industries. Low labor force participation, low job creation, and a high proportion of informal employment continue to be latent problems in Costa Rica. Moreover, there is a growing shortage of skilled labor in sectors such as advanced manufacturing, digital services, engineering, and other knowledge-intensive industries.

Another challenge is the appreciated real exchange rate, which affects the competitiveness of Costa Rican exporters, tourism operators, and domestic companies that compete with imports. A strong currency erodes export margins and makes the country a relatively expensive destination compared to other regional countries. All this has a direct impact on investment and job creation and is among the economic challenges facing Costa Rica in 2026.

Moderate growth, low inflation, and policy limitations

For 2026, Cubero projects a scenario of moderate growth and low inflation, possibly below the target range set by the Central Bank of Costa Rica (BCCR). Although low inflation can help preserve purchasing power, it also reflects a certain weakness in domestic demand and economic dynamism. In this context, the financial conditions are also expected to be relatively restrictive, limiting credit expansion and private investment.

Fiscal and political pressures also condition the future. Although Costa Rica has shown important advances in its fiscal profile in recent years, stabilizing public finances, and lowering the debt-GDP ratio, there are still pressures due to increased social demand, insecurity, and the political-electoral calendar that can put pressure on public finances. In the event that this is taken as a relaxation of fiscal discipline, this could feed into an increase in risk premiums that would further complicate the situation.

Social unrest and security as new factors

The macroeconomic variables are not the only ones that worry experts about the economic challenges facing Costa Rica in 2026. There is growing concern about the situation of insecurity, which, in addition to being problematic in itself, can also have an impact on tourism, discourage investment, and affect the overall quality of life in the country. In parallel, social discontent related to employment conditions, cost of living, and inequality can be a breeding ground for more political polarization, which complicates the design and implementation of consensus-driven reforms.

For foreign investors, stability and institutional continuity are important fundamental factors. In addition to continuing to preserve the country’s institutional framework, the rule of law, and transparent and effective policymaking, some agility in the public sector could be another very relevant element to address the economic challenges facing Costa Rica in 2026.

Bright spots and opportunities

Not everything is a concern for Costa Rica. The country is far from starting from zero. It continues to have a relatively orderly macroeconomic framework, a solid financial system, and a track record of attracting high-value foreign investment. These are points that should not be taken for granted and that place the country in good condition to face the economic challenges facing Costa Rica in 2026.

Opportunities for diversifying the productive matrix are also very good. There are segments such as knowledge-based services, artificial intelligence, digital transformation, logistics, semiconductors, and new models of sustainable and competitive agroindustry that allow a good way to decrease the high concentration of the productive base in traditional sectors. However, this will require taking advantage of nearshoring dynamics, investing in human capital, education and training, as well as in infrastructure to close the gap between the dynamic export sector and the much more “flat” domestic economy.

Coordinated and strategic actions

Tackling the economic challenges facing Costa Rica in 2026 will not be easy, but it is not insurmountable. Coordination and strategic vision will be needed among public and private-sector players. In this way, it will be necessary to focus on the implementation of structural reforms that improve competitiveness, update the educational system, and enhance security and innovation. In this way, the country can transform today’s challenges into opportunities for more sustainable and inclusive future growth.

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December 11 2025

Government and Private Sector Establish Mechanism for Expanding and Facilitating Foreign Investment in El Salvador

Steve Colantuoni Blog, El Salvador 0

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The Salvadoran Government has recently unveiled a new mechanism that it expects will promote, expand, and streamline foreign investment in El Salvador. In an official statement, the Government announced the creation of the Investment Facilitation Committee (CFI), a public-private collaboration mechanism that will serve as a formal point of contact to promote and attract foreign investment.

CFI is the Product of a Development Agenda Focused on the Future

CFI is the formal product of a national development strategy that is being implemented by the Government, and in which foreign investors are invited to participate. The Committee is presented as an innovation agenda that seeks to open the country to new productive projects and companies, with the strategic aim of positioning El Salvador as an increasingly competitive and reliable place to do business.

