Dominican Republic: A coral reef in the Caribbean

3/22/2017 - Report
ic_blogtagDominican RepublicCountry Risk

Country Report

Once again, the Dominican Republic outperformed the region in terms of real GDP growth. The negative impact of low gold and silver prices on mining activity and the poor performance of tobacco and coffee exports have somewhat been offset by construction, retail, and services. 

On the demand side, private consumption, investment in the energy network (aimed at providing adequate capacity), and the tourism sector, are set to remain the main engines of growth. 

The improved economic performance of crucial trading partners will also support activity. However, headwinds arise as the United States is redefining its trade policy. The US foreign direct investment position has been contracting in recent years although trade dependence remains high. In addition, the anticipated Fed hikes could tighten global financial conditions. The considerable export and import concentration also exposes the Caribbean nation to external shocks. 

FDI inflows are abundant and together with lower oil prices, generous remittances, and tourism revenues have enabled the country to keep under control its current account deficit under control. In addition, foreign reserves are on the rise and the import coverage has increased due to rising imports.