With a population of 11.1 million consumers and a GDP of $94.2 billion in 2021, the Dominican Republic is the tenth largest economy in Latin America and the largest in the Caribbean region. In the past two decades, the Dominican Republic experienced significant economic growth, driven by structural reforms and favorable external conditions. However, this growth is slowing due to challenges such as low productivity, insufficient human capital, climate-related disasters, and market distortions. By 2023, growth in the country is expected to slow from 4.9 percent in 2022 to 3.1 percent and the upper-middle-income poverty rate ($6.85 PPP per day 2017) is estimated at 21 percent, down from 23 percent in 2020, but above pre-pandemic levels. Despite the economic expansion, quality job creation remains a concern, and high inflation in 2022 (8.8% y/y) impacted vulnerable populations. Therefore, there is a need to enhance the availability of high-quality essential goods and services, including education, healthcare, water, and electricity. This improvement is essential for fostering economic opportunities, promoting economic mobility, and safeguarding vulnerable sectors. The government has initiated reforms, particularly in the electricity sector, but transparency and efficiency need improvement. Improving the environment will also be key to supporting the competitive development of investments in renewable energy led by the private sector.

Over 40 percent of Dominicans face vulnerability to poverty, exacerbated by climate change. The Dominican Republic faces a considerable risk from disasters, ranking 12th globally in vulnerability to climate shocks according to the 2019 Germanwatch Climate Risk Index. These disasters have the potential to worsen pre-existing challenges, including severe threats such as soil and beach erosion, deforestation, and water shortages.

In addition, addressing gender gaps and fostering inclusive growth will require reforms in human capital, competitiveness, innovation, public spending efficiency, and climate resilience. For example, the average unemployment rate in the Dominican Republic over the past decade has been 5.5 percent. However, when examining unemployment rates by gender and age, notable disparities emerge. In 2017, data from the International Labour Organization (ILO) indicated a 13.5 percent unemployment rate for youth, with a significant 19.7 percent of young females being unemployed. Of particular concern for citizen security in the Dominican Republic is the ILO's report that 18.3 percent of young males are neither employed, attending school, nor enrolled in a training program.

Source: World Bank, Dominican Republic Country Overview, USAID, Dominican Republic Country Overview