Costa Rica in 2026: Navigating Tourism Headwinds Amid Political and Economic Crosscurrents

San José, 17 January 2026 – Costa Rica, long celebrated as a beacon of stability and eco-tourism in Central America, enters 2026 at a complex juncture. The nation faces a delicate balancing act: sustaining robust economic growth driven by high-value exports and services, while confronting a significant downturn in its vital tourism sector and navigating heightened political tensions under President Rodrigo Chaves.

The Tourism Paradox: Record Highs to Recent Lows

Costa Rica’s tourism industry, a cornerstone of the economy contributing approximately 8.2% to GDP and supporting one in ten jobs, presents a tale of two trends. The country achieved a 16-year high in 2024 with 2.66 million air arrivals, a 7.7% increase from 2023. North American visitors, led by the United States (59% of total arrivals), drove this growth, attracted by the country’s renowned biodiversity, beaches, and commitment to sustainable “pura vida” tourism.

However, 2025 marked a sharp reversal. Data from the Costa Rican Tourism Institute (ICT) shows air arrivals fell by 4.7% in May 2025 year-on-year, continuing a decline observed since September 2024. Industry leaders project a 15-20% reduction in arrivals for the full year. This downturn threatens businesses in key regions like Guanacaste, Limón, and Monteverde, with the National Chamber of Tourism (CANATUR) reporting 544 layoffs in 2024 and warning of 918 more if trends persist.

Key Tourism Statistics & Economic Indicators

Roots of the Tourism Downturn

Industry analysts cite a confluence of factors behind the declining visitor numbers. The appreciation of the Costa Rican colón—strengthening to approximately ₡500 per US dollar from ₡700 in mid-2022—has significantly increased costs for foreign visitors, eroding price competitiveness against destinations like Colombia or the Dominican Republic. A new Value Added Tax (VAT) on tourism services has further inflated prices.

Security concerns have also intensified. International media has spotlighted drug-related violence, with over 6,300 tourists reporting crimes like assaults and thefts since 2020. The homicide rate reached 16.6 per 100,000 inhabitants in 2024, prompting the U.S. government to recommend “increased caution” for its citizens visiting the country. Global economic uncertainty and reduced flight connectivity, including a 10% reduction in U.S. airline capacity to Costa Rica, compound these challenges.

Political Landscape: Stability Under Strain

Costa Rica’s political environment, historically a pillar of democratic stability in the region, shows signs of tension. President Rodrigo Chaves, elected in 2022 as an “outsider” candidate of the Social Democratic Progress Party (PPSD), maintains relatively high popularity (around 54% in late 2024) amid improved economic conditions. However, his confrontational style—frequently attacking traditional parties, the press, and judiciary—has raised concerns about institutional norms.

The political system faces structural challenges. Party fragmentation is high, with Chaves’s PPSD holding only 9 of 57 seats in the Legislative Assembly, complicating governance. In 2025, the country witnessed an unprecedented constitutional confrontation: the Legislative Assembly voted twice on whether to lift the president’s immunity—first in September 2024 regarding a corruption case, and again in December 2024 concerning alleged electoral law violations. Neither vote achieved the required two-thirds majority, but the episodes tested Costa Rica’s checks and balances.

Economic Performance and Challenges

Despite tourism headwinds, Costa Rica’s broader economy shows resilience. The OECD’s 2025 Economic Survey notes growth is driven by increasing specialisation in high value-added manufacturing and services, particularly pharmaceuticals, financial outsourcing, and software development. Foreign Direct Investment (FDI) reached record levels in 2023 and remained robust in 2024, attracted by political stability and low operational risks relative to neighbours.

Fiscal consolidation has progressed under an IMF programme agreed in 2022. A public employment law introducing a unified pay scale is generating estimated savings of 1% of GDP annually. The primary fiscal surplus (excluding debt interest) is projected to reach 1.6% of GDP in 2025, supporting a downward trend in the public debt-to-GDP ratio. However, challenges persist, including high informality, skills shortages that constrain FDI potential, and the need to improve infrastructure.

Frequently Asked Questions

Why is Costa Rica’s tourism declining in 2025/2026?

Multiple factors are at play: a strong colón has made the country more expensive for foreign visitors; rising security concerns linked to drug trafficking; the imposition of a new VAT on tourism services; and reduced flight connectivity from key markets like the United States.

Is Costa Rica’s democracy under threat?

While Costa Rica remains a functioning democracy, it faces significant stresses. Surveys show declining public satisfaction with democracy, falling from 73.4% in 2014 to 51.9% in 2021. President Chaves’s populist rhetoric and clashes with other branches of government have raised concerns, but institutional checks have so far held, as evidenced by the legislature’s refusal to lift his immunity in 2024.

What is the state of Costa Rica’s economy?

The economy is performing well in aggregate, with growth driven by advanced services and manufacturing. Unemployment is at a decade low (~6.5%), and fiscal discipline is improving. However, the strong currency hurts export and tourism competitiveness, and high public debt (~70% of GDP) remains a concern.

How important is the United States to Costa Rica?

The U.S. is overwhelmingly Costa Rica’s most important partner. It is the source of 59% of tourists, the destination for about 46% of exports, and a major source of investment and political cooperation, particularly on shared challenges like drug trafficking and migration management.

What are the main security concerns?

Costa Rica faces rising crime linked to its role as a transit point for drug trafficking to Europe and North America. The homicide rate was 16.6 per 100,000 in 2024, and crimes against tourists have been widely reported, affecting the country’s safe, “pura vida” image.