Through this move, the Salvadoran Government is betting on economic growth and foreign investment in El Salvador as an engine of development and employment, modernizing the country and strengthening its regional and international position. El Salvador expects to boost investment in key sectors such as energy, manufacturing, agroindustry, logistics, services, and technology, among others.

Committee Focuses on Generating a Predictable Investment Climate in the Country

The government announced that the CFI is a space for interinstitutional coordination and private-sector involvement, including strategic investors, with the function of promoting, attracting, and safeguarding new economic and productive options for the country. “It is not only about facilitating procedures but also about generating greater integration, transparency, and predictability for those investors who are evaluating opportunities in different industries for foreign investment in El Salvador,” they added.

The CFI is a new step in the process of positioning El Salvador as a reliable investment destination, which also includes the digital transformation, the consolidation of macroeconomic stability, the simplification and rationalization of administrative procedures, and the strengthening of capabilities, among other aspects.

Salvadoran Economy Grows, Investor Interest Increases

The new mechanism has been launched at a time when the country is experiencing a growth cycle and has been a destination for international capital attracted by favorable political conditions, including an improvement in public security, infrastructure rehabilitation works, and the modernization of the fiscal system, among other important developments.

Authorities report that in recent years, El Salvador has received investment from new companies and the expansion of those already operating in the country. For 2025, they have announced a total of 32 projects already certified by the CFI, for $353 million. Growth in activity and improving business conditions have allowed El Salvador to be increasingly well-positioned in the eyes of investors looking for new opportunities.

Structure and Participants of the CFI

With regard to its structure and participants, the Ministry of Foreign Affairs has been appointed as Technical Secretariat of the CFI, for the efficient functioning of the mechanism, with the formal direction of the Secretariat of Commerce and Investment of the Office of the President, and the participation of different sectors of the public administration.

“The decision to create the Investment Facilitation Committee is precisely based on the need to act in an articulated manner,” Miguel Kattán, Secretary of Commerce and Investment, stated. “If we want to attract investment, generate dignified work, and transform our economy, we must be a team, alongside the private sector, the productive sector, and all our allies,” he said. The CFI is expected to bring together all public institutions and private-sector actors, generating greater focus, consistency, and efficiency in decision-making and work.

On the government side, the CFI is made up of the Ministries of Economy, Finance, Tourism, Environment and Natural Resources, Agriculture and Livestock, and the Central Reserve Bank (BCR), the Export and Investment Promotion Agency (INVEST), and CONAMYPE. Representatives of the productive sector, as well as business leaders and sector associations, are also part of the Committee.

Private Sector Affirms the Importance of Participation in the CFI

On the other hand, the private sector and business leaders have affirmed the importance of working hand in hand with the public sector in a joint and coordinated manner. In this regard, Luis Videgaray, Vice President of the Salvadoran Association of Industrialists (ASI) has commented: “We believe that joining efforts and institutional resources in the CFI makes it possible to work on several fronts at the same time. These include the legal framework, procedures, promotion of information, and support of strategic infrastructure projects, among others.” For his part, David Bravo, President of the Salvadoran Chamber of the Construction Industry (CASALCO), affirmed: “Through the Committee, we will work to make the Salvadoran business environment more competitive by favoring direct communication between the public and private sectors, generating certainty and transparency for our investors.”

Foreign Investment in El Salvador: The International Community Takes Note

Ambassadors and representatives of international organizations accredited in El Salvador have also taken an interest in the CFI, which has allowed them to learn more about the functions and guiding principles of the instrument. In general, the foreign community has seen this mechanism as an opportunity to advance economic ties with El Salvador and support companies from their countries that are interested in finding new opportunities for foreign investment in El Salvador.

