Economy weakens, although currency is stable and exports are robust

DOMINICAN REPUBLIC - Report 16 Jun 2025 by Magdalena Lizardo

Economic activity data for April confirmed earlier expectations. The robust 5.4% y/y growth recorded in March 2025 was not sustained in April, when economic activity grew by just 1.7% y/y. This slowdown is primarily driven by weakening domestic demand, in both public and private investment.

Inflation rose to 3.84% y/y in May, remaining below the 4% target. After intense depreciation from August 2024 to March 2025, a sharp appreciation of the currency was also observed in April–May 2025. Y/y DOP depreciation in May was 0.72%.

Exports of goods and services continue to perform well, despite global uncertainty. Goods exports grew by 13.8% y/y in May. Although net international reserves declined, they still remain above $14 billion. Monetary conditions continue to be highly restrictive, with M1 liquidity growing by 3.3% y/y in May—below the inflation rate—and credit to the private sector expanding moderately. Although lending rates rose slightly, the effect of liquidity constraints is clearly reflected in the sharp monthly rise (397 bps) in the interbank interest rate.

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