Dominican Republic: Growth ebbs in the first quarter but was likely still the fastest in the region
May 14, 2019
According to a preliminary estimate released by the Central Bank on 14 May, the economy expanded 5.7% in the first quarter of 2019. While down from the 6.6% growth registered in Q4, the reading marked another quarter of above-potential growth and was likely the fastest in Central America and the Caribbean.
The first quarter’s performance was broad-based. Construction remained a key growth driver (Q1: +12.5% yoy; Q4: +13.2% yoy), while the service sector grew solidly (Q1: +5.3% yoy; Q4: +5.7% yoy). with the energy and water and financial services subsectors leading the way. Mining output growth was up notably (Q1: +6.3% yoy; Q4: +0.3% yoy). The economy as a whole was likely buoyed by a double-digit credit expansion, solid employment growth and surging FDI inflows.
Looking ahead, GDP growth is expected to continue moderating towards potential, on the back of a tough base effect and a deceleration in the U.S.—a key source of tourist arrivals, remittances and exports. However, growth will compare favorably to regional peers, thanks to strong fixed investment, and with low inflation and healthy credit growth supporting private consumption.
Author: Oliver Reynolds, Economist