Dominican economy maintains high dynamism

Dominican economy maintains a high dynamism in the context of an adverse environment.

In the Informe Situación Macroeconómica: Seguimiento de Coyuntura August 2022, the Ministry of Economy, Planning and Development, highlights that growth has been driven by a faster reactivation than expected in the industrial and services sectors, particularly in tourism (34.3%).

Santo Domingo, Dominican Republic (September 2022). The Dominican economy maintains a high dynamism, registering a year-on-year expansion of 4.7 % last July, for a cumulative growth between January-July 2022 of 5.5 %.

“This performance continues to reflect the resilience and capacity of the country to face the uncertainty of the international environment, so that at the close of the year, real product growth continues to be projected at around 5.0 %, in line with potential,” indicates the Ministry of Economy Planning and Development in the Report Situación Macroeconómica: Seguimiento de Coyuntura agosto de 2022 (Macroeconomic Situation: Monitoring of the Situation August 2022).

According to the report, this favorable outlook reflects the capacity and resilience of the Dominican economy in the context of an adverse environment, where global growth prospects have slowed.

It states that sales registered a monthly increase of 0.57% in July, totaling at

RD$580 billion. The publication of the Macroeconomic Analysis Directorate of the Vice-Ministry of Economic and Social Analysis, specifies that this variation is explained by an increase in the sales of the services sector (2.9 %).

It highlights that the growth of prices slowed down last August, registering an inter-annual inflation of 8.80 % and monthly inflation of 0.21 %, the lowest in the last 27 months, placing the accumulated inflation at 5.7 %.

On the other hand, it establishes that core inflation was at 7.12 % interannual, similar to that of June and July.

“It is observed that the groups with the highest incidence in the growth of prices in August were: miscellaneous goods and services (0.09 %), Education (0.07 %), Restaurants and hotels (0.04 %), Furniture (0.03 %) and Housing (0.02%),” it details.

The report points out that the pressures on the cost of the main energy raw materials in the international market are beginning to ease. It details that fuel and food prices are beginning to reflect a downward trend, despite the fact that the international situation continues to be influenced by high inflation levels and the effects of the geopolitical conflict.

According to this information, it specifies that the Dominican Government has assumed the commitment to counteract the upward dynamics of international prices through various subsidies that have sought to protect the purchasing power of Dominican households, resulting in an execution of RD$44.2 billion as of September 9, 2022.

It indicates that under this scenario, average inflation is expected to stand at 9.0% and year-end (December) at 8.0% in 2022.

It highlights that the national currency continued to appreciate against the US dollar, registering an inter-annual decrease in the exchange rate of 5.8 % in August, with a slower rate of appreciation with respect to the first quarter of 2022.

The recovery

It highlights that growth has been driven by a faster than expected reactivation in the industrial and services sectors, particularly in tourism activity (34.3 %).

It points out that the latter was driven by the arrival of close to 4.9 million non-resident passengers during the first eight months of the year, equivalent to a year-on-year growth of 30.9 %. “As a result of this greater flow of foreign exchange, an appreciating trend of the exchange rate is visualized with a projected average rate of RD$55.25 per dollar by the end of the year and an appreciation rate of 3.53 % in relation to the average of 2021,” it adds.

Likewise, the document points out that the financial result of the central government stood at -0.9% of the GDP in the accumulated January-August 2022, in contrast with the surplus registered in the same period of the previous year (0.2% of the GDP).

It maintains that this behavior is explained by the Government’s actions to counteract the upward dynamics of international prices through various subsidies, which have sought to protect the purchasing power of Dominican households.

Government in action

The Informe Situación Macroeconómica: Seguimiento de Coyuntura August 2022 highlights that the measures implemented by the Government have had as a priority to support the different productive sectors, to facilitate investment and the activity of households and companies, as well as to contribute to social and environmental development.

The publication details 53 measures taken in August in the following sectors: agriculture and livestock, water and sanitation, construction, energy and mining, social assistance, sports, government, environment and climate change, quality education, higher education, science and technology, labor market, health, titling, housing, tourism, transportation, citizen security, and diaspora.

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