Caribbean & Central America - May 2023

The United Nations Economic Commission for Latin America and the Caribbean (Eclac) said on 20 April that the Dominican Republic will be the fourth-fastest growing economy in the region this year.

According to Eclac’s forecasts, the Dominican Republic’s GDP will grow 4.6% this year, placing it in joint fourth place with Panama. For the region as a whole, growth will average only 1.2% due to “growing external uncertainties and internal restrictions” including higher interest rates and nervousness over the bank failures in the US and Europe in March.

Broadly in line with Eclac, the economy ministry is predicting 4.0%-4.5% growth this year. It acknowledges however that there has been something of a slowdown in the first quarter with growth of only 1.1% in January and February, attributed to lower construction activity and a dip in public sector investment. Despite this, the ministry expects the pace to pick up as public investment recovers, tourism continues to grow, and lower inflation leads to an easing of interest rates. The economy ministry notes that in March, year-on-year inflation was 5.90%, the lowest rate of the last 27 months. Also reflecting positive fundamentals, the peso remains strong and foreign currency reserves stand at US$16bn or 13.3% of GDP.