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December 4 2025

Costa Rican Life Science Sector Leads the Region in Talent, Investment and Medical Device Growth

Steve Colantuoni Blog, Costa Rica 0

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Positioned as a Regional Leader in Life Sciences Export Capacity

The Costa Rican medical devices industry has made a significant impact in Latin America in recent years. With the region facing its largest shortage of trained technicians in at least the past two decades, Costa Rica’s Life Sciences sector has demonstrated a successful model of export manufacturing and talent development. In its latest Life Sciences sector (medical devices) market report, CBRE studied the ecosystem in Costa Rica and highlighted its leadership in the region across three key variables: operating conditions, supply chain depth and development, and consistent foreign investment.

Costa Rica has now established itself as a production and export powerhouse with world-class medical device manufacturers such as Edwards Lifesciences, Getinge, Genstar, Smith + Nephew, Technimed, Tecnon, and more. The country is currently second in the region in terms of medical device exports, behind only Mexico. The Costa Rican Life Sciences sector is a major contributor to the national economy and now accounts for 13% of GDP and 43% of all export revenues.

The continued growth of the sector in the past year has been demonstrated by an increase in exports to $5.2 billion and a robust average annual growth rate of 35% over the past decade. Along with this, the industry also creates substantial economic linkages within the Costa Rican economy as it continues to deepen its supply chains and increase the share of value added that remains in the country.

Sustained Sector Growth and Deepening Local Integration

Costa Rica has been able to grow its Life Sciences ecosystem and attract world-class medical device manufacturers due to strong operating conditions for companies. As highlighted in the CBRE report, Costa Rica currently demonstrates the following indicators, among others:

Over 55,000 direct jobs
600,000 m² in occupied production space
11 new companies and 10 reinvestments in the past three years
Salaries 27% higher than the regional average for skilled professional positions
24% share of Latin America’s medical device exports

The growth of Costa Rica’s Life Sciences sector and medical device industry in particular has shown to be both sustained and increasingly integrated, generating new domestic economic activity and building deeper supply chains. Costa Rica has quickly become a regional favorite among foreign Life Sciences companies due to the real estate, talent, and operating conditions it can provide.

CBRE’s Senior Vice President of Advisory & Transaction Services, Industrial & Logistics, Bernal Rodríguez, SIOR, spoke on the current competitiveness of the Costa Rican life sciences sector and how it has consolidated into one of the most capable in Latin America:

“The advanced manufacturing ecosystem that has developed in Costa Rica is unique in the region. Costa Rica offers investors a great combination of factors, such as a highly skilled workforce, institutional stability, and a modern industrial real estate offering, among others, which position it as a key destination for Life Sciences companies and other related industries.”

Costa Rica’s Competitive Advantages in the Region

Costa Rica’s advanced manufacturing and Life Sciences production ecosystem is seen to be a magnet for new and expanding foreign firms. The country offers a wide range of advantages that have been developed over many years. These include a competitive labor market, regulatory and tax stability, and a deepening infrastructure ecosystem, including new industrial real estate.

Among the industry’s most notable advantages, Costa Rica currently offers the following:

Significant Labor Cost Savings

Companies can access a highly trained and experienced production workforce in Costa Rica that costs an average of 58% less than labor in the United States. This makes Costa Rica an appealing nearshoring option for many U.S.-headquartered companies in search of high-quality production at an attractive price point.

Stable and Favorable Labor Environment

Costa Rica is a low-risk and low-cost country for labor issues, with minimal unionization and strikes in the country’s industrial sector. The country’s overall reputation as a politically and institutionally stable democracy also increases its reliability and predictability for long-term foreign investors.

Highly Prepared Talent Pool

Costa Rica is home to one of the most prepared workforces in the region. The country’s higher education system, which includes highly regarded institutions such as the University of Costa Rica (regional ranking of 14th for human capital formation), and a network of technical training centers and bilingual schools that support the Costa Rican life sciences sector.

Expansion of Industrial Infrastructure

Costa Rica’s industrial real estate market is currently undergoing a substantial expansion of new industrial space. There is currently 150,000 m² of new industrial space under construction, 75% of which is being built in the country’s fast-growing Grecia corridor. This region of the country has established itself as one of Costa Rica’s most important industrial zones thanks to modern free zone parks, top connectivity, and a tailored infrastructure to suit advanced manufacturing companies’ needs.

