DR1 Daily News - Dominican Republic

The economist Ellen Perez Ducy argues that the current sluggishness in the Dominican economy, evidenced by slow growth in 2025 despite favorable external conditions, is primarily due to domestic factors, specifically an overemphasis on social and current expenditures (a policy of “induced demand or social predominance”) rather than strategic capital investments.

The bottom line is that the money is going to make interest payments on foreign borrowing by the government that has grown 40% in two years (2022-2024). Social benefits are up 30%, electricity subsidies are up 27% and the government payroll is up 22%.

The DR is expected to reach only 2% growth for 2025, despite the rebound to 5% of the economy in 2024.

Perez Ducy argues that any one of these increases could, by itself, explain the fiscal deficit. The created deficit prevents the execution of necessary capital investments, leading to the deterioration of essential services like electricity and transportation.

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