Dominica’s economy maintained its recovery momentum in 2022. Growth was driven primarily by the robust return of tourist arrivals and increased output in the agricultural sector, albeit hampered by higher inflation. Despite efforts at expenditure containment, the fiscal performance weakened during the period on account of the convergence of lower Citizenship-by-Investment (CBI) receipts and higher interest payments.

The continued resurgence in economic activity contributed to a reduction in the public debt-to gross domestic product (GDP) ratio. Despite declining profitability, the financial sector remained relatively stable. Risks, however, emanate from the under capitalisation of two of the largest credit unions, elevated non-performing loans (NPLs), higher non-interest expenditure, and the exit of CIBC First Caribbean International Bank from the jurisdiction in 2022.

The 2023 outlook is favourable. The forecast is anchored on the continued normalisation of tourist arrivals to pre-pandemic levels, and the planned implementation of large public investment projects. Fiscal consolidation measures announced in the 2023-24 Fiscal Year Budget Estimates will improve the fiscal and debt outcomes, albeit at a slow pace. Risks are, however, tilted to the downside.