The future looks clearer, but risks persist
The Dominican Republic began 2021 feeling the onslaught of the second wave of COVID-19, internally evidenced by the increase in the number of infections and deaths, and externally by greater restrictions on international mobility - the most extreme expression of which is the ban on flights from Canada to the Caribbean until April.
Although the DR has adopted measures to facilitate the arrival of tourists, such as the provision of free rapid tests to visitors and the contracting of vaccines that should start to arrive in February, the appearance of new variants of the COVID-19 virus and the difficulties in starting the vaccination campaign in many countries that send tourists to the DR make for a still-uncertain outlook for the coming months. This means that the expected recovery of tourist activity would be further delayed.
As we predicted, the 2020 economic contraction was more acute than the government had originally sustained until the end of November 2020. The figures for the closing of 2020 on economic growth have just been released by the Central Bank, indicating a contraction of -6.7% of GDP in 2020 - the worst shrinkage of the past 50 years. In terms of inflation in December 2020, prices were 5.55% higher than those of December 2019, exceeding the upper limit established in the inflation target. In 2020 it was only possible to keep core inflation within the target range of 4 ± 1%, and inflationary pressures have been maintained since the last months of 2020.
In politics, President Luis Abinader continues to rule with very little pressure from opposition forces. The PLD is concentrating on its internal organization process, with Congress electing a new party leadership, while the People's Force questions its consideration by the Central Electoral Board as a minority party - thus its low share of access to public funds for financing political parties.
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