CB reports remittance flows surpassed US$6.5 billion between January and August 2022
In the month of August, the Dominican Republic received US$849.2 million.
In the January-August period, remittances of US$6,518.8 million were received, evidence that these flows could close this year close to US$10 billion.
The Central Bank of the Dominican Republic (BCRD) reports that, between January and August 2022, remittances received reached US$6,518.8 million.
It also highlights that this amount exceeds by US$1,792.8 million the remittances received in the first eight months of 2019, a period prior to the start of the COVID 19 pandemic, in which the United States did not yet have the aid schemes that were implemented after March 2020 and ended in September 2021, which is why, when comparing the flows received as of August 2022 with those of the same period of 2021, a reduction of some US$512.9 million is observed.
In the month of August 2022, remittances totaled US$849.2 million, higher than those received in the months of June and July. These figures reaffirm the establishment of the new level of monthly remittance flows at around US$800.0 million. In that sense, when comparing this August 2022 amount with the value averaged in the same month for the period prior to the 2015-2019 pandemic, which was US$527.7 million, a significant increase is observed.
The Central Bank explains that the economic performance of the United States (US) is one of the main factors that continues to influence the behavior of remittances, since from that country came 84.0 % of the flows in August. During that month, the non-manufacturing PMI of the Institute for Supply Management (ISM) registered an increase from 56.7 in July to 56.9 in August, thus evidencing the continued expansion of the service sector of the US economy, a sector in which the Dominican diaspora in the US is generally employed.
The BCRD also highlights the receipt of remittances from other countries, such as Spain, in the order of 6.2%, the second country in terms of total Dominican Diaspora residents abroad, as well as Haiti and Italy with 1.3% and 0.8% of the flows received, respectively. The rest of the remittances received are divided among countries such as Switzerland, Canada and Panama, among others. It is worth noting that remittances received from Europe have been affected to some extent by the depreciation of the euro against the dollar, as well as by geopolitical conflicts.
Regarding the distribution of remittances received by provinces, the BCRD indicates that the National District obtained the highest proportion, 34.1%, followed by the provinces of Santiago and Santo Domingo, with 14.3% and 9.0%, respectively. This indicates that more than half (57.4%) of remittances are received in the metropolitan areas of the country.
After evaluating the recent evolution of the external sector, the BCRD estimates that during the rest of the year this sector will maintain a dynamism in the flow of remittances, tourism, exports and foreign direct investment. This will contribute to a greater flow of foreign exchange to the country and will help maintain the relative stability of the exchange rate currently observed, such that the exchange rate showed an inter-annual appreciation of more than 7.0 % at the end of August 2022.
The institution highlights that this greater flow of foreign exchange has also allowed the accumulation of international reserves, which by the end of August 2022 were placed above US$14 billion, representing about 12.5% of GDP and equivalent to about 5.8 months of imports. These metrics exceed the levels recommended by the IMF, contributing to the Dominican Republic maintaining a favorable external position.
All these elements, together with the country’s robust macroeconomic fundamentals, indicate that the external sector of the Dominican Republic has particularly adequate conditions to accommodate the shocks coming from a complex and uncertain international environment, projecting that this sector would close 2022 with remittances close to US$10 billion, exports with record figures of around US$14 billion, tourism revenues of over US$8 billion, and FDI in excess of US$3.5 billion.
The Central Bank reiterates that it remains vigilant to continue taking the necessary measures to counteract the impact of the challenging international environment on the Dominican economy, in order to guarantee the stability of prices and the exchange market.