The Covid pandemic significantly weakened the economy in the Dominican Republic, particularly due to the impact on the tourism industry, with GDP contracting by 6.7% in 2020. As a consequence, banking and finance transactions slowed down (although disputes relating to labour issues, breaches of contract and force majeure saw an increase, as in other markets affected by the pandemic).
However, the economy is now recovering strongly: GDP is expected to grow by 5.3% in 2022 (according to figures from the Economic Commission for Latin America and the Caribbean) and the Inter-American Development Bank predicted in April 2022 that the Dominican economy would expand at the fastest rate in Latin America and the Caribbean, noting, among other things, the country’s outstanding fiscal consolidation and progress on structural reforms (such as the long-awaited energy reform, which aims to improve the costly and unreliable electric power system and encourage renewable energy generation), as well as the stable political context. Risk-rating agencies also improved the Dominican Republic’s rating, with Fitch Ratings revising its outlook to stable in December 2021 and affirming its BB- rating, due to rising investment (particularly in real estate) and the recovery of the tourism and manufacturing sectors.
In the banking and finance sphere, the domestic securities market is growing with the introduction of new products and participants, including various investment funds (mainly publicly traded trusts), as investors in the country have benefited from the devaluation of Dominican peso. The inflow of investment is mainly channelled towards the booming tourism and real estate industry, financing the development of new hotels, amenities and airports. In September 2021, the Ministry of Tourism approved 136 new tourism projects, totalling $5bn in new investments, and the newly formed Ministry of Housing has also announced a major construction programme, covering low-cost housing, schools, trauma centres and cancer centres.
In the tax space, generous incentives in the entertainment sector have encouraged a dramatic uptick in film productions in the country (with international productions benefiting from a transferable tax credit equal to 25% of all qualified expenses incurred in the Dominican Republic). Indeed, Hollywood actor Vin Diesel is currently developing a film studio in Puerto Plata in the north of the country.
The legal market continues to be dominated by full-service domestic firms Headrick Rizik Alvarez & Fernández and Pellerano & Herrera, although other notable local names include OMG (which stands out for its corporate finance expertise), Pellerano Nadal (continuing its rapid expansion following its contentious split from Pellerano & Herrera), Guzmán Ariza (a key name for real estate and tourism matters, benefiting from its eight offices across the country), Jiménez Peña (which has a particular focus on corporate matters), Medina Garnes Abogados (a go-to firm for litigation and dispute resolution) and DMK Abogados (which is highlighted for its strength in the real estate sector).
The number of international firms in the Dominican market remains relatively low: US-headquartered Squire Patton Boggs has established the strongest presence, with expertise in large cross-border transactions, while ECIJA DVMS, the Dominican arm of Spanish firm ECIJA, which is rapidly expanding across Latin America, and Russin, Vecchi & Heredia Bonetti, the Santo Domingo office of Russin & Vecchi LLP, are also worthy of note.