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Country Risk Report

Dominican Republic

Last update – January 2026

Country risk rating 


LOW RISK
Economic risk

Slight risk of payments disruption
Business environment risk
Moderate risk of payments disruption
Political risk

Slight risk of payments disruption
Commercial risk
Low risk of payments disruption
Financing risk
Moderate risk of payments disruption

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Form of state
 Presidential republic
Head of government
 Luis Abinader (president)
Next elections
 2028, presidential

Strengths & weaknesses

  • Largest economy in Central America with robust macroeconomic management and public debt below 30% of GDP
  • Resilient growth, supported by remittances and steady domestic consumption, even amid global shocks
  • Ongoing infrastructure and digital connectivity investments are enhancing competitiveness
  • Persistent poverty and inequality, with over half the population living below the poverty line 
  • Heavy reliance on remittances and the US labor market exposes the economy to external shocks 
  • Low tax revenues (about 14% of GDP) restrict fiscal space for transformative reforms

Economic overview

Cyclical risks

The Dominican Republic enters 2026 with economic momentum gradually recovering after a mild slowdown in late 2024 and early 2025. Growth is forecast at +4.5% and +5%, respectively, for 2026 and 2027, supported by resilient remittances, robust private investment and a rebound in tourism. Inflation remains well-anchored within the central bank’s target range, averaging 3.7% in 2025, and monetary policy is expected to remain accommodative, with rates near 5.5%. However, cyclical risks persist: the regional environment could dampen tourist arrivals, while global financial volatility may tighten external financing conditions and remittance inflows. The current account deficit is projected to remain manageable at around 2.5% of GDP, fully financed by foreign investment. The country’s solid macroeconomic fundamentals and policy flexibility provide a buffer against external shocks, but vigilance is needed as global uncertainty and commodity price swings could impact growth and stability.

Financing risks

Public debt remains moderate at approximately 53% of GDP, with fiscal consolidation efforts ongoing despite challenges in broadening the tax base. The government aims to reduce the deficit to 3% by 2026, focusing on targeted reforms and rationalizing subsidies, particularly in the electricity sector. The banking system is robust, with a non-performing loans ratio of around 1.5% and adequate provisioning, adequate capitalization and strong overall liquidity. However, fiscal revenue remains low (16.2% of GDP in 2023), and interest payments consume about 20% of government income, limiting the capacity for public intervention in the event of social difficulties or larger tensions. Insolvency risks are contained, but corporate payment behavior can be affected by economic and political uncertainties, especially in sectors exposed to external shocks. Continued progress in financial regulation and supervision, including the implementation of Basel standards, is essential to maintain investor confidence.

Structural business environment risks

The Dominican Republic offers a favorable business climate, anchored by institutional stability, a strong banking sector and ongoing reforms. Free trade agreements with the US and EU, diversification of free trade zones and infrastructure improvements support competitiveness. However, the business environment faces structural challenges: labor informality remains high, manufacturing is concentrated in export zones with limited domestic linkages and the electricity sector is underpriced and heavily subsidized. Corruption and legal inefficiencies persist, with the country ranking 108th out of 180 on Transparency International’s index. Progress in governance, education and healthcare reforms is critical for inclusive growth. The government’s commitment to the National Development Strategy 2030 and Meta 2036 plan signals a long-term focus on structural transformation, but implementation gaps remain.

Political risks

Political stability is a key asset, reinforced by President Abinader’s re-election and a congressional supermajority. The administration’s pro-market stance and anti-corruption drive have strengthened investor confidence, though sporadic protests and persistent social challenges – inequality, crime and unreliable electricity – continue to test governance. Relations with Haiti remain tense due to migration and security concerns, with border closures and deportations straining ties with the US. The risk of spillover from Haiti’s instability is significant, but the Dominican government’s decisive actions have so far contained major disruptions. Continued diplomatic engagement and progress on social reforms will be vital to sustaining stability and growth in the medium term.

Trade structure by destination/origin

(% of total, 2024)

Trade structure by product

(% of total, 2024)

Contact 

Luca Moneta
Allianz Trade
+33 (0) 6 70 27 40 16
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