The Dominican Republic’s economic indicators mean that, compared to other countries in the region, it is well on its way to a significant economic recovery that will greatly benefit the national banking sector and continue to attract investment.
“It is a country that has already been a leader in growth in the region for two decades, of which its GDP (Gross Domestic Product) is expected to grow by 5% in 2021. I would say that in a world where American (interest) rates are rising due to the need for economic acceleration, this has many positives,” said Eduardo Suarez, vice president of Economics for Latin America at Scotiabank.
He stated that the country has the resilience to tolerate an increase in U.S. interest rates, something that translates into a tranquility factor and that is more worrisome “in some European economies with structural growth problems”, in which an upturn in the U.S. economy, when they are not prepared, translates into a loss of capital.
During the virtual conference “Banking Perspective in the context of the Latin American economic recovery”, organized by the multinational financial institution, the executive highlighted that the country’s capacity to attract business and, with it, to perceive an increase in income, is one of the great strengths that the country has to stimulate its economic growth.
He also highlighted the inflationary index of 1.6% sustained by the country as of February 2021, an outlook within the target range of 4 to 1%, as well as a moderate depreciation of the Dominican peso by 4.7%.
In his presentation Suarez mentioned, among other indicators, the trend towards the recovery of industries, especially tourism, which has already resumed operations with 30% of its capacity, as well as the growth of remittances by 20% year-on-year, boosted by a Dominican diaspora rooted in the United States that has managed to access formality and enjoy the economic stimulus checks implemented by the administration of President Joe Biden as a support for citizens to mitigate the crisis.
“I think it is a country that is quite well positioned for the shocks that we will see in the coming years of a world that will no longer be anchored by the pandemic, and where the question will be about who is ready for the reacceleration of the world at different speeds,” Suarez said.
According to a study conducted by the IMF, which analyzes the situation of banking in Latin America during the precovid levels, the Dominican Republic showed solidity in comparison with other countries in the region, especially in aspects such as regulatory capital (17.7), assets at risk (14.8) and liquid assets at risk (398.0), indicators that detail the solvency and liquidity levels of an economy.
