The Inter-American Development Bank projects a growth of 2.1% for Latin America and the Caribbean in 2026, and the Dominican Republic almost doubles that figure, supported by a basket of currencies that the organization identifies as a model of resilience for the Caribbean
SANTO DOMINGO – In March 2026, the Inter-American Development Bank (IDB) presented its annual macroeconomic report for Latin America and the Caribbean, "Resilience and Growth Prospects in a Changing Global Economy." The regional outlook is one of moderate stability amidst geopolitical tensions, tariff pressures, and persistently high global interest rates.
The projected growth for the region is 2.1%, just above its long-term historical average, and the Dominican Republic stands out in that context as one of the fastest-growing economies in the hemisphere.
But the same variables that explain this privileged position contain the warnings that the IDB formulates for the entire region: the opportunity is on the table; what determines whether it is taken advantage of is what happens with productivity, debt and formalization in the coming years.
The anchor of resilience
The IDB identifies the combination of tourism, remittances, and foreign direct investment as the mechanism that has allowed Caribbean economies to maintain exchange rate stability and investor confidence even during periods of high global volatility. The Dominican Republic operates with all three channels active and growing simultaneously.
In the first quarter of 2026, foreign exchange earnings generated by FDI, remittances, tourism, exports of goods and other services exceeded US$13.4 billion, some US$1.4 billion more than in the same period of 2025, according to the Central Bank of the Dominican Republic (BCRD).
Tourism contributed US$3.9097 billion in the quarter covered by the IDB report alone, representing a 20.2% year-on-year increase, with over 3,350,000 visitors during the period. The Central Bank of the Dominican Republic (BCRD) projects year-end tourism revenues exceeding US$12.5 billion, a historic record. Remittances totaled US$5.1701 billion between January and May 2026, and foreign direct investment (FDI) reached US$1.5367 billion in the first quarter, with an annual projection of US$5.2 billion.
This sustained flow explains a fact that the IDB highlights as an indicator of structural confidence: the Dominican Republic's EMBI stood at 177 basis points as of May 20, 2026, compared to a regional average of 264 basis points, and this difference means that the international market charges less to lend to the Dominican State than the average of its neighbors.
In 2025, Dominican sovereign bonds in dollars offered returns close to 13%, outperforming other emerging issuers with similar ratings.
The EMBI (Emerging Markets Bond Index) is an index created by JP Morgan that measures the difference between the yield on an emerging market country's sovereign bonds and the yield on US Treasury bonds, considered the ultimate risk-free asset. It is expressed in basis points, with 100 basis points equaling 1%. Therefore, the Dominican Republic's EMBI of 177 basis points as of May 20, 2026, means that the market demands the country pay 1.77 percentage points more than what the United States pays on its debt. In practice, this measures country risk: a higher EMBI indicates a greater perception of risk and a higher cost of financing. A lower EMBI indicates greater investor confidence and a lower cost for the government to access international markets.
RD above average and below potential
The IDB projects 2.1% growth for Latin America and the Caribbean in 2026, and the Dominican Republic far exceeds this projection: the World Bank estimates 3.6%, the IMF 3.7%, and the Ministry of Finance and Economy itself establishes a central projection of 3.75% in its Macroeconomic Outlook 2026-2030.
The country's nominal GDP amounts to US$136.148 billion in 2026, with a GDP per capita of US$12,406, for an increase of US$656 compared to 2025.
The historical reference is the best argument for regional positioning: between 1972 and 2022, the Dominican economy grew at an average annual rate of 4.9%, the highest in Latin America during that period, more than one and a half points above the regional average of 3.2%.
The IMF estimates that, under appropriate policies, the country could achieve advanced economy status by the middle of the 21st century.
But the country's growth potential is estimated at 5.0% annually. Current projections of between 3.6% and 3.75% represent performance below what the economy can produce under normal conditions. The year 2025 ended with only 2.1% expansion, affected mainly by weakness in construction and manufacturing.
This data prompted a downward revision of expectations for 2026 and Fitch Ratings' decision in April 2026 to lower the country's credit outlook from positive to stable, while maintaining the rating at BB-. The agency cited, among the factors in its decision, the trend of growth below the historical average.
