Dominican Republic: Economic activity records lowest expansion since March in August but remains strong
October 3, 2021
Economic activity expanded 11.7% in year-on-year terms in August, which followed July's 12.1% increase. August's figure marked the worst reading since March, but still means that, in 2021, the Caribbean country is on track for one of the highest growth figures in the region and to exceed pre-pandemic output.
Looking at the breakdown for August, the lower growth owed itself to slightly weaker growth in construction as well as in the hotels, bars and restaurants sector, among others.
Meanwhile, annual average economic activity growth rose to 7.0% in August (July: +5.3%).
While year-on-year GDP growth readings will continue to ebb ahead on a less favorable base effect, underlying momentum should be robust in the remainder of H2 as the vaccination rollout advances at home and abroad, tourist arrivals recover and as U.S. stimulus measures boost remittances and demand for the Dominican Republic’s exports.
Analysts at the EIU are optimistic about longer-term prospects:
“Real GDP growth will be stronger than the regional average, averaging 4.9% annually in 2022–25 as private consumption, investment, and U.S. demand for Dominican goods and services all gain ground. However, a slowdown in job creation and weaker growth in remittances (assuming that immigration policy in the U.S. remains tight in the medium term) will lead to lower private consumption growth than before the pandemic.”