SANTO DOMINGO – Economist Francisco Tavarez warned that if the government does not implement bolder measures, the economy could slow down even further in 2026. “If the government does not increase the level of public investment, the economy could fall into a recession,” the specialist stated.
In an interview on the program "La Ventana" on Grupo de Medios El Inmobiliario , the professional stated that, in the current context, the private sector will not assume the risk of massive investment due to the high cost of financing and the increase in material prices. "The private sector is not going to risk its capital in a scenario of high costs and high interest rates," he indicated.
Tavarez insisted that the State must increase public investment , especially in infrastructure and housing . “We need to create the fiscal space to increase investment in construction, public works, and housing. This country has a tremendous housing deficit,” he stated.
He pointed out that affordable housing and housing aimed at the lower-middle class require state support to be viable. “If wages are low, a mortgage with monthly payments of 20,000 or 30,000 pesos requires a direct subsidy from the state,” he explained.
He explained that the Central Bank's reduction in the monetary policy rate has not translated into lower rates for families and businesses. "Although the monetary policy rate has been decreasing, this has not been reflected in local interest rates," he noted.
According to the economist, banks are not passing on this reduction to the public because they prefer safer options in the stock market. “There is a kind of sterilization of interest rates. Banks are investing their reserves in certificates, bonds, and funds because they represent a secure return,” he explained.
He warned that an atmosphere of financial insecurity is influencing the behavior of the banking system. “In a scenario where people say there is no money circulating, it is very likely that delinquency rates will rise,” he noted. He also indicated that data from the Superintendency of Banks shows a slight increase in payment arrears.
He also explained that this leads financial institutions to be more cautious when granting mortgage or consumer loans. This credit contraction directly impacts the construction sector and its value chain, affecting everyone from developers to buyers.
Foreign investment
Despite the challenging times in the construction sector, Tavarez emphasized that the Dominican Republic remains an attractive destination for foreign direct investment. “A lot of foreign investment is coming here, and that’s positive,” he said.
He noted that the country has an attractive legal framework for investors, especially in tourism, free trade zones, and real estate. “Tourism and construction are closely linked. Tourism is the main source of foreign investment, followed by real estate and free trade zones,” he said.
The economist highlighted that when tourism and real estate are combined, these two sectors account for approximately 50% of the foreign currency entering the Dominican Republic through foreign investment. However, he noted that this inflow, while robust, does not offset the decline in domestic financing.
He added that the peso's depreciation is not due to a lack of foreign currency, but rather to external factors and market decisions. "It's not because enough foreign currency isn't flowing in here; the flow has actually increased," he pointed out.
The economist emphasized that the coming months will be crucial to preventing the recession in the construction sector from deepening. He reiterated that the key lies in government intervention and greater availability of credit for households.
“Everything that has been happening in 2025 are signs that monetary policies need to be bolder,” he stressed.
