Q COSTA RICA — Costa Rican industries have halted expansion plans, paused new investments, and cut staff as the colón strengthens against the U.S. dollar.
This comes from the seventeenth annual Business Outlook and Competitiveness Factors Survey of the Manufacturing Sector, released Thursday by the Cámara de Industrias de Costa Rica (CICR) — Costa Rican Chamber of Industries.
The exchange rate tops the list of external challenges, with seven out of ten companies naming it as the biggest problem. The CICR’s Impact Index marks it as the leading factor hurting the industrial sector’s competitiveness for the fourth year in a row. This holds true for both free trade zone companies and those under the Definitive Regime (RD).
Not only is it the main issue, but its impact is growing stronger.
Across all companies surveyed, those naming it among their top three challenges jumped from 43.3% in 2025 to 54.1% in 2026. Companies calling it their biggest challenge more than doubled, rising from 19.2% to 40.5%. This trend is consistent across free trade zone firms and both large and small businesses, which saw an increase from about 12% to roughly 33%.
Sergio Capón, CICR president, explained, “The colón’s appreciation was modest for most of 2025—around 2.2%. But starting late last year and continuing into this year, it sped up to about 10%, worsening the negative effects companies have felt since mid-2022.”
The Consequences
Six out of ten companies said their income in colones dropped when converting the dollars needed to cover operating costs.
More than half—55%—reported lower profitability, with eight out of ten free trade zone companies feeling this pinch.
Additionally, 43% pointed to tougher price competition at home due to imported goods taking advantage of the favorable exchange rate.
Among these free trade zone companies, one in four struggles with cash flow because reduced income can’t cover purchases and expenses.
About 35% of free trade zone and large RD companies said they lost export markets because they can’t compete with countries whose currencies haven’t appreciated or have weakened.
These challenges have already affected investment, jobs, pricing, and financing.
Nearly a third of companies (31%) have paused expansion or new investments—almost half of those in free trade zones.
Thirteen percent have cut staff, and 30% haven’t replaced workers who left. This is especially true for free trade zone companies, where 23% reduced staff and 46% left vacancies unfilled.
At least one in four companies fears they’ll have to cut more jobs if the exchange rate stays the same.
Meanwhile, a third of large RD companies lowered prices to compete with imports, and 20% of small and medium businesses took out loans to handle cash flow problems.
Rising Costs
After the exchange rate, the biggest external challenges are infrastructure (67.5%) and social security contributions (66.7%).
Next come electricity costs, availability and quality of labor, and prices of raw materials and supplies, at 57.0%, 56.1%, and 55.3%, respectively.
Compared to last year, fuel costs jumped significantly from 32.1% to 46.5%, and raw material prices rose from 47.7% to 55.3%.
Raw materials climbed from eighth place in 2025 to second in 2026 in terms of their negative impact on competitiveness, right behind the exchange rate.