The Central Bank of the Dominican Republic (BCRD) reported this Monday the preliminary results of the Dominican economy during the year 2022, indicating that the real gross domestic product (GDP) registered a growth of 4.9%, after the monthly indicator of economic activity (IMAE) experienced an inter-annual variation of 3.3% in the month of December, in line with the latest projections of this institution.
In nominal terms, GDP is projected to increase by some US$18.476 billion to around US$114 billion, which further improves the debt-to-GDP ratio compared to the previous estimate. This figure allows reaching a GDP per capita of approximately US$10,700 in 2022 higher than the US$8,971.9 verified in 2021, which would place the country as the seventh largest economy in Latin America.
“The results of the Dominican economy during the past year could be achieved despite the challenging global situation. In this tenor, the world economy during 2022 was affected by the significant impact of two successive shocks, the first being the lagged effects of the covid-19 pandemic and the second Russia’s invasion of Ukraine,” the monetary entity explains in this regard.
It also indicates that the aftermath of these events was reflected in aggregate supply constraints and inflationary pressures at the global level, mainly due to disruptions in supply chains, high commodity prices in international markets, including oil, and increased container transportation costs. As a result, most countries adopted a tight monetary stance to control upward price pressures.
“GDP expansion in 2022 is a reflection of the Dominican Republic’s strong macroeconomic fundamentals, as well as its resilience to cope with external shocks. This strength, coupled with the timely and prudent implementation, as demanded by events and circumstances, of both monetary and fiscal economic policy decisions, as well as the climate of social peace, transparency and legal certainty, have been decisive in maintaining economic stability and the flow of investments in the country, local and foreign.”
As proof of this, the BCRD highlights the positive assessment of international organizations and risk rating firms, highlighting the most recent decision of Standard & Poor’s to improve the country’s sovereign credit risk rating from ‘BB-‘ to ‘BB’. In addition, prudent fiscal management with efficient debt management was an important element that was taken into account for the referred improvement in the credit rating, in addition to the expectations of continuity of timely policies in the medium term, as well as the diversification of the Dominican productive apparatus.
Regarding the details of the behavior of economic activities in 2022, the important incidence of the services sector as a whole stands out, which represents approximately 60.0% of the total size of the economy, with an expansion of 6.5% in real terms during the past year.
This was led by hotels, bars and restaurants (24.0%), followed by health (11.3%), other service activities (8.2%), public administration (8.5%), transportation and storage (6.4%), financial services (5.8%) and commerce (5.4%).
On the other hand, agriculture and livestock recorded a growth of 5.0%; while, within the industrial activity, which constitutes around one third of the GDP, there were increases of 5.4% in free trade zone manufacturing, 2.2% in local manufacturing and 0.6% in construction.
The activity with the highest contribution to the GDP result in 2022 was hotels, bars and restaurants, with a year-on-year expansion of 24.0% in real value added. The performance of this sector was mainly driven by the total arrival of 7.2 million tourists by air, “reaching a historical record”, the monetary institution points out. The dynamism was also observed in the unprecedented arrival of 1.3 million cruise passengers through the different ports of the country. According to Ministry of Tourism figures, some 8.5 million visitors arrived last year.
On the other hand, in the performance of the manufacturing industry during the year 2022, the activity of the free trade zones stands out, which registered an inter-annual increase of 5.4%, due to the increase in their exports of goods to supply foreign demand.
The development evidenced by this sector corresponds to the growing number of companies established under this regime that promote the creation of new formal jobs, registering 192,291 employees in the sector as of December 2022, according to information provided by the National Council of Export Processing Zones (CNZFE). It also highlights the flow of direct investments destined to the sector in response to the climate of stability and attractive opportunities offered by the Dominican Republic.
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