- United Nations Report States That Growth Will Be Driven by Domestic Consumption and Investment
The economy of the Dominican Republic, together with Costa Rica and other Central American countries, is expected to grow above 3.5% in 2026, supported by domestic consumption and investment.
This projection is outlined by the United Nations (UN) in its report World Economic Situation and Prospects 2026, which also estimates similar growth for Guatemala, Honduras, Panama, and Paraguay.
The report anticipates that Latin America and the Caribbean will grow by 2.3% this year and 2.5% in 2027, albeit with heterogeneous performance, shaped by domestic fiscal constraints and a more challenging external environment.
The UN revised its 2026 forecast upward by one-tenth of a percentage point to 2.3% compared to its previous report, and improved its 2025 projection by four-tenths to 2.4%.
According to the United Nations, growth is expected to rebound to 2.5% in 2027, driven by private consumption and a gradual recovery in investment.
The organization notes that short-term prospects remain generally resilient, supported by solid consumption, improved financial conditions in 2025, and relatively stable commodity prices.
However, it warns of downside risks stemming from a potential slowdown among major trading partners, tighter global financial conditions, and heightened uncertainty—particularly related to new U.S. tariffs and changes in migration policies.
In the Caribbean, excluding Guyana, growth is expected to remain subdued at around 1.6% in 2026, slightly below 2025 levels, due to high debt burdens and significant climate vulnerability.
By contrast, Guyana is expected to continue posting strong growth as a result of the ongoing oil boom.
Inflation and Employment
Inflation in the region is expected to continue moderating, albeit at a slower pace. The UN projects inflation at 4% in 2026, compared to an estimated 4.5% in 2025.
Two-thirds of countries recorded declines in inflation in 2025, with notable improvements in Argentina, Cuba, and Suriname.
Nevertheless, returning inflation to target ranges has proven more challenging in economies such as Brazil and Colombia, where core inflation remains elevated.
The labor market remained relatively stable. In 2025, unemployment declined or remained low in Brazil, Costa Rica, the Dominican Republic, Paraguay, and Uruguay.
In Brazil, the unemployment rate fell to 5.6% in August 2025, the lowest level in several decades. However, countries such as Ecuador, Paraguay, and Peru have yet to fully recover pre-pandemic labor force participation levels.
The report also highlights that limited fiscal and monetary policy space continues to constrain governments’ ability to stimulate growth.
Although regional public debt declined from 76.1% of GDP in 2020 to an estimated 70.7% in 2025, debt levels remain elevated, and interest costs exceed 5% of regional GDP.
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