The strongest asset in the file
The IDB points to the region's success in containing inflation, whose median fell to 3.8% at the end of 2024 after reaching 9.8% in July 2022. The report attributes this result to the strengthening of monetary policy frameworks and warns that maintaining this is a necessary condition for preserving investor confidence.
The Dominican Republic fits into that narrative with its own numbers: the accumulated inflation for 2025 closed at 4.95%, within the Central Bank's target range of 4.0% ±1.0%, representing 32 consecutive months of controlled prices.
By 2026, the Ministry of Finance and Economy projects a year-end inflation rate of 4.50%, with upward pressure from fuel prices in a country that is a net energy importer.
The flip side of resilience
The Inter-American Development Bank (IDB) warns that regional growth is insufficient to close income gaps, that average public debt in Latin America and the Caribbean stands at 59% of GDP, and that rising interest payments are putting increasing pressure on public finances. The organization recommends that countries keep their debt ratios within a prudent range of between 46% and 55% of GDP.
As of April 30, 2026, the Dominican Republic recorded a Non-Financial Public Sector debt of US$66,408.5 million, equivalent to 49.3% of GDP, slightly below the median of BB-rated economies (51.6%), but projected to reach 51.1% in 2027.
The foreign currency component represents 67% of the total, a vulnerability factor to exchange rate fluctuations that the average maturity of 11.6 years helps to mitigate.
The most revealing figure is not the debt stock but its relative cost. The ratio of interest payments to tax revenues reached 21.9% in 2025, the highest level among BB-rated economies and double the median for that group. Projected interest payments for 2026 exceed RD$322,560.9 million, 8% higher than in 2025, with projections of uninterrupted growth to RD$418,674 million in 2029.
This scenario explains Law 30-26, the tax reform enacted on June 18, 2026, and Fitch's warning that a new tax reform that broadens the revenue base will be difficult to push through in a pre-election year.
The fiscal deficit for 2025 was close to 3.5% of GDP; the official projection for 2026 is 3.2%, but Fitch estimates 3.8%, driven by the fuel subsidies announced in March.
The agenda that the IDB puts at the center
The IDB identifies productivity as the main engine of growth for the next stage of regional development, and labor formalization as one of the mechanisms with the greatest potential impact on production, employment and tax revenues, and both variables are the pending issue for the Dominican Republic.
Between July and September 2025, the economy added nearly 120,000 net new workers, with the strongest growth in healthcare, financial intermediation, and electricity. The informal employment rate fell from 55.3% to 54.6% during that period: progress, but from a structurally high level.
Credit to the private sector grew 10.5% in 2025, compared to 17.7% in 2024, a moderation that reflects the impact of double-digit lending rates on private investment.
The opportunity that the Dominican Republic must seize
The IDB notes that digitalization, artificial intelligence, and global demand for critical minerals represent next-generation growth opportunities for Latin America and the Caribbean. For the Caribbean in particular, the Caribbean Development Dynamics 2026 Report, jointly published by the IDB and the OECD in April, identifies tourism, the blue economy, energy, and the creative economy as the sectors with the greatest potential for sustainable investment.
The Dominican Republic has positional advantages on several of these fronts: it is the leading tourist destination in the Caribbean, a recipient of FDI concentrated in energy and tourism, an issuer of green bonds since 2024 with a framework verified by S&P Global, and an EMBI that allows it to access international financing on better terms than most of its regional peers.
Reading the IDB report does not generate complacency, but it does confirm the direction: the basket of tourism, remittances and FDI is exactly the combination that the organization describes as an anchor of resilience for Caribbean economies.
The remaining task, according to the same diagnosis, is to convert that resilience into structural transformation, productivity, formalization, and fiscal sustainability, before the global environment closes the window of opportunity that remains open today.
Sources: IDB data are from the Macroeconomic Report for Latin America and the Caribbean 2026 (Ayres and Juvenal, DOI: 10.18235/0013959) and the Caribbean Development Dynamics Report 2026 (IDB-OECD, April 2026). Data for the Dominican Republic are from the Central Bank of the Dominican Republic (BCRD), the General Directorate of Public Credit, the Ministry of Finance and Economy (Macroeconomic Outlook 2026-2030, March and June 2026), the World Bank, the IMF (World Economic Outlook, April 2026), and Fitch Ratings (April 2026).
