Muted Economic Headwinds, Market-Friendly Reforms To Sustain Dominican Republic Stability In H123

• Fitch Solutions maintains its view that social stability in the Dominican Republic will improve in the first half of 2023. Despite their expectations that real GDP growth will slow from an estimated 5.0% in 2022 to 4.2% in 2023, resilient growth in the market’s tourism sector, which employs 17.0% of the labour force, will constrain the increase in average annual unemployment to 6.1% in 2023, from an estimated 5.3% in 2022.
• Additionally, Fitch expects headline inflation to moderate to an average of 6.5% in 2023, from 8.8% in 2022, as elevated interest rates and falling private consumption weakens pressures on price growth.
• Easing inflation and a relatively strong labour market will reduce the likelihood of public unrest and protests. Notably, threats of strikes and demonstrations by public and private sector unions, specifically from the nurses’ and transportation workers’ unions, have wound down from a spike in September through November.
• Given this, Fitch has revised up the Short-Term Political Risk Index score for the Dominican Republic from 71.3 out of 100, to 75.2, based on improvements to the country’s social stability and security/external threats components.

(Source: Fitch Solutions)