The Dominican Republic: Economic Report 2021


The Dominican Republic’s (DR)economy had maintained a robust growth until 2019, outperforming its Latin American and Caribbean peers, and averaging 5%> annual growth over the previous 5 years. In 2019, the country’s GDP was US$88.9Bn supported mainly by sectors like manufacturing (13.8%), construction (12%), commerce (10.1%), and Hospitality (7.4%). In March 2020, due to the COVID19 pandemic, the DR Government was forced to close down all the economic activity in the country, with the exception of a few businesses considered as critical. The complete shut down lasted until late May, when the Government started a partial re-opening in phases that allowed most business to be open 2 months later.

In 2020, GDP contracted by 6.7%, ending the year at US$78.8Bn. Sectors like Hospitality (-47.5%), Mining (-12.7%), and Construction (-10.7%) were the hardest hit, while Health (12.5%), Financial Services (7.1%), and Real State Activity (3.8%) showed the biggest gains. Tourism, which is one of the main generators of foreign currency, generated US$4 Bn less in revenues than in 2019. On the other hand, despite the decrease in mining activity, and because of higher gold prices, Barrick Pueblo Viejo’s contribution in tax and royalties to the DR coffers were double of what they were in 2019, reaching US$385M and making it one of the main contributors in critical pandemic times. This amount included an advance payment of the royalty for the year 2021 estimated at $47 million (requested by the DR Government). Pueblo Viejo also agreed to advance in 2021 the royalty payment for the years 2022 and 2023, estimated at $95 million, to support the government mission to combat the health and economic crisis caused by Covid-19. Despite Barrick’s contribution during pandemic times, there has been an increasing social opposition to their expansion project and an overall growth in anti mining sentiment in the DR.

The COVID19 pandemic caused a drop of 3.7% in revenues for the DR Government in 2020. This drop was partially offset by an increase in other items, such as family remittances, another key source of revenue for the country, which increased 16% and reached US$8.2 Bn. Furthermore, and despite the shut down of the economy and its effects on Tourism, the DR received US$2.55Bn of foreign direct investment in 2020, a figure slightly higher than in 2018. The tourism, real state, and energy sectors received 70% of that investment.

Before the pandemic, the DR’s Public Debt had been increasing steadily until 2019, when it reached US$47.6Bn, equivalent to 52.2% of GDP.  The shut down of the economy in March 2020, combined with a sharp rise in spending to fund the programs implemented to mitigate socio economic impact of COVID19, triggered an acceleration of this indebtedness pattern.

Key Data201820192020
GDP(USD billions)81.388.978.8
Per capita GDP (USD at PPP)17,49118,50617,294
Real Growth in GDP (%)7.05.0-6.7
Inflation (CPI %)
Exchange Rate (USD – avg end period)50.2152.9158.32
Exchange Rate (CAD – avg end period)38.1338.6042.16
Current Account Balance (US$ M)-1,322-1,188-1,541
Fiscal Balance/GDP (%)-2.2-2.2-7.9
International reserves (US$M)7,7188,87110,845

Sources: EIU

The Abinader Administration – one year in.

After taking office in August 2020, President-elect Luis Abinader had no choice but to continue with the indebtedness pattern of the previous Government, and the country closed 2020 with a public debt of US$58.9 Bn, equivalent to 71.3% of GDP. This pattern continues in 2021, a year for which the Government budgeted US$9.98 Bn of new debt. However, in order to mitigate the volatility risk of the public debt, the Government announced it is working to change the profile of the debt, by repurchasing high interest rate debt and debt in USD with funds from new low interest debt in Dominican pesos.

In the 14 months since the economy shut down due to COVID19 (including 7 pre-Abinader months) the DR Government has invested approximately US$3.2 Bn in its socio-economic programs to mitigate the impact of the pandemic. Since many sectors of the economy have been operating almost normally for many months, some of these programs have already been phased out, and others limited in scope.

As the DR economy has been recovering, 85% of the lost jobs during the pandemic have been restored. In the Tourism sector, this figure reached 97% of direct and indirect jobs. Still the Ministry of Labour admits that some 200,000 jobs remain to be restored in the private sector.

Despite the economic limitations that the Abinader Government has been facing, the government has presented an ambitious program of infrastructure and development projects, mostly based on loans and public-private partnerships. This program has a strong focus on water, energy, transportation, and tourism. On September 2020, President Abinader made operational the General Directorate of Public Private Partnerships (DGAPP), which was created with the PPP Law approved earlier that year by the former Government. The Government expects to develop many of the important projects under the PPP format through the DGAPP.

Energy: The Abinader Administration has started a complete reform of the energy sector, which includes the elimination of the former Government energy holding, CDEEE, and integrating many Government agencies under the Ministry of Energy and Mines. When finished, this reform should bring efficiencies, cost reductions, and more transparency to the sector. On the other hand, the Government is promoting private investments in both renewable energy and natural gas generation. There is much interest in renewable energies by companies from Canada, US, EU, and Asia. However, energy transmission lines in the country (owned and managed by ETED – a Government agency) are saturated, with no indications of when they will be revamped for new energy projects to be able to interconnect with the system. Until then, new developments of renewable energy projects are in pause.

