The Dominican Republic closes the year 2024 and consolidates its position as a potential leader in economic growth in the region, with a projected GDP of 5.1% and notable macroeconomic stability.
However, the outlook for 2025 is presented with challenges linked to global dynamics, such as the slowdown of the main economies and geopolitical tensions that could impact international trade and the availability of key inputs. In this context, the country is expected to take advantage of its strong performance in sectors such as tourism, remittances and free zone exports to sustain its pace of expansion.
The tourism sector, one of the main drivers of foreign exchange, will close 2024 with historic figures, exceeding 10 million visitors combining arrivals by air and sea. This robust growth places the country in a strategic position to capitalize on the revival of global tourism. Projections for 2025 indicate that, with a strategy of market diversification -mainly- tourism could maintain double-digit growth, and generate greater employment and productive chains.
In the case of remittances, which have experienced sustained increases in the last three years, it is expected that they will continue to be a pillar of support for the domestic economy. In 2024, remittances have reached nearly US$10 billion, with a direct impact on consumption and investment in the receiving communities. However, the outlook for 2025 will be conditioned by the economic evolution of the United States, the main origin of these flows, and by the migration policies that affect the Dominican diaspora.
Manufacturing in free zones, which will close the year with growth of more than 6.5%, represents another area of opportunity for 2025. Foreign direct investment (FDI) in this sector, which in 2024 exceeded US$4.5 billion, could increase, considering how attractive this nation is for companies seeking to diversify their supply chains. However, it will be essential to face challenges such as energy sustainability and job training to ensure its competitiveness. In terms of inflation, the stability recorded in 2024, with an interannual rate of 3.18%, places the country among the most stable in the region.
By 2025, the challenge will be to maintain this performance in a less favorable external environment, marked by the volatility of raw material prices and possible adjustments in international interest rates.
These elements, combined with a stable political environment following the presidential re-election, create a solid basis for the design of public policies that prioritize productive diversification, financial inclusion and the strengthening of infrastructure. The projection for 2025 is not only one of continued growth, but also of adaptation to a changing international environment.
At the local level, in the period January-September, the real Gross Domestic Product (GDP) registered an accumulated year-on-year growth of 5.1%, a figure consistent with the variations of 4.1% in January-March, 6.0% in April-June and 5.0% in July-September of this year. This performance took place in an environment of price stability determined by the implementation of timely monetary and fiscal policies.
According to economic analysts and the BCRD itself, the pace of GDP expansion is in line with the forecasts of different international organizations, whose projections place the country as a leader in terms of economic activity growth in the region by the end of 2024, leaving the doors open and the possibilities of a fruitful 2025.
In the first nine months, according to available data, service activities showed a cumulative increase of 5.3% as a whole, among which the increases in real added value of financial services (7.9%), hotels, bars and restaurants (6.3%), transport and storage (5.9%), real estate and rental activities (5.7%), communications (5.1%), trade (4.8%), energy and water (4.6%), other service activities (4.5%), health (4.3%), among others, stand out. There was a notable performance in free zone manufacturing (6.5%), construction (4.4%), local manufacturing (4.1%) and agriculture (4.1%). Meanwhile, a negative variation was verified in the mining and quarrying activity (-6.1%).
The monthly economic activity indicator (IMAE) then had a year-on-year expansion of 5.4% in October, reaching an average growth of 5.1% in ten months, compared to the same period in 2023.
The expansion of the IMAE in January-October consolidates the nation as the economy with the greatest year-on-year growth compared to its Latin American peers, in line with the forecasts of the different organizations, which indicate that the Dominican economy would be closing in 2024 at 5.1% as is the case of the International Monetary Fund (IMF).
Extended review
The year-on-year variation of the IMAE of 5.1% in January-October 2024 was mainly due to the performance of service activities, which showed an accumulated increase of 5.3% compared to the same period of the previous year, highlighting financial intermediation (7.9%), hotels, bars and restaurants (6.0%), transportation and storage (5.8%), real estate and rental activities (5.7%) and communications (5.2%).
Likewise, local manufacturing increased 7.1% in October, after registering a rise of 4.4% in January-October 2024. Free zone manufacturing grew 6.5% on average in the first ten months of the year and 5.8% in October 2024.
While mining recorded an average year-on-year variation of -5.4% in January-October (it has been a weak point for several years), this activity presented a more positive result during the months of August (8.6%), September (16.9%) and October (1.3%) of 2024, seen individually, supported by the increase in gold production in the country's main deposit.
Remittances have given the country a great boost. In 2022, US$8,912.3 million were received through this chapter, in 2023, US$9,212.2 million were received, and by November 2024, US$9,752.5 million had been received. The absolute variation from 2024 to the same period in 2023 was US$540.3 million (5.9%).
It is essential to highlight the importance of these resources sent by the Dominican diaspora abroad, as they generate a multiplier effect on consumption, investment and financing of the most vulnerable sectors of the country.
The economic performance of the United States was a determining factor in the behavior of remittances, since 83.1% of the formal flows in November, equivalent to US$652.1 million, came from that country.
Analyzing the evolution of the external sector, the outlook contemplates a significant flow of foreign currency income by the end of 2024 (a complete evaluation is pending), generating more than US$43 billion, and income from the tourism sector stands out with a value of around US$10.7 billion and a similar amount from remittances.
Estimates for the end of the year include FDI flows of over US$4.5 billion and free zone exports of over US$8.5 billion. These foreign currency inflows contribute to maintaining the relative stability of the exchange rate currently observed, such that, at the end of November 2024, the national currency depreciated by 3.7% compared to the end of 2023. The higher external income has also made it possible to maintain an adequate level of international reserves, which at the end of November 2024 reached US$13,090.4 million, covering five months of imports, and equivalent to 10.5% of GDP, above the thresholds recommended by the IMF.
Tourism and the MSME sector
In terms of tourism, the country recorded the arrival of 9,082,178 visitors in the first ten months of the year. This number of visitors reflects a growth of 46% compared to the same period in 2019, 35% compared to 2022 and 10% compared to 2023. By air alone, the country received 6,984,569 visitors in the period from January to October, which represents a growth of 30% more than in 2019, 20% above 2022 and 7% higher than last year.
October was another great month for Dominican tourism; 554,169 tourists arrived in the country by air alone, representing a 49% increase compared to the same month in 2019, 13% more than in 2022 and 4% above last year. In October, cruise passenger arrivals were 165,680, 155% more than the same month in 2019, 88% above 2022 and 88% compared to last year.
On December 5, the Monetary Board (JM) authorized the Central Bank to consider productive loans directed to micro, small and medium-sized enterprises (Mipymes) as part of the beneficiary sectors of the RD$35,355 million released through its Fifth Resolution of November 21, 2024, with an amount of RD$2,000 million. This, for when they are granted by financial intermediation entities specialized in financing in this low- and middle-income sector.
This sector of SMEs represents 32% of the GDP and 61.6% of the employed population. Among its most important economic problems, the lack of access to credit for the acquisition of inputs, payment of debts, expansions or repairs, as well as the purchase of machinery and equipment are cited.
Source: Ministry of Tourism of the Dominican Republic.