Dominican Republic: Economic activity records quickest growth since October 2013 in March
Economic activity expanded 10.6% year-on-year in March (February: +1.1% yoy). The reading marked the best result since October 2013, and was powered by strong growth in the construction, mining, transport and manufacturing sectors. Moreover, the contraction in the hotels and restaurants sector eased as tourist arrivals picked up. However, March’s GDP figure was flattered by the highly favorable base effect.
Over Q1 as a whole, the economy expanded 3.1%, likely making the Dominican Republic one of Central America and the Caribbean’s top performers. Meanwhile, the trend improved, with the annual average variation of economic activity coming in at minus 6.0% in March, up from February’s minus 7.5%.
Growth in Q2 will likely rise further due to base effects, given the global pandemic was at its height in Q2 2020. The year-on-year expansion will likely then moderate later in the year but stay robust, benefitting from greater fiscal stimulus in the U.S. under Biden, which will support exports and remittances. Moreover, fiscal and monetary support at home will aid domestic demand. However, lingering Covid-19 restrictions and a potentially slow recovery in tourism pose downside risks.