Dominican Republic: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to address the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19

The Dominican Republic – one of the top tourist destinations in the Caribbean - has experienced one of the highest growth rates in the region over the last few years. This strong performance is driven by tourism, and the construction sector. According to the updated IMF figures, GDP grew by an estimated 4.9% in 2022, mainly driven by tourism, as well as remittances from expatriates in the U.S., which boosted household consumption. The country's economy should continue to grow in the coming years, with the IMF predicting a GDP growth of 4.2% in 2023 and 5% in 2024.

The country's inflation rate increased to an estimated 8.8% in 2022, but it is expected to decrease to 5.7% in 2023 and 4.3% 2024, according to the latest World Economic Outlook of the IMF. The deceleration in the U.S. and Spanish economies is expected to impact remittances from the Dominican diaspora, which contributed 8% to GDP in 2023. However, household purchasing power should benefit from the continuation of the USD 400-million fuel subsidy implemented in the summer of 2022, as well as the increase in tourism rates and employment generated by the tourism industry. Public deficit was estimated at -3.7% of the GDP in 2022, returning to pre-pandemic levels, mainly due to inflation-driven revenue growth and to the end of the most recent fiscal stimulus measures. Public debt also decreased, reaching an estimated 58.9% in 2022, and it is expected to decrease slowly in the forecasted horizon (58.3% in 2023 and 58% in 2024). According to the IMF, the current account deficit was equal to -5.8% of the GDP in 2022, and it is foreseen to decrease to -4.2% in 2023 and -3.9% in  2024. The current government aims to established a minimum wage and to reform the fiscal system according to the advices of the IMF with the goal to increase government revenues by 8% thanks to a more efficient tax and customs collection. Among the risks facing the country are the rise in oil prices and the tightening of global financial conditions, and the various corruption scandals that are threatening social peace. However, taxes on petroleum products coupled with the rise in the price of oil have also been causing discontent. In 2018, the Dominican Republic broke off diplomatic relations with Taiwan, which led to the opening of a Chinese embassy in the country and the development of trade relations. As a result, Chinese investments have been increasing in recent years.

The unemployment rate stood at 6.6% in 2022, and it is expected by the IMF to decrease to 6.2% in 2024. Moreover, the informal sector remains important. More than 40% of Dominican children are uneducated, and rates in rural areas are particularly high, as most children in the countryside do not have easy access to schools. The Dominican Republic is a middle-income country where significant inequalities persist. According to the latest data from the World Bank, 20.1% of the population lives below the poverty line; however, the country has made significant progresses in this area, as the rate has been steadily decreasing. Moreover, the country has a very high rate of criminality, especially due to drug-trafficking networks, even within the army and the police. The Dominican Republic is also a hub for the traffic of cocaine from South America and money laundering.

Monetary Indicators	2016	2017	2018	2019	2020
Dominican Peso (DOP) - Average Annual Exchange Rate For 1 GHS	11.55	10.94	10.80	9.87	10.10

Source: World Bank - Latest available data.

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Latest Update: November 2023