The World Bank maintains its projection of around 5.1% economic growth for the Dominican Republic during 2024, making it one of the fastest-growing economies in Latin America and the Caribbean.
These figures are contained in the regional economic report for Latin America and the Caribbean titled “Competition: The Missing Ingredient for Growth?” presented yesterday by the World Bank Group. The report estimates that the Dominican Republic will have a growth rate of 5.0% for both 2025 and 2026.
“Things are looking pretty good for the Dominican economy,” said William Maloney, Chief Economist for Latin America and the Caribbean. “They’ve had quite a bit of foreign investment, although we’re not seeing as much manufacturing as we are in Costa Rica, for example. So, it’s not the nearshoring we expected, but there is growth in other service activities that look quite promising, all of this despite the clear tragedy of Haiti near their border,” he noted.
Maloney spoke during a virtual press conference with several journalists from the region, where he pointed out that the Dominican Republic is one of the few countries in Latin America that has seen consistent productivity growth rates in the last decade.
Foreign Investment
The report notes that in the Dominican Republic, the main focus of Foreign Direct Investment (FDI) over the past 10 years has been in the mining sector. It explains that recent FDI announcements for completely new projects (greenfield) between 2020 and 2022 in the Dominican Republic show a strategic shift towards diversification, notably in “hotels and accommodation” and “renewable energies.”
Stagnation
Through the press release, the World Bank explains that Latin America and the Caribbean (LAC) have been slowly but steadily advancing in addressing the imbalances caused by the pandemic, in an international environment that is just beginning to show signs of stabilization. However, there is still much to be done. LAC, with a few exceptions, managed to reduce its inflation to levels below those observed in the member countries of the Organization for Economic Cooperation and Development (OECD).
Challenges
It adds that interest rates are beginning to decline after four years of solid macroeconomic management. Nevertheless, challenges persist, such as correcting fiscal imbalances, restoring purchasing power, and regaining the progress made in poverty reduction in the previous decade. Additionally, high-interest rates have caused problems in household and business debt, which must be monitored.
However, the central objective of the region remains to improve its anaemic growth rates. While this weak growth partly reflects high-interest rates, it also reflects long-standing structural problems. These factors also contribute to the benefits of nearshoring and friend sharing being lower than anticipated. All of this points to a significant agenda of reforms postponed for decades revolving around infrastructure, education, regulation, and competition policy.
Concerns about Violence in Haiti
According to the report, violence perpetrated by organized crime, such as the recent upsurge in gang violence in Ecuador and Haiti, is a crucial issue for the welfare of citizens in Latin America and the Caribbean. It details that the average homicide rate is four times higher than the global average, five times higher than that of North America, and twice as high as that of Africa. Moreover, LAC is the only region in the world where this figure is growing. The region is home to 9% of the population and a third of the homicides on the planet. It’s not surprising, the report indicates, that security concerns are also on the rise among citizens of LAC.
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