Yet during the year 2013 there were some worries. Growth decelerated in the first half of 2013 to 1.6% (y-o-y), in the context of “fiscal contraction and weak confidence,” according to the International Monetary Fund. The Republic’s fiscal deficit had climbed to approximately 7.17% in 2012, up from 3.35% in 2011, prompting officials to pass a series of tax reforms, including a value-added tax increase to 18%, from 16%.
The quite strongly positive outcome for the full year 2013 was, therefore, something of a surprise. The Dominican Republic's economic numbers are above overall regional growth average for Latin American and Caribbean economies, which the Commission for Latin America and the Caribbean (ECLAC) has estimated at 2.6% in 2013.
The Republic's growth was primarily driven by tourism, which grew 6.3%, to more than 5 billion dollars in annual revenues - a first.
Since 2005, it the Dominican Republic been attracting the most tourists in the Caribbean, based on World Bank statistics. Although growth has slowed in more recent years, the country remains the top Caribbean destination, drawing in tourists by the millions.
Rising house prices in the Dominican Republic property market are expected as more and more foreign buyers head to the country to capitalize on the growing tourism sector.
Prices have increased 7.5% (y-o-y) in 2012, according to the latest Global Property Guide research. Cumulatively, prices have climbed 11% (y-o-y) since 2008.
Analysis of Dominican Republic Residential Property Market »
The same trend is evident for house prices in Puerto Plata, though the price appreciation is not that high. Last year, the average house price in Puerto Plata was US$1,578 per sq. m. This has slightly increased to US$1,689 per sq. m. now.
Capital Gains: Capital gains realized by nonresidents tax is levied at a flat rate of 27%.
Inheritance: Inheritance taxes are levied at a flat rate of 3% for properties.
Residents: Residents are taxed on their worldwide income and some kinds of investment income derived from abroad at progressive rates, from 0% to 25%.
Buyers must be vigilant. There is much history of fraud by real estate agents in the country, and little protection is offered to the buyer. Any knowledge of Spanish must be shown off. Real estate agents tend to offer higher prices to foreigners, especially when their services are employed in English.
Rent Control: Rents are strictly controlled in the Dominican Republic. The maximum monthly rent is fixed at 1% of the rental property’s value. The tenant can request the Rent Control Authority to reduce the rent if it exceeds the maximum rate.
Tenant Eviction: It is not easy to evict a tenant even when the owner decides to use the property for personal reasons. A hearing must be conducted and the tenant is usually given months, or even years, to look for an alternative dwelling that he can afford.
These figures are high for the region. The quite strongly positive outcome for the full year 2013 was above overall regional growth average for Latin American and Caribbean economies, which the Commission for Latin America and the Caribbean (ECLAC) has estimated at 2.6% in 2013.
Tourism is a major contributor to the country’s economic development. It is relatively cheaper than other Caribbean islands, which is one reason why it is one of the most popular destinations. But the Dominican Republic also has wonderful beaches and good moor=ing for yachts.
Before winning the Dominican Republic’s presidential election in May 2012, Medina promised to “continue with what works, fix what is wrong and do what has never been done before”.
He committed to allocating at least 4% of GDP for pre-university education and has raised the allocation for higher education. He also pushed for the improvement and repair of roads. In addition, the Ministry is engaged in constructing nearly 1,500 kilometers of highways and roads throughout the country.
The construction of housing is another initiative taken since the first day of the current administration. It has worked closely with the private sector to enable access to credit for the massive construction of housing for the middle and lower classes.
Medina is optimistic that 2014 will be a year of employment and productivity. "Macroeconomic indicators show an optimistic 2013 balance and a really hopeful future perspective," according to Medina.