Dominican Republic Climbs to 5th Spot in 2025 Prosperity Index

• October 11, 2025
• C Badenhorst
• 1 Comments

In the latest release of the regional Prosperity Index, the Dominican Republic vaulted into the top five economies of Latin America and the Caribbean, landing at 37.4 points out of 100 and ranking fifth among 23 nations. The report, compiled in June 2025 using data from the World Bank and the United Nations Development Programme (UNDP), placed the Caribbean nation just behind Chile, Uruguay, Panama and Argentina – a notable leap over larger economies such as Brazil and Colombia.

Only a handful of countries in the region have managed to keep their growth engines humming amid a global slowdown, and the Dominican Republic’s surge is anchored primarily on a tourism boom and strong remittance flows. From January through April 2025 the island welcomed 4.3 million visitors, with April alone breaking records by topping one million arrivals – the busiest month the sector has ever seen.

During the International Monetary Fund’s (IMF) Article IV mission in September 2025, Héctor Valdez Albizu, Governor of the Banco Central de la República Dominicana, and Finance Minister Magín Díaz fielded a series of questions about fiscal policy, monetary liquidity and the country’s resilience to external shocks. The IMF staff concluded that real GDP growth should hover around 3 % for 2025, buoyed by the government’s reformulated budget and targeted fiscal stimulus.

Official statistics show that the Dominican economy produced a purchasing‑power‑parity (PPP) GDP of $293.365 billion in 2024, expanding at a 5.4 % real rate with per‑capita PPP output of $27,120. Inflation ran at 4.2 % and unemployment stood at 6.0 % in the same year, while 23.9 % of the population lived below the poverty line as of 2021. Tourism now accounts for more than 15 % of GDP and has delivered roughly 40 % of the nation’s recent growth, according to government data.

Understanding the Prosperity Index

The Prosperity Index merges 12 pillars – ranging from economic quality to personal freedom – to generate a composite score. In the 2025 edition, the Dominican Republic vaulted six places from its 2011 position, landing 68th worldwide and 6th in the Caribbean sub‑ranking. Transparency International’s Corruption Perceptions Index also reflected improvement, moving the country to 104th place in 2024, up from 137th in 2020.

Tourism’s Record‑Setting Surge

Tourist arrivals hit 4.3 million in the first four months of 2025, eclipsing the pre‑pandemic 2022 total of 3.2 million. The surge was driven by aggressive marketing of the island’s beach resorts, an expanded cruise‑ship schedule, and the reopening of the Las Vegas‑style “Punta Cana Convention Center” which attracted several mega‑events.

• April 2025: >1 million arrivals – the highest monthly total ever recorded.
• Tourism contributes >15 % of GDP and ~40 % of annual growth.
• Remittances add another 8 % of GDP, reinforcing household consumption.
• Hotel occupancy averaged 78 % in Q1 2025, up from 62 % in Q1 2024.

Industry officials credit the rise to a streamlined visa‑on‑arrival policy and a $250 million public‑private partnership that upgraded airport runways and highway links to key coastal zones.

IMF Assessment and Fiscal Outlook

In its September 15, 2025 staff concluding statement, the IMF highlighted three pillars of the Dominican fiscal plan: (1) a liquidity injection by the central bank in June 2025, (2) a re‑budgeted fiscal stimulus totalling roughly 2.1 % of GDP, and (3) a commitment to a fiscal rule that caps the primary deficit at 1 % of output after 2027.

"The government has put in place credible policy measures that should support a modest pick‑up in activity during the second half of the year," said IMF senior economist Laura Martínez. Inflation is expected to stay near the 4 % target, while the current‑account deficit should linger around 2.5 % of GDP, financed primarily by foreign direct investment (FDI).

The central‑government deficit is projected to rise to about 3.5 % of GDP in 2025, reflecting the boost in capital spending. However, the IMF expects gradual consolidation once the stimulus phase ends.

Challenges and Risks Ahead

Despite the upbeat outlook, the IMF warns that the country’s external environment remains precarious. Continued high global interest rates, tighter financial conditions, and the lingering risk of natural disasters – especially hurricanes – could derail growth.

Reform delays in the electricity sector, which still runs a sizeable fiscal deficit, also pose a thorny obstacle. Analysts say that while the Dominican Republic is well‑positioned to weather shocks, the upside hinges on successful implementation of energy reforms and continued diversification of export markets.

Road to High‑Income Status by 2030

Official targets set by the Ministry of Economy envision the Dominican Republic crossing the high‑income threshold by the end of the decade. To achieve a 79 % growth trajectory for the 2020‑2030 period, policymakers plan to channel FDI into high‑value manufacturing, expand the digital economy, and sustain tourism’s momentum.

“If we keep the fiscal discipline, finish the power‑sector reforms, and keep attracting tourists, the high‑income goal is realistic,” noted regional analyst Jorge Castillo of Global Citizens Solutions.