Dominica’s Economy Continued to Expand as Growth Accelerated to 4.5% in 2025-IMF
Dominica’s economy continued to expand with positive performance across several key sectors in 2025, according to the International Monetary Fund (IMF).
In its Staff Concluding Statement following consultation held in Dominica from March 16-26, the IMF reports that Real GDP growth accelerated to 4.5 percent, up from 3.5 percent in 2024, driven largely by a surge in tourism and sustained investment in major development projects. Visitor arrivals have rebounded, now standing 36 percent above pre-pandemic levels. Inflation has also eased, averaging 2.3 percent.
The IMF said the financial system remains stable and liquid, with banks maintaining adequate capital levels and modest growth in credit to the private sector. The credit union sector continues to expand its role in financing, now accounting for 53 percent of private sector credit.
According to the IMF, major national investments, particularly in resilient infrastructure, including roads and geothermal energy, are helping to strengthen the country’s long-term development prospects. These projects are expected to support continued economic activity, with growth projected to average around 3 percent in 2026–2027.
Looking ahead, Dominica is expected to benefit from improved connectivity, expanded infrastructure and a gradual reduction in fuel import costs as the country transitions to geothermal energy.
However, challenges remain. The IMF noted that the current account deficit remains elevated due to high levels of construction-related imports and public debt. Additionally, global uncertainties, including geopolitical tensions and natural disaster risks, as well as uncertainty surrounding CBI inflows, continue to pose potential threats to the economic outlook.
To address these risks, further fiscal strengthening and structural reforms have been recommended. The IMF says additional fiscal consolidation may be required to reduce debt vulnerabilities and build resilience to external shocks, including natural disasters. This could involve phased adjustments over the next two years to meet fiscal targets and strengthen disaster preparedness frameworks.
The report also recommends a multipronged reform strategy to improve revenue collection and spending efficiency. Suggested measures include reducing reliance on CBI revenues, enhancing tax compliance and improving the targeting of public spending particularly within social programmes and the National Employment Programme.
In the financial sector, the report points to the need for strengthened regulatory oversight, including improved management of non-performing loans and enhanced supervision of credit unions, alongside efforts to improve access to credit for businesses.
Additionally, it outlines a broader structural reform agenda focused on improving trade and transport connectivity, strengthening digital infrastructure, modernizing education and skills training and enhancing the overall business environment.
The report also highlights the importance of institutional strengthening; including improved public financial management, better data systems and enhanced fiscal oversight mechanisms to support effective policymaking.
