Dominican Republic Economy Could Grow More Than 4.2% in 2026

The Dominican Republic’s economic growth could surpass 4.2% in 2026, marking a stronger performance than the 3% to 3.5% expansion initially expected for the year. Economist Juan Manuel Sontag said some current projections now place growth between 4.3% and 4.5%, reflecting improved expectations for economic activity in the final months of the year.

Sontag made the assessment during an interview on the radio program “Qué tenemos radio,” where he also pointed to the government’s proposed 2027 budget and its higher allocation for capital spending as a factor that could support future growth.

Public Investment Takes a Larger Role

The 2027 budget proposal places greater emphasis on investment spending. Official budget figures show capital expenditure rising by 19.7% from the initial 2026 budget, compared with a 12.3% increase in current spending. The proposal is built around a real GDP growth assumption of 4.75% for 2027.

For Sontag, the distinction between the two types of spending is important for understanding their potential economic effects. Current spending covers the government’s day-to-day operations, including salaries and administrative expenses, while capital spending is directed toward infrastructure and other long-term investments.

Roads, ports and hospitals can create economic effects beyond the initial public expenditure. A new road, for example, can improve transportation while encouraging the development of businesses, housing and other services along the areas it connects.

The government’s budget proposal reflects that approach, with capital spending intended to support infrastructure, transportation, energy, water and sanitation, health, education and other productive areas of the economy.

Construction Shows Signs of Recovery

Construction was another area highlighted by Sontag as a potential source of stronger economic activity. He pointed to an improvement in the approval of permits for new projects, saying the number of permits had increased by roughly 30% compared with the previous year and that 203 permits were recorded in a single month.

Official statistics also indicate stronger construction activity during the first quarter of 2026. The National Statistics Office reported 442 private-sector construction licenses between January and March, an increase of 27.7% from a year earlier, while the area covered by licensed construction projects rose 106.2%.

The recovery in permits can have broader effects on the economy because new projects require financing, construction materials, labor and other services. For businesses and investors, an increase in approved projects can therefore signal greater activity across several connected sectors.

Inflation and Credit Risks Remain on the Radar

Despite the more positive growth outlook, inflation remains a concern for households, Sontag said, although he described price pressures as being within a manageable range. He also pointed to currency stability as a factor that has helped improve perceptions of the country’s economic performance.

Commercial and personal loan delinquency is another indicator he said deserves close monitoring. According to his assessment, delinquency is approaching 2% of the loan portfolio, compared with an estimated average of about 1.5%.

Sontag linked the increase partly to borrowing undertaken by households and businesses during the period of economic difficulties that extended from the previous year into early 2026. A sustained improvement in economic activity could help ease some of those pressures, although the evolution of credit quality remains an important consideration for the financial sector.

Stronger Outlook for the End of 2026

The latest official data provide additional context for the more optimistic outlook. The government reported that GDP growth had reached 4.5% on a cumulative basis through July, while public investment was also expanding as authorities sought to support economic activity.

Against that backdrop, Sontag expects the final months of the year to benefit from stronger construction, increased circulation of resources and improved investment prospects. He summed up his expectations for the end-of-year period by saying that “Christmas promises” to be strong.

For companies and investors, the combination of faster growth, rising public investment and renewed construction activity could make the final quarter of 2026 an important period for assessing whether the Dominican economy can sustain the stronger pace reflected in current forecasts.