3 lessons on sustainable growth from the Dominican Republic

The Dominican Republic’s economy rebounded from the COVID-19 pandemic disruption faster than many others - developing and developed alike. As the country re-emerges as a Latin American growth leader, it is applying the lessons of the pandemic to accelerate both sustainable and inclusive growth in the region.

While the Dominican Republic is known for its dynamic tourism industry, its resilience and diversified economy are equally noteworthy. Its average GDP growth exceeded 5% annually from the turn of the century through recent pre-pandemic times, reducing poverty by more than half. When COVID-19 hit in 2020, crushing global trade and tourism activities that powered the country’s performance until then, the economy contracted by nearly 7% (similar to its Latin American peers).

Growth rebounded following the Dominican Republic’s response to the pandemic, triggering a rising trend. In 2021, the Dominican Republic recorded one of the highest growth rates in Latin America, expanding its economy by more than 12%, and is expected to register a 5% GDP-growth for 2022, despite ongoing global economic turmoil.

Inflation has remained below the Latin American median and Standard & Poor’s recently improved the country’s sovereign debt credit rating from BB- to BB, based on the strength of its integrated COVID response and corresponding economic recovery. A highly relevant outcome for the nation’s financing rate and critical input factor for the growth of the economy for the years to come.

This recovery has been led by President Luis Abinader and his administration, who took office in August 2020 – when vaccinations were still undergoing clinical trials, the country had neither signed nor negotiated vaccine contracts, and the future was shrouded in uncertainty.

Through innovative means and forms of collaboration, the Dominican Republic – as small island developing nation – courageously took its fate in its own hands: by summer 2021, it achieved one of the world’s highest daily vaccination rates per 100 people - even with a significant lead over major economic blocks. This spearheaded the road towards reopening our economy. Tourism, accounting for 31% of foreign direct investment (FDI) and 22% of foreign exchange inflows, swiftly regained its pre-crisis strength, and arrivals continue to exceed pre-pandemic levels since the fall of 2021 (a feat the IMF described as a “notable recovery of tourism”).

Despite this remarkable crisis management and economic recovery, there are other legacy issues still to be addressed. As a small island developing state with a population of approximately 10 million, we continue to face significant challenges: climate change vulnerability, more required FDI for high-growth industries, income and wealth inequality; and ongoing humanitarian challenges sparked by continuous violence and political unrest in neighboring Haiti.

The pandemic experience, nonetheless, has given us a blueprint to respond swiftly to different complex challenges. We hope other leaders might take insight from what we have learned:

1. Agile, data-driven decision making. In order to deploy accurate responses, we needed to rapidly construct data. This required multiple entities engaging for the first time together and every minute could mean saving a life. Soon after taking office, we created a “Nerve Center” - a primary decision-making body to respond to COVID-19 challenges. This required creativity and moving away from traditional governmental action to achieve extraordinary results in a short period of time. Data was gathered from different public entities, including population and Ministry of Public Health records which had been mostly kept manually. Low-cost mechanisms, including mobile devices, were set up to collect new data on vaccination progress. Paper records were digitalized nearly overnight, a seemingly impossible task even in normal circumstances. The capabilities developed during the pandemic will also be at the center as we face new challenges, particularly to unlock new economic, social, and environmental opportunities.

2. Integrated, innovative collaboration models with the private sector, academia and civil society. An effective response required harnessing the best ideas, capabilities and solutions from all sectors and stakeholders. The Nerve Center implemented new ways to tackle pressing national issues in a non-siloed, ongoing manner and used these collaborations to respond to challenging questions: How to get vaccines entering late into a global race that had started even before taking office? How to acquire syringes with limited immediate world stock for developing nations? How to run a nationwide vaccination campaign targeting millions (#vacunateRD)? How to access communities in both rural and urban areas? How to coordinate at-scale to mount a nationwide operation involving so many ministries, agencies, finance, and public institutions? Inviting business leaders, public entities and other stakeholders to the table for hands-on collaboration enabled the Dominican Republic to tap new expertise and resources that proved critical to our pandemic response: leaving no one willing to get a vaccine behind. Our administration is now looking to make cross-sector collaborations the “new normal” to address future challenges at national level.

3. Focusing on the well-being and livelihoods of the Dominican people. COVID-19 threatened people’s economic and financial well-being and their physical and mental health. The Dominican Republic sought to protect these through a balanced public-health targeted pandemic response. Because of its prominent role in our economy, the Dominican Republic supported tourism, while minimizing health risks through vaccinations, mask mandates, social distancing, and nightly curfews. The economy was gradually reopened by region based on daily reviews of vaccination progress, balancing the acceleration of economic recovery and protecting lives. The benefits of this approach are already being reaped. In 2022, FDI reached 32% higher than pre-COVID year 2019. Exports increased by 26%, influenced by notable performance of free trade zones. Overall tourism-related activities continue to rebound, with ecotourism poised to drive even more expansion with sustainability at its core.

Utilizing the three-step blueprint outlined above, the country aims also to boost FDI, invest in its workforce through reskilling and upskilling that place more people in family-sustaining jobs and unlock diversified areas of growth and development. Building on these learnings, we are working towards doubling the size of the economy by 2030, in an inclusive and sustainable manner.