Water: Since taking office in August 2020, President Abinader established water as one of his Government’s priorities. On June 2021, the President presented to the Social and Economic Council (CES) the National Commitment for the Water Act (2021 -2036), an ambitious proposal for a 15-year, US$8.5 Bn water program that would address water supply, water treatment, protection of water resources, among others. It would include the construction of 17 water dams of different sizes, of which 8 would commence construction in the current term (2020-2024). This proposal is just the beginning of a long journey, and should go through different layers of approval by different entities before becoming an actionable project. There are several Canadian companies which have expressed interest in water-related projects in the last 2 years, and will be following closely the developments related to water in the DR.

The Government has been working to present an integral fiscal reform soon. Although the reform had been in the works and pending for several years, the previous Governments had been hesitant to implement it because of the impact the reform could have on the population. According to President Abinader, the upcoming reform would be greatly focused on reducing and/or eliminating a great deal of tax exemptions, which are considered to favor mostly large enterprises, and weaken the efficiency of the local tax structure. The reform is expected to be implemented in early 2022.

Foreign Direct Investment & Trade

The DR received US$2.55B of foreign investment in 2020, according to the Dominican Central Bank, which represents only a 16% decrease over the amount received in 2019.

The stats from the Dominican Central Bank up until 2020 show Canada as the 2nd largest all-time foreign investor in the country with total cumulative investments of over US$6 billion, closely following the US. Canadian investments are mostly concentrated in mining, financial services, manufacturing, tourism, renewable energy, and agriculture.

A large share of the Canadian investment can be attributed to a Barrick Gold Corp/ Newmont mining project, Pueblo Viejo, which is the single largest foreign investment in the Dominican Republic. Barrick Gold’s announcement in the first quarter of 2019 of a $1.2 B expansion to their current operation has been on hold since then, due mainly to opposition from civil society.

Despite progress made in the last years, the DR remains a challenging market for first-time foreign investors.  Inordinate delays stemming from bureaucratic red tape and a high degree of bureaucratic discretion are factors that need to be considered carefully by investors. 

Business legislation has progressed in the Dominican Republic, with significant improvements in taxation, labour, customs procedures, banking supervision, among others. However, improvements remain to be seen in the systematic application of rule of law and reduction in the discretionarily applied to decisions affecting private businesses. It is recommended that Canadian companies wishing to enter the Dominican Republic market seek legal advice before entering into a formal agreement with a local counterpart, be it private or public.

The DR exported US$10.3Bn worth of goods in 2020, down from US$11.2Bn in 2019. Gold exports by Barrick Gold reached US$1.6 Bn in 2020, maintaining its status as a key export. Imports also decreased in 2020, ending the year at US$17Bn.

Main Canadian exports to the DR: Canada exported C$252.9 M of goods to the DR in 2020. The main exports from Canada were: wheat, smoked herring, steel, and paper. With regards to services, Canada has a strong presence in the financial sector, as well as in tourism, and consulting services.

Main Canadian imports from the DR: Canada imports from the Dominican Republic were C$671.6 M in 2020. This high value is attributable to the gold imported from Barrick Gold/Newmont’s project in the Dominican Republic, which totaled C$430 million. Other key imports were silver, medical supplies, electrical and electronic components, and live fish.

Trade Agreements and Canadian commercial activity with the Dominican Republic

Membership in trade agreements and other multilateral agreements: The DR is signatory of DR-CAFTA, the Free Trade Agreement between the US, 4 Central American Countries and the Dominican Republic. DR-CAFTA entered into its 12th year, providing duty-free or preferential tariffs to many products from member countries. The Dominican Republic also has an Economic Partnership Agreement (EPA) with the EU since 2008. The EPA has created better market access conditions to the EU market for Dominican products.  Canada does not have a FTA with the DR, creating competitiveness issues for Canadian exporters subject to hefty tariffs in some areas.

The Dominican Republic is a member of many multilateral institutions including: WTO, WCO, ACS, ECLAC, G-77, IADB, IMF, OAS, UN, and the Central American Common Market, among others. Furthermore, the DR has bilateral Air Agreements with over 70 countries worldwide.

On April 30, 2018 the DR announced the establishment of Diplomatic Relations with China, while breaking up a longstanding and very cooperative relation with Taiwan. The announcement, although initially received with optimism by the business community, has not necessarily translated into increased economic activity between the 2 countries. China is the second source of DR imports with over US$2B a year, but Dominican exports to China are limited. Following the announcement, the Dominican Republic and China signed several bilateral agreements.

Up until 2019, Canadian tourism to the DR had kept its steady increase, reaching 892,000 Canadians visiting the country in that year. However, with the shutdown in March 2020 due to the COVID19 pandemic, that figure drop to 337,000 in 2020. Tourism generates large economic activity in the DR, which directly benefits local suppliers of several products and services. Canadian investment in the Tourism sector has been growing as well, with investments in resorts, tour operators, hotel supplying companies, and small restaurants.

Sources: Embassy of Canada in Dominican Republic, EIU, Strategis, Statistics Canada, Dominican Central Bank

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