A Destination for Strategic and Sustainable Investment

As a core pillar long-term development strategy, foreign investment in the Costa Rican life sciences sector has been growing steadily in recent years. In the report, CBRE noted that companies are choosing to invest in Costa Rica, not only for its ability to drive down costs, but also for its long-term strategic vision and willingness to invest in sustainable growth. Multinationals are also attracted by the country’s environmental policies, renewable energy infrastructure, 100% reliable electric grid, and overall emphasis on ethical business practices.

Rodríguez added that CBRE plays a critical role in the decision-making process as companies weigh their key variables when choosing a country for operations:

“In the eyes of our clients, every factor matters. Labor costs, tax incentives, operating costs, logistics costs, real estate availability, and other considerations all play a factor. Our work is to help our clients understand and secure their long-term success in Costa Rica, and that means analyzing every single variable that matters to them.”

Costa Rica also has a Free Trade Zone Regime offering a range of tax exemptions and benefits, along with a streamlined regulatory process, specifically intended to attract foreign companies and to help grow high-value industries such as Life Sciences, precision manufacturing, and biotechnology.

A Future of Continued Innovation and Growth

The Costa Rican life sciences sector is currently performing strongly in all key categories. The industry produces $5.2 billion in exports and has been growing by an average rate of 35% each year over the past decade. Costa Rica is quickly consolidating itself as a world leader in the life sciences and medical devices industry and has already secured its place in the global medical device supply chain.

These numbers reflect a sophistication in the products Costa Rica can produce and the diversification of the overall product portfolio. The industry has continued to grow in recent years and is also a beneficiary of firm reinvestments and new companies entering the market.

CBRE expects Costa Rica to continue to consolidate itself as a regional hub for innovation and specialized manufacturing. This growth will likely be defined by an increase in highly technical companies that are looking for a scientifically capable workforce, high operational stability and security, and a strategic geographic location close to North American markets. As medical device demand increases worldwide and as companies seek more resilient, nearshored supply chains, the Costa Rican life sciences sector is well-positioned to remain one of the most competitive and forward-thinking in Latin America.

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November 28 2025

The Salvadoran Economy Grows Strongly, Driven by Improved Security

Steve Colantuoni Blog, El Salvador 0

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President Nayib Bukele recently highlighted a new report from the Central Reserve Bank (BCR) confirming sustained acceleration in the country’s economic activity. The president underscored that “the security dividend is also beginning to pay off economically,” referring to the economic benefits of improved public safety. His statement accompanied an official chart showing a steady increase in the Volume Index of Economic Activity (VIEA) between January and September 2025. This trend has drawn the attention of analysts, business leaders, and multilateral institutions.

Consistent Growth Throughout the Year

According to BCR data, the Salvadoran economy began the year with relatively low growth of just 0.4%. However, as the months progressed, the trend shifted markedly, gaining strength at a sustained pace. By September 2025, the country had reached a growth rate of 7.8%, the highest figure of the period and one of the most dynamic variations recorded in recent years. Many experts interpret this performance as a sign that the Salvadoran economy is entering a broader phase of recovery and expansion, driven primarily by greater internal stability.

The progressive rise in the VIEA indicates that sectors such as commerce, tourism, construction, light manufacturing, services, and transportation are now operating with greater fluidity. The recovery is also reflected in increased circulation of goods, expanded business hours across multiple industries, and growing confidence among both consumers and Salvadoran entrepreneurs.

The “Security Dividend”: A Structural Shift

One concept gaining prominence in both official discourse and recent economic analysis is the so-called “security dividend.” This term refers to the economic benefits derived from the sharp reduction in crime—one of the most significant transformations El Salvador has experienced in recent years.

The elimination of extortion across thousands of businesses—long one of the crimes that most hindered business operations—has allowed small, medium, and large enterprises to reinvest resources, expand their operations, and increase profitability. For many business owners, reducing these informal costs has meant not only financial relief but also the opportunity to pursue initiatives that were previously unviable due to security concerns.

