The Dominican Republic’s economy grew at the slowest pace in three years in 2012 as manufacturing and construction nearly stagnated in the Caribbean’s biggest economy.
The Dominican Republic’s gross domestic product expanded 3.9 percent in the fourth quarter from a year earlier, the central bank reported, led by a 42 percent surge in mining as Toronto-based Barrick Gold Corp’s $4 billion Pueblo Viejo mine neared completion. Manufacturing rose 1 percent and construction 0.7 percent.
To trim a deficit estimated at 8.5 percent of GDP after the previous government boosted spending ahead of a May election, the legislature backed a plan to raise taxes to narrow the gap. Most of the tariffs, which include a value-added tax increase to 18 percent from 16 percent, went into effect this year.
“Over the past two years, economic activity has decelerated and macroeconomic imbalances have increased,” the IMF said in a March 8 statement. “The large fiscal expansion combined with the easing of monetary policy, and limited exchange rate flexibility increased public sector debt, kept the external current account deficit high, and fueled losses in international reserves.”