Dominican Republic: Strong final quarter caps stellar 2018
According to a preliminary estimate released by the Central Bank on 27 December, the economy expanded 7.1% in annual terms in the fourth quarter. Although this was down marginally from Q3’s 7.3% increase, it still marked another quarter of above-potential growth. The economy thus expanded 7.0% over 2018 as a whole, likely the strongest performance in the Central America and Caribbean region by some distance.
The fourth quarter’s performance was broad-based. Construction remained an important growth driver (Q4: +8.1% year-on-year; Q3: +9.2% yoy), thanks to private housing, tourism and energy diversification projects. Moreover, the service sector expanded robustly (Q4: +6.0% yoy; Q3: 6.4% yoy), with particularly fast growth in the communication, health and retail subsectors. The latter was likely supported by easy access to credit. The manufacturing sector had a mixed performance: While growth in local production accelerated, growth in production from duty-free zones dimmed notably in Q4.
Looking ahead, GDP growth is expected to moderate in 2019 after such a vigorous performance in 2018, on the back of a tough base effect and softer momentum in the U.S., which will have a knock-on effect on tourism and remittances growth. However, the economic performance will remain strong compared to regional peers, thanks to robust fixed investment and private consumption.