“They are doing quite well. It is very interesting; they received a significant amount of foreign investment,” the World Bank emphasized, referring to the Dominican economy.
The regional economic report for Latin America and the Caribbean entitled “Competition: The missing ingredient for growth?”, presented yesterday Wednesday by the World Bank Group, highlights that Foreign Direct Investment (FDI) in the Dominican Republic shows a remarkable shift towards diversification.
He emphasizes that recent FDI announcements for new projects between 2020-2022 in the country lean towards "hotels, accommodation and renewable energy".
The report indicates that in the Dominican Republic, the main focus of FDI in the last ten years has been the mining sector.
During 2023, the Dominican Republic's Export and Investment Center (ProDominicana) reported that foreign direct investment (FDI) in the country reached US$4.381 billion, representing a year-on-year increase of approximately 9.2%. The agency's data also shows growth in foreign investment, particularly in the tourism sector, between 2022 and 2023, rising from US$1.05 billion to US$1.1821 billion.
The World Bank report estimates that the Dominican Republic will have a growth of approximately 5.1% during 2024 and 5.0% for both 2025 and 2026.
“The Dominican economy is doing quite well. It’s very interesting; they’ve had a lot of foreign investment, although we’re not seeing, for example, as much manufacturing as we’re seeing in Costa Rica. So, it’s not the nearshoring we were expecting, but there’s growth in other service activities that are looking quite good, and all this despite the fact that they clearly had the tragedy of Haiti near their border,” said William Maloney, chief economist for Latin America and the Caribbean.
Maloney said that the Dominican Republic is one of the few countries in Latin America that has seen consistent rates of productivity growth over the past decade.
“That’s something we have to understand, even when we try to see why that doesn’t happen in other countries,” he said.
This is how Latin America will grow
The Dominican Republic is the nation that will grow the most, by 5.1% in 2024; followed by Costa Rica, with 3.9%, Paraguay, with 3.8%; Nicaragua, with 3.7%, and Honduras, with 3.4%, according to the report's specifications.
Brazil's economy, which grew by 2.9% in 2023, is projected to slow to 1.7% in 2024 and is expected to grow by 2.2% in 2025 and 2% in 2026, according to World Bank forecasts. Mexico, meanwhile, is also expected to see its growth decline from 3.2% in 2023 to 2.3% in 2024, 2.1% in 2025, and 2% in 2026.
GDP growth in Colombia will increase from 0.6% in 2023 to 1.3% this year, 3.2% in 2025 and 3.1% in 2026.
At the regional level, the projected growth for 2025 is 2.7% and for 2026 is 2.6%.
The projected GDP growth of 1.6% for 2024 is the lowest in the world. For South Asia, for example, it is expected to be 6%, for East Asia and the Pacific 4.5%, and for Sub-Saharan Africa 3.4%.
According to the World Bank, Latin American countries need to think more long-term, and that implies implementing infrastructure, education, and trade reforms that have been pending for decades and are essential to improve productivity and integration with the world.
“The best, the only way to improve is to grow more,” Maloney said. “You have to take steps to grow, even if those steps might be costly in the short term.”.
