Significant Upward Revisions For The Dominican Republic 2024 And 2025 Growth Outlook

• Fitch Solutions has substantially revised upward its growth forecasts for the Dominican Republic for 2024 from 3.8% to 4.6% and for 2025 from 3.5% to 5.1%. The forecasts are in line with Focus Economics consensus for 2024 (4.6%) and marginally more upbeat in 2025 (4.6%).
• While Fitch’s expectations for aggregate household income growth have modestly improved, the revisions are underpinned by a more upbeat view of investment growth in the coming quarters as well as an improving growth outlook for the US economy.
• Fitch forecast that the Dominican fiscal deficit will stabilise at 3.4% of GDP in 2024 (2.7% previously) and 2025, which, in conjunction with strong economic growth, will contain the overall debt load at 45.2% of GDP by 2025.
• In 2024, economic resilience will drive tax revenue growth, balancing against increased capital and payroll spending, but in 2025, proposed tax cuts pose risks to revenue growth and could cause President Luis Abinader to temper expected spending increases.
• After winning supermajorities in both chambers of Congress, President Luis Abinader of the Modern Revolution Party will embark on a sweeping reform drive, including reforms to the constitution, social security, labour and fiscal policy. Given his large majorities in Congress, Fitch believes that Abinader will be able to institute his agenda more or less fully, although the possibility exists that some minor concessions will be made to retain the support of allied parties.
• While the full text of the reform proposals will not be presented to Congress until mid-August, based on public statements, Fitch remains fairly optimistic that the changes will be conducive to economic growth and improved fiscal policy guardrails.

(Source: Fitch Solutions)