Ministry of Economy reports economic activity grew 2.4 % in May, the highest rate so far this year

The Ministry of Economy, Planning and Development publishes the “Informe de situación macroeconómica: Seguimiento de coyuntura” corresponding to June 2023, which highlights that the Monthly Economic Activity Indicator (IMAE) registered a growth of 2.4 % inter-annual in May, higher than the expansions registered in the first four months of the year.

The monthly publication, prepared by the Macroeconomic Analysis Directorate of the Vice-Ministry of Economic and Social Analysis, refers that the accumulated growth of the IMAE in the first five months of 2023 was 1.4 %.

The report states that this performance reaffirms the country’s solid macroeconomic fundamentals, and is attributed to the coordinated implementation of expansionary monetary and fiscal measures.

In turn, real gross domestic product (GDP) growth expectations for 2023 stood at 4.0%. On the other hand, economic agents expect that by 2024, real GDP will grow around its potential growth of 5.0 %.

Regarding inflation, the document explains that it was within the target range established in the monetary program in June, for a year-on-year variation of 4.00 %, the lowest rate recorded since July 2020. As for core inflation, it registered a year-on-year variation of 5.33%.

It details that the groups that attenuated to a greater extent the variation of the June price index (0.22 %) were Housing, with a variation of -0.73 % and incidence of -0.09 %, and Transportation, with a variation of -0.16 % and incidence of -0.03 %.

The macroeconomic report notes that the Dominican peso depreciated for the first time in 24 months, registering an inter-annual variation of 0.2 % in June 2023. However, the national currency registered a negative accumulated variation (-0.8 %) in the January-June period.

Tourism and remittances

The document highlights that the number of non-resident passengers entering the country by sea and air approached 759 thousand in May 2023, for an increase of more than 138 thousand passengers with respect to May 2022. The number of tourists who have entered the country during the January-June period has accumulated a total of around 4.5 million people.

It adds that, in June 2023, the value of family remittances reached US$ 846.4 million, for a total of US$ 5,019.9 million in the first half of the year, representing a year-on-year increase of 3.3%. Likewise, remittances experienced a year-on-year expansion of 5.3% in the month, which is equivalent to an absolute increase of US$ 42.6 million.

Fiscal sector

The publication indicates that, in the first half of 2023, the Central Government received revenues of RD$ 543.7 billion, which represents an increase of RD$ 71.5 billion (15.1 %) compared to the same period of 2022.

On the other hand, Central Government expenditures amounted to RD$580.3 billion in the first half of 2023, equivalent to an increase of RD$90.0 billion (18.4%) compared to the same period of 2022.

International outlook

The monthly report states that, according to the latest revision of international organizations, the global economy will grow an average of 2.5% in 2023 and 2.6% in 2024. Global growth forecasts are clouded by a context of high inflation, restrictive monetary policies and difficult global financial conditions.

For the Latin American and Caribbean region, the document adds, both the World Bank and Consensus Forecast foresee a growth of 1.5% for 2023. In turn, for the year 2024 the forecasts were slightly adjusted downward to an average growth of 2.0 %, subject to the levels of uncertainty regarding global macro-financial conditions.

Source: Mepyd.gob.do

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