Additionally, increased police presence and the new climate of public order have enabled the expansion of nighttime activities, including restaurants, tourism, transportation, cultural events, and family-run businesses that now operate late into the evening. This dynamism has generated additional jobs and strengthened domestic consumption, producing a direct and positive impact on the Salvadoran economy.

Impact on Tourism and Investment Attraction

Tourism is another sector that has shown significant growth. With new routes, greater availability of recreational spaces, and a sharp rise in foreign visitors, the country is experiencing accelerated development in an industry that for many years was constrained by international perceptions of insecurity. The government has actively promoted emerging destinations and new tourism corridors that connect rural areas with urban centers, giving small producers and entrepreneurs opportunities to integrate into value chains.

Security improvements have also been decisive in attracting foreign direct investment (FDI). Regional and global companies have begun evaluating El Salvador as a strategic location for logistics, services, nearshoring, and manufacturing operations. Certainty surrounding the reduction of operational risks has become a key factor in evaluating new projects, particularly in technology, renewable energy, agribusiness, and advanced manufacturing.

Greater Business Dynamism and Increased Confidence

A stronger security environment has generated favorable conditions for local businesses to operate more steadily. The elimination of threats has enabled thousands of small enterprises to consolidate. It has encouraged the development of larger investment projects, helping generate more formal employment and keeping economic activity circulating within the country.

At the same time, confidence in public institutions and in the government’s economic management has increased. The administration argues that this combination of macroeconomic stability, falling crime rates, and fiscal discipline offers a robust framework for continued investment attraction. Increased transparency in public management—along with the development of strategic projects in infrastructure, transportation, and energy—has strengthened the perception that the Salvadoran economy is well-positioned to sustain its pace of growth in the coming months.

Outlook for the Near Future

The government projects that the positive trend will continue in the short- and medium-term, especially if current levels of security and stability are maintained. Among the factors expected to further drive economic expansion are improvements in logistics infrastructure, the growth of industrial zones, and the implementation of technological initiatives aimed at enhancing the efficiency of the productive sector.

Sectors such as tourism, construction, business services, renewable energy, and retail are expected to maintain strong performance. Authorities also emphasize that increased public investment in infrastructure—roads, ports, water systems, and sanitation—will continue to improve the country’s competitiveness.

Conclusion

The notable increase in the VIEA from January to September 2025 reflects a structural shift in El Salvador’s productive dynamics. The transition toward a safer environment has allowed productive sectors to operate with greater freedom, efficiency, and predictability, creating a multiplier effect across the entire economy. Both business owners and citizens are beginning to see the results of a safer, more attractive country for investment, work, and entrepreneurship. If this trend continues, El Salvador may position itself as one of the region’s most notable examples of economic recovery in the years ahead.

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November 20 2025

AZOFRAS Defines Five Priorities for the Next Costa Rican Government

Steve Colantuoni Blog, Costa Rica 0

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The next administration will need to address investment, cost, and labor regulation challenges

The Free Trade Zone (FTZ) Regime supports a large portion of Costa Rica’s exports. In 2024 alone, it accounted for 66.5% of the country’s total export volume.

During that year, its contribution to the economy was equivalent to 15% of the country’s Gross Domestic Product (GDP), according to data from the Foreign Trade Promoter (Procomer). However, attention is now focused on the outcomes expected at the end of 2025, as the National University predicts that exports will be affected by the gradual closure of Intel’s microprocessor assembly and testing plant and by Qorvo’s relocation of operations to Asia.

While awaiting these results, in September the regime reported 22.8% year-on-year growth in exports, though this was slower than in the previous two months. The contrasts are clear: foreign direct investment (FDI) generated by the free trade zones during the first half of the year reached $1.099 billion, the lowest level recorded for this period in the last three years. This dichotomy in competitiveness has not gone unnoticed by the Association of Free Trade Zone Companies (Azofras).

The next government should pursue the following priorities as communicated by AZOFRAS to maintain positive results and attract more investment.

