05.06.2026
Dominican Republic’s economy slowed in 2025 after a strong 2024 rebound, as tighter financial conditions and uncertainty weighed on credit, construction and investment. Growth is expected to recover in 2026–2027, supported by private investment, exports, tourism, remittances and mining, while inflation should remain close to the central bank’s target range. Fiscal pressures remain important because of energy-sector subsidies and interest costs, but public debt is expected to stabilise and gradually decline. The external position remains manageable, with current account deficits largely financed by foreign direct investment.
| Indicators | 2025 | 2026 | 2027 |
|---|---|---|---|
| GDP growth (%, yoy) | 2.1 | 3.6 | 4.4 |
| Inflation (%, yoy) | 3.9 | 4.9 | 4.0 |
| Employment rate (% of working-age population, 15+) | 63.4 | 63.5 | 64.0 |
| Fiscal balance (% of GDP) | -3.6 | -3.8 | -3.3 |
| Gross public debt (% of GDP) | 57.9 | 58.1 | 57.8 |
| Current account balance (% of GDP) | -1.2 | -2.0 | -1.5 |
Growth recovers after a weak 2025
Real GDP growth slowed to 2.1% in 2025, after 5.0% in 2024. Tighter domestic financial conditions weakened credit growth, especially mortgages, and investment contracted. Construction declined, while manufacturing stagnated. Services, agriculture and mining continued to expand, helping prevent a sharper slowdown.
Growth is projected to recover to 3.6% in 2026 and 4.4% in 2027. The rebound should be supported by stronger private investment, exports, tourism, mining and continued remittance inflows. Over the medium term, growth is expected to move closer to its long-term potential, but this depends on continued reform implementation and improved investment conditions.
Inflation remains close to target
Inflation averaged 3.9% in 2025, broadly within the central bank’s 4% ±1 percentage point target range. Price pressures were contained for most of the year, although food prices rose toward year-end after Hurricane Melissa and a more accommodative monetary stance.
Inflation is projected to rise to 4.9% in 2026, near the upper bound of the target range, mainly reflecting higher energy prices and import costs. It is expected to ease back to around 4.0% in 2027. The main risks come from energy prices, food shocks, weather-related disruptions and exchange-rate pressures.
Fiscal consolidation remains gradual
The fiscal deficit widened to 3.6% of GDP in 2025, reflecting higher capital spending and interest payments. Revenues remained broadly stable, but fiscal space is constrained by electricity-sector losses and interest costs, which absorb a significant share of public resources.
The deficit is projected to widen slightly to 3.8% of GDP in 2026 before narrowing to 3.3% in 2027. Public debt is expected to peak around 58% of GDP in 2026 and then decline gradually. Stronger revenue mobilisation, better targeting of energy subsidies and tighter expenditure management will be important for creating space for infrastructure and social spending.
External position remains manageable
The current account deficit narrowed to 1.2% of GDP in 2025, helped by strong remittances, gold exports and weaker import demand. Foreign direct investment remained strong, supporting reserve accumulation and external stability.
The deficit is projected to widen to 2.0% of GDP in 2026 as energy imports rise and domestic demand recovers, before narrowing to 1.5% in 2027. The external position remains relatively well supported by tourism, remittances, mining exports and FDI. However, risks include higher oil prices, weaker US growth, disruptions to trade with Haiti, tighter global financial conditions and natural disasters.
Overall outlook
Dominican Republic’s outlook remains favourable, despite the weak 2025 performance. Growth is expected to recover in 2026–2027, inflation should remain near target, and public debt is projected to stabilise. The main medium-term challenges are fiscal consolidation, electricity-sector reform, stronger revenue mobilisation, infrastructure investment and resilience to natural disasters. Continued reforms to improve productivity, competitiveness and social spending efficiency will be essential for sustaining high growth and reducing poverty.
Sources:
World Bank, Dominican Republic Macro Poverty Outlook, April 2026.
International Monetary Fund, Dominican Republic: 2025 Article IV Consultation, November 2025.
International Monetary Fund, World Economic Outlook, April 2026.
Central Bank of the Dominican Republic, Monetary Policy and Inflation Reports, 2025–2026.
Ministry of Finance of the Dominican Republic, Fiscal Responsibility Law and Public Finance Data, 2025–2026.
