The Dominican Republic offers an attractive environment for investment, with sustained economic growth and pro-investment policies.
Below, we provide a detailed assessment of the economic and political risk level in the Dominican Republic. It is designed for entrepreneurs looking to establish or expand their businesses in the country, offering a clear and updated view based on official statistics and information.
Economic Risk Level
The Dominican Republic has experienced sustained economic growth in recent years, but as with any emerging economy, certain risks must be considered.
Economic Growth
GDP Growth Rate: In 2023, the GDP grew by 5.3%, according to the Central Bank of the Dominican Republic (BCRD). This growth has been driven primarily by tourism, construction, and free trade zones.
Inflation
Inflation Rate: The year-on-year inflation rate stood at 3.3% in April 2024, placing the country among the lowest inflation rates in Latin America, excluding dollarized economies (Panama, Ecuador, and El Salvador).
Public Debt
Public Debt Level: The public debt of the Dominican Republic represents approximately 53% of GDP, compared to 50.5% in 2029 and 69.1% in 2020. Although the debt is being managed, it is important to consider the potential impact on long-term economic stability.
Financial Stability
Banking System: The Dominican banking system is robust, with proper supervision by the Superintendence of Banks. The default rate remains low, around 1.5%.
Political Risk Level
The political environment in the Dominican Republic is relatively stable, but like in any country, risks must be evaluated.
Political Stability
Governance: The Dominican Republic has maintained political stability with peaceful transitions of power. The current president, Luis Abinader, has implemented pro-investment and transparency policies.
Corruption
Corruption Perception Index: According to the NGO Transparency International, the Dominican Republic ranks 108 out of 180 on the Corruption Perception Index. While efforts have been made to improve transparency, corruption remains a challenge.
Legal Security
Judicial System: Legal security is a critical aspect. Although progress has been made, the efficiency of the judicial system and the protection of property rights still need improvement.
Official Statistics and Information
- GDP: 5.3% GDP growth.
- Inflation: 3.3% inflation rate in April 2024.
- Public Debt: 53% of GDP.
- Corruption Perception Index: 108th out of 180 according to Transparency International.
- Bank default rate: 1.5%.
Conclusion
The Dominican Republic presents a favorable economic and political environment for investment, although it is not without risks. Economically, the country shows solid GDP growth and controlled inflation, with a robust banking system and manageable public debt. However, it is important to monitor inflation and debt trends in the long term.
Politically, the country enjoys relative stability and governance, supported by structural reforms and pro-investment policies. However, corruption and the need to improve legal security remain challenges to consider.
Entrepreneurs looking to establish themselves in the Dominican Republic should take into account all the political and economic factors presented by this Caribbean nation.
With careful planning and risk mitigation strategies, the opportunities for success in the Dominican market are promising.
At Contadores Dominicanos, we provide comprehensive legal, corporate, and accounting advice to create businesses in Dominican territory, with highly qualified professionals ready to assist you.