4×3 Work Schedules

The free trade zones support the Bill on Exceptional Work Schedules for Specific and Highly Qualified Cases (24290), known as “4×3 Work Schedules.” The initiative proposes 12-hour workdays for four consecutive days, with three days off, in certain industries and private companies.

Azofras considers its approval crucial to guarantee the country’s competitiveness, ensure the attraction and retention of FDI, provide legal certainty for companies and workers operating under continuous production processes, and establish a legal framework adapted to the labor environment.

Ronald Lachner, Chairman of Azofras’ Board of Directors, clarified that the bill does not modify established work schedules but “addresses exceptional situations by creating a new work schedule modality that expands options to respond to the different production realities of both companies and individuals, 24 hours a day, seven days a week.”

For the sector, these schedules would improve competitiveness in a context where national goods face a 15% tariff in their main export market, the United States. Additionally, the U.S. is researching the impact of medical device imports on national security, which could result in additional tariffs on these products, which represent 48% of the country’s exports.

Exchange Rate

The appreciation of the Costa Rican colón forces free trade zone companies to allocate more dollars to meet their local currency commitments, increasing operational costs by up to 30%, according to Azofras.

In 2025, the exchange rate remained stable around ₡500, a relatively low level compared to the last decade and far from its all-time high of ₡700 in June 2022.

“From an operational competitiveness perspective, this significant additional cost affects companies’ growth plans, limits their capacity to expand, and hinders the execution of projects that would generate more employment in Costa Rica,” said Lachner.

Azofras emphasizes that rising operational costs—in a sector where revenues are in dollars—make it difficult to compete internationally for new FDI projects compared to Mexico, Colombia, and the Dominican Republic, “where production costs are substantially lower.”

Social Security Contributions

The OECD Economic Studies: Costa Rica 2025 report states that employer payroll contributions in the country are high compared to international levels.

The OECD notes that employer contributions to social security account for 20% of salary costs, while the average among its member countries is 13%. Overall, payroll charges represent 37% of salary costs, with employers covering 72% of these costs.

In response, free trade zone companies argue that a more balanced system would reduce business costs, strengthen formal employment creation, and consolidate Costa Rica as an attractive destination for investment and economic development.

The study indicates that approximately 35% of employer contributions do not go to social security but instead finance institutions such as the National Learning Institute (INA), the Social Development and Family Allowances Fund (Fodesaf), and the Popular Bank. This system is considered inefficient and regressive; it is suggested that contributions to the bank be eliminated, and that INA and Fodesaf be progressively financed through the national budget. Changes to payroll contributions would reduce employer costs by 7.25 percentage points without compromising social security funding, according to the OECD.

Electricity Costs

Lachner noted that the current average electricity cost for the industrial sector in Costa Rica is 13.8 cents per kilowatt-hour (kWh), double the U.S. rate of 7.95 cents per kWh. Because of this disparity, the sector is requesting approval of the Bill on Harmonization of the National Electric System (23.424) to modernize energy infrastructure and ensure a more efficient, sustainable, and affordable energy supply.

“We consider it urgent to advance a transformation of the electricity sector that diversifies the energy matrix, expands supply, and offers more competitive rates,” Lachner emphasized.

Infrastructure Improvement

The transport of goods produced in free trade zones, as well as imported materials, relies primarily on maritime and air transport services. However, the outdated infrastructure of Puerto Caldera, which has already reached 100% of its capacity, slows the unloading process and reduces the country’s competitiveness.

Road congestion also acts as a deterrent to investors, according to Azofras. For example, the trip from Belén, where a free trade zone is located, to Puerto Moín (about 150 km) takes 3 hours and 20 minutes, while travel to Juan Santamaría Airport (6–8 km depending on the route) takes 22 minutes; these calculations were based on the national competitiveness index.

“For years, many strategic projects have faced delays due to complex administrative procedures, overly rigid regulatory frameworks, and red tape that discourages investment and slows decision-making,” Lachner noted.

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