Dominican Republic

In-depth country-focused analysis on the Dominican Republic's economic, political and operational risk environment, complemented by detailed sector insight

Dominican Republic

Our comprehensive assessment of the Dominican Republic's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect the Dominican Republic, as well as the latest industry developments that could impact the Dominican Republic's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in the Dominican Republic before your competitors.

Country Risk

Dominican Republic Country Risk

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Core Views

  • Bermuda's prolonged recession continued into 2014, and we now expect this economic contraction to continue over the coming years. We expect that an international crackdown on offshore financial centres such as Bermuda will lead to a decline in financial services activity, one of the key contributors to the island's economy. Although tourism will rise, it will not be enough to offset tempered insurance activities.

  • Bermuda's current account will remain in surplus over the course of our 10-year forecast period, though the surplus will decrease to 10.4% of GDP by 2024, down from 17.4% in 2014, in line with our projections for slowing exports of tourism services and secular decline in off-shore finance.

  • Despite poor growth prospects, Bermuda will remain politically stable over the next 10 years owing to the...

Dominican Republic Country Risk

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Core Views:

  • A gradually improving tourism sector and strong private consumption growth will help drive robust real GDP growth rates in the Dominican Republic in the coming years.

  • Puerto Rico will emerge from recession in 2016, but weak revenue generation means that additional debt defaults are on the cards.

  • Reforms in Cuba are headed in a positive direction, and investor interest is on the rise, however the country's transition towards a more market-oriented economy will be slow, as illustrated by the incremental steps towards abolishing the dual exchange rate regime.

Major Forecast Changes:

  • Buoyant government expenditure and solid private consumption, even despite slumping precious metals production, will support real GDP growth to a greater...

Dominican Republic Industry Coverage (6)

Food & Drink

Dominican Republic Food & Drink

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BMI View: We are turning more positive regarding economic growth in the Caribbean, as structural and financial reforms take hold in the region, tourism numbers pick up and growth becomes stronger in key markets like the US. The Dominican Republic and Jamaica will outperform other regional markets over the next five years. Nonetheless, small consumer bases will limit long-term investment opportunities.

Dominican Republic The Regional Outperformer
Select Countries - Food Sales Growth (% chg y-o-y, USD terms)
...

Insurance

Dominican Republic Insurance

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BMI View: Currency weakness will continue to plague the dollar terms returns of many of the Caribbean insurance sectors covered in this report. Offshore business in Barbados and the Cayman Islands, amounting to around USD45bn annually, dwarf the domestic sectors in the region. Health insurance, an underdeveloped line of business, is likely to outperform in many of these markets over the five-year forecast period.

The insurance markets of the Caribbean, particularly offshore business in Barbados and the Cayman Islands, but also domestic sectors, are heavily tied to the economic fortunes of the United States and, to a lesser extent, Canada. The ongoing recovery in both major North American markets should boost the fortunes of the region's insurers, driving demand for offshore reinsurance and captives, as well as boosting domestic economies. On the whole, regulation...

Dominican Republic Insurance

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BMI View : The Dominican Republic's insurance market will continue to be one of the least developed in the Caribbean, with per capita premiums of just USD70.1 in the non-life sector and a paltry USD8.8 in the life market. Currency weakness will also continue to plague the dollar terms returns for many operators. Health insurance, an underdeveloped line of business, is likely to outperform our forecasts given the recent outbreak of the Zika virus.

Headline Insurance Forecasts (Dominican Republic 2013-2020)
2013 2014 2015e ...

Mining

Dominican Republic Mining

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BMI View: Mining sectors across Central America and the Caribbean will see varying growth prospects in 2020. The region has significant untapped mineral potential, yet a range of business environments and operational challenges will lead to uneven growth.

Select Countries - Mining Industry Value
2014e 2015e 2016f...

Telecommunications

Dominican Republic Telecommunications

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BMI View: Haiti and Cuba represent the largest organic growth opportunities in the region, as both are significantly underdeveloped compared to their peers. However, the risks associated with business in these two markets mean that a mobile subscription boom is far from likely.

Key Data

  • Cayman Islands has the highest mobile penetration, at 153.4% in 2015, while Cuba's penetration rate remains below the regional average, at 28.9%.

  • The number of mobile lines in Cuba reached the 3mn mark in Q215, up from 2.4mn lines at the start of 2015, according to data published by state-owned telecoms operator Empresa de Telecomunicaciones de Cuba (ETECSA). The increase was mainly owing to a promotion, called Si activas ganas 30, wherein new users obtained USD30 in credit for activating a...

Tourism

Dominican Republic Tourism

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BMI View: Arrivals growth in the Caribbean will pick up to 2.3% in 2016, reflecting improved visitor numbers from Europe and North America. The Dominican Republic, St Eustatius and Cuba are expecting the highest rate of arrivals growth, but all tourism markets will experience growth in 2016. However, the outbreak of the Zika virus from late 2015 could pose downside risks to 2016 arrivals forecasts.

We currently expect arrivals to the Caribbean to grow by 2.3% in 2016, to 33.5mn, reflecting an improvement from growth of only 0.6% in 2015. We expect the Dominican Republic, Cuba, St Eustatius and St Lucia to post the highest level of arrivals growth in 2016, at around 6%, but we note the positive sign that all Caribbean countries except St Vincent will experience arrivals growth in 2016, for the first time since the downturn....

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