Economy of the Dominican Republic

Economy of Dominican Republic

Santo Domingo is the capital and financial center of Dominican Republic
Currency	1 Dominican Peso (RD$) = 100 Centavos
Fiscal year	Calendar year
Trade organizations	WTO, CAFTA-DR
Country group	Developing/Emerging[1] Upper-middle income economy[2]
Statistics
GDP	$127.356 billion (nominal, 2024)[3] $293.365 billion (PPP, 2024)[3]
GDP rank	62nd (nominal, 2024) 62nd (PPP, 2024)
GDP growth	–6.7% (2020) 12.3% (2021e) 5.5% (2022f) 5.0% (2023f)[4]
GDP per capita	$11,774 (nominal, 2024)[3] $27,120 (PPP, 2024)[3]
GDP per capita rank	77th (nominal, 2024) 67th (PPP, 2024)
GDP by sector	agriculture: 5.5%; industry: 33.8%; services: 60.8% (2017 est.)
Inflation (CPI)	3.564% (2018)[3]
Population below poverty line	30.5% (2016 est)[5][6] 23.9% (2021 est)[7]
Gini coefficient	38.5 medium (2021)[8]
Human Development Index	0.766 high (2022)[9] (82nd) 0.627 medium IHDI (77th) (2022)[9]
Labor force	5.278 million (2022 est.)
Labor force by occupation	agriculture: 14.6%; industry: 22.3%; services: 63.1% (2005)
Unemployment	7.1% (2022 est.)
Main industries	ferronickel and gold mining, textiles, cement, tobacco, and sugar production, tourism
External
Exports	$11 billion (2019 est.)
Export goods	ferronickel, sugar, gold, silver, coffee, cocoa, tobacco, meats, consumer goods
Main export partners	United States 50.8%  Haiti 11.8%   Switzerland 10%  India 7.5%  Canada 6.2% (2017 est.)[10]
Imports	$20 billion (2019 est.)
Import goods	foodstuffs, petroleum, cotton and fabrics, chemicals and pharmaceuticals
Main import partners	United States 44.7%  China 14.2%  Mexico 8.3%  Brazil 6.5%  Chile 4.7% (2017 est.)[11]
FDI stock	$42 billion (31 December 2019 est.)
Gross external debt	$29.69 billion (31 December 2017 est.)
Public finances
Government debt	37.7% of GDP (2017 est.)
Revenues	$14.10 billion (2021 est.)
Expenses	$16.60 billion (2021 est.)
Credit rating	BB− (Domestic) BB− (Foreign) BB (T&C Assessment) (Standard & Poor's)[12]
Foreign reserves	$14.5 billion (March 2022 est.)
Main data source: CIA World Fact Book All values, unless otherwise stated, are in US dollars.

The economy of the Dominican Republic is the seventh largest in Latin America, and is the largest in the Caribbean and Central American region. The Dominican Republic is an upper-middle income^[13] developing country with important sectors including mining, tourism, manufacturing (medical devices, electrical equipment, pharmaceuticals, and chemicals), energy, real estate, infrastructure, telecommunications and agriculture.^[14][15] The Dominican Republic is on track to achieve its goal of becoming a high-income country by 2030, and is expected to grow 79% in this decade.^[16] The country is the site of the single largest gold mine in Latin America, the Pueblo Viejo mine.^[17][18]Although the service sector is currently the leading employer of Dominicans (due principally to growth in tourism and free-trade zones), agriculture remains an important sector in terms of the domestic market and is in second place (behind mining) in terms of export earnings. Tourism accounts for more than $7.4 billion in annual earnings in 2019.^[19] Free-trade zone earnings and tourism are the fastest-growing export sectors. A leading growth engine in the Free-trade zone sector is the production of medical equipment for export having a value-added per employee of $20,000 USD,^[20] total revenue of $1.5 billion USD, and a growth rate of 7.7% in 2019. The medical instrument export sector represents one of the highest-value added sectors of the country's economy, a true growth engine for the country's emerging market.^[21] Remittances are an important sector of the economy, contributing $8.2 billion in 2020.^[22] Most of these funds are used to cover household expenses, such as housing, food, clothing, health care and education. Secondarily, remittances have financed businesses and productive activities.^[23] Thirdly, this combined effect has induced investment by the private sector and helps fund the public sector through its value-added tax. The combined import market including the free-trade-zones amounts to a market of $20 billion a year in 2019. The combined export sector had revenues totaling $11 billion in 2019.^[19] The consumer market is equivalent to $61 billion in 2019.^[24] An important indicator is the average commercial loan interest rate, which directs short-term investment and stimulates long-term investment in the economy. It is currently 8.30%, as of June 2021.^[25]

The Dominican Republic's most important trading partner is the United States (over 40% of total commercial exchange; over $12 billion in trade). Other major trade partners are China (over $3 billion in trade), Switzerland (over $1 billion), Puerto Rico (over $800 million), Mexico (over $700 million), Haiti (over $700 million), Spain (over $700 million), the Netherlands (over $700 million), Canada (over $600 million), Brazil (over $500 million), and Germany (over $500 million), in that quantitative order.^[26] The country exports free-trade-zone manufactured products (medical devices, electrical equipment, pharmaceuticals, and chemicals), gold, nickel, agricultural products, liquor, cocoa beans, silver, and sauces and seasonings. It imports petroleum, industrial raw materials, capital goods, and foodstuffs. On 5 September 2005, the Congress of the Dominican Republic ratified a free trade agreement with the U.S. and five Central American countries, the Dominican Republic – Central America Free Trade Agreement (CAFTA-DR). CAFTA-DR entered into force for the Dominican Republic on 1 March 2007. The total stock of U.S. foreign direct investment (FDI) in Dominican Republic as of 2019 was U.S. $42 billion, much of it directed to the energy, tourism, real estate, manufacturing, infrastructure and the telecommunications sectors.^[14] In 2019 the foreign direct investment stock amounted to $42 billion a significant growth in the last decade and a half.^[14] In 2020, during the COVID-19 pandemic, foreign direct investment flows in the Dominican Republic had remained strong at $2.5 billion added to the stock in that year. Having grown to an estimated $44.5 billion, and growing more than ten-fold since 2006 when the liberalization efforts began.^[22]

An important aspect of the Dominican economy is the Free Trade Zone industry (FTZ), which made up U.S. $6.2 billion in Dominican exports for 2019.^[19] Reports show, however, that the FTZs lost approximately 60,000 between 2005 and 2007 and suffered a 4% decrease in total exports in 2006. The textiles sector experienced an approximate 17% drop in exports in 2006 due in part to the appreciation of the Dominican peso against the dollar, Asian competition following expiration of the quotas of the Multi-Fiber Arrangement, and a government-mandated increase in salaries, which should have occurred in 2005 but was postponed to January 2006. Lost Dominican business was captured by firms in Central America and Asia. The tobacco, jewelry, medical, and pharmaceutical sectors in the FTZs all reported increases for 2006, which offset textile and garment losses. Industry experts from the FTZs expected that entry into force of the CAFTA-DR agreement would promote substantial growth in the FTZ sector in 2007. By the end of the last decade-and-a-half the free-trade-zone sector has rebounded and surpassed the former amounts of $4.5 billion in 2006 to grow to $6.2 billion by 2019.