Dominican Republic To Outperform Other Caribbean Economies As Consumption, Investment Rebound

• Robust external demand and a swift national vaccination campaign will underpin an economic rebound in the Dominican Republic over the coming quarters. 
• Economic activity has accelerated in the year through May, averaging a monthly 15.6% y-o-y expansion after returning to growth in March. This will support business confidence and hiring, particularly as the country’s fast vaccination campaign outpaces other Latin American and Caribbean markets. 
• As of June 27, 44.7% of Dominicans had received at least one COVID-19 vaccine dose and 26.1% have been fully vaccinated. This efficiency in administering vaccines has allowed the Dominican government to relax many of its public health restrictions, aiding a recovery in domestic commerce.  
• Furthermore, strong US growth in 2021 will sustain a surge in remittance inflows that will boost household incomes and consumer purchasing. Over 1.0Mn people of Dominican ancestry live in the US and from January through May 2021, inbound remittances totaled US$4.4Bn, a 60.5% y-o-y increase and 53.1% higher than from January-May 2019. 
• That being said, Fitch Solutions has revised its 2021 real GDP growth forecast to 6.0%, from 5.2% previously, due to a more upbeat outlook for the global economy and Dominican exports. The agency’s 2022 growth forecast of 4.7% is unchanged. 
• While it expects the Dominican economy will outperform other Caribbean markets in the coming years, the possibility of higher inflation or an abrupt tightening of monetary policy pose downside risks to longer-term growth.

(Source: Fitch Solutions)