After 14 months since the productive sectors saw their activities limited and paralyzed as a result of the covid-19 pandemic, the Dominican economy starts a reactivation process whose dynamics maintains a positive trend in the figures of the main macroeconomic indicators.
According to the Central Bank’s Monthly Index of Economic Activity (IMAE), which analyzes the behavior of the aggregate value of the economic sectors included in the calculation of the gross domestic product (GDP), the Dominican economy presented an accumulated variation of 13.4%, indicating a real increase of 4.6 percentage points in relation to the same period of 2020, when the health emergency took this indicator into negative territory, with a variation of -8.8%.
This result shows that the partial reopening is contributing to an economic rebound that translates into recovery, by approaching half a percentage point to the cumulative growth of 5.1% obtained in the months January-May 2019 and two percentage points to the 6.6% variation of the first five months of 2018, years prior to the pandemic.
At a press conference, Central Bank Governor Héctor Valdez Albizu explained that the monetary and fiscal stimuli designed to mitigate the adverse effect of the pandemic have favorably impacted economic activity, which is projected to expand between 8% and 9% conservatively and with an upward bias, according to the institution’s forecasting system.
With a growth of 54%, construction was the productive sector with the highest contribution to the accumulated IMAE, considered by the Central Bank as “an important driver of the expansion of aggregate demand, determining the turning points in the economic cycle”. The increase was due to the sales volume of cement, metallic structures and other materials used for the construction of public and private works.
Manufacturing in free trade zones was the second most important activity, with 30.1%, in line with the growth of exports, which during the month of May alone generated amounts valued at US$603.9 million, a behavior that has been possible due to the total reactivation of the companies that make up this industry, as well as the attraction of new investments.
This was followed by mining, with 16.2%, explained by the increase in production volumes of sand, gravel and gravel, ferronickel, gypsum and gold.
Local manufacturing (15.9%), transportation and storage (14.6%), commerce (10.1%), communications (3.5%), real estate and rental activities (2.1%), agriculture and livestock (1.6%), energy and water (1.4%) and other service activities (1.3%) were other productive segments that contributed to the recovery of the IMAE after its decrease from January to May 2020.
Stimulus and liquidity plans
The Central Bank has been implementing, since March 2020, a monetary stimulus plan to face the economic crisis derived from the pandemic. The monetary policy rate (TPM) remains at 3.00% and the liquidity provision program amounts to US$215,000 million, representing 5% of the GDP.
RD$196,285.1 million have been channeled through financial intermediation entities to companies and households, through 90,000 new loans, refinancing and debt restructuring. The sectors that have received the most resources are commerce and MSMEs (RD$83,141.4 million), households (RD$27,766.3 million), manufacturing (RD$21,725 million), construction (RD$18,276.5 million) and exports (RD$6,062.6 million).
The issuing institution has also placed RD$19,954.9 million in short-term revolving liquidity repos.