The Dominican Republic has enjoyed strong economic growth in recent years and a significant reduction in poverty, although the country remains vulnerable to natural disasters - such as hurricanes and earthquakes – and needs to address some key challenges to achieve a more inclusive and sustainable growth.
The country’s economic growth has been one of the strongest in the LAC region over the past 25 years. Growth in 2017 decelerated to 4.6 percent, down from 6.6 percent in 2016, but was still close to the country’s annual average growth rate of 5.3 percent. Sustained by strong domestic demand, GDP is expected to grow close to 5 percent in 2018 and maintain this rate in the near future.
The poverty rate fell from 30.8 percent in 2015 to 28.9 percent in 2016 according to official estimates. Poverty rate is expected to continue declining at a slower pace than in recent years as GDP growth approaches the country’s medium-term growth potential.
The government has allocated 4 percent of GDP to the education sector every year since 2013. However, the DR’s narrow fiscal space and increasing public debt limits the country’s ability to spend more on developing human capital and enhancing private sector’s competitiveness. Therefore, efforts are needed to strengthen fiscal sustainability - particularly by raising tax revenues and improving public financial management, as well as building resilience to external shocks.
Despite improvements in the ease of doing business, further reforms are needed to improve the country’s competitiveness, including in the water and electricity sectors.
Last Updated: Sep 20, 2018