Santo Domingo. –Inflation is one of the factors with the greatest impact on production processes because it causes a general increase in the prices of goods and services in an economy, as it increases production costs, decreases household consumption capacity, and affects investment decisions.
This was stated by Eliseo Cristopher, president of the Dominican Confederation of Micro, Small and Medium Construction Enterprises (COPYMECON), who warned that in the construction sector, inflation has an even greater impact, because it directly influences the price of materials, labor, equipment, and the cost of project financing.
Likewise, he explained that during the 2013-2019 period, the country maintained an environment of relative price stability, with inflation moving below the target range established by the Central Bank (2.64%, with the target range being 4%).
This scenario allowed construction companies to operate with greater predictability, facilitating budget planning and reducing the risk of unexpected project cost increases, which resulted in the construction sector experiencing robust growth of 10.52% during that period.
“However, starting in 2020, the landscape changed drastically due to the outbreak of the COVID-19 pandemic, which caused disruptions in global supply chains, shortages of raw materials, and a significant increase in international transport costs, explained Cristopher.
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Which resulted in inflation rising to 5.55% in 2020 and reaching 8.50% in 2021, the highest level in the entire series. In 2022, although a moderation process began, inflation remained high (7.83%) due to the conflict between Russia and Ukraine, which drove up international prices for energy, fuels, and various inputs used by the construction industry.
The president of COPYMECON also pointed out that in the years 2023 and 2024, inflation moderated to 3.57% and 3.35% respectively, but the price index from previous years kept the production cost of the construction sector high. “For 2025, inflation stood at 4.95%,” he highlighted.
In 2020, the sector suffered the most severe impact of the entire period as a consequence of the COVID-19 pandemic. Nominal GDP decreased by 4.14%, while real growth fell to -9.67%.
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He highlighted that during 2021, construction showed an extraordinary recovery. Nominal GDP grew by 41.31% and real growth reached 22.84%, the highest recorded in the entire series. However, this recovery did not benefit all companies uniformly.
“While larger construction companies managed to quickly reactivate their projects, many MSMEs continued to face credit restrictions, increases in production costs, and difficulties in accessing new contracts,” he indicated.
He said that after two anomalous years (2020 and 2021), a deceleration process began that deepened in the following years. In 2022, construction grew by only 1.73%, in 2023 by 0.83%, in 2024 it recovered slightly, reaching 2.11%, but in 2025 it plummeted, recording a contraction of -1.80%.
“The high inflation rate has been a determining factor in the decline of the construction sector in recent years, since “while in the 2013-2019 period we had an inflation of just 2.64%, construction experienced vigorous growth of 10.52%, but between 2022-2025 with an average inflation of 5.62%, construction only grew 0.72%.”, he emphasized.
He also considered that, to achieve an effective recovery of the sector, measures must be applied to prevent accelerated inflation from continuing to raise materials and production costs, expand access to productive credit, streamline permitting processes, establish price readjustment mechanisms in construction contracts, and guarantee greater participation of MSMEs in public and private investment.
Otherwise, growth will continue to be concentrated in a small number of companies, deepening competitiveness gaps, limiting job creation, and reducing the contribution that MSMEs can make to the country’s economic development, in order to guarantee a participatory and sustainable balance.
