With 34.3% growth, tourism leads DR’s economic reactivation
The Dominican Republic’s growth has been led by a faster than expected economic reactivation in the industries and services sectors, particularly in tourism activity (34.3%), states the Macroeconomic Situation Report: Monitoring of the economic situation corresponding to July 2022.
Regarding the performance of tourism, this publication of the Macroeconomic Analysis Directorate of the Vice-Ministry of Economic and Social Analysis highlights the arrival of close to 4.3 million non-resident foreigners during the first seven months of the year, equivalent to an inter-annual growth of 29.3 %.
As a result of this greater flow of foreign currency, the report points out, an appreciating trend of the exchange rate is visualized, with a projected average rate of RD$ 56.6 per dollar by the end of the year and an appreciation rate of 1.17 % in relation to the average of 2021.
The document reiterates that, despite an adverse international environment due to geopolitical uncertainty, persistent inflationary pressures and a slow recovery of post-pandemic employment, the Dominican economy continues to show a favorable macroeconomic environment, by registering in the monthly economic activity index (IMAE) a year-on-year expansion of 5.8 % in June 2022, for an accumulated growth between January and June of 5.6 %.
It adds that this performance continues to reflect the country’s resilience and capacity to face the uncertainty of the international environment, so that at the end of the year the projections of a real gross domestic product (GDP) growth of around 5.0 %, in line with the potential, are maintained.
Cost of raw materials
The report states that the pressures on the cost of the main raw materials in the international market have lasted longer than expected. Likewise, fuel and food prices have remained volatile due to the international situation influenced by various factors, such as high inflation levels and the consequences of the geopolitical conflict.
It specifies that inflation stood at 9.43 % last July, 0.21 p.p. below the rate observed in April of 9.64 % (the highest rate to date). In monthly terms, the increase was 0.50 %, 0.14 p.p. below that recorded in June.
It warns that the Dominican Republic’s status as a net importer of some items produced abroad places the country in a situation of potential vulnerability to external shocks of this type.
On the other hand, the document highlights the Dominican government’s commitment to counteract the upward dynamics of international prices through various subsidies that have sought to protect the purchasing power of Dominican households.
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