SANTO DOMINGO.-The Central Bank of the Dominican Republic (BCRD) projects that by the end of 2024, income from Foreign Direct Investment (FDI) will reach US$4.5 billion, while remittances will reach US$10.4 billion, taking into account the evolution of the current international market.
"Analyzing the recent evolution of the external sector, the Central Bank of the Dominican Republic (BCRD) anticipates a favorable trend in foreign exchange earnings during 2024, driven by tourism revenues, foreign direct investment, and exports, along with remittances. Remittances and FDI flows are estimated to reach approximately US$10.4 billion and US$4.5 billion, respectively, by the end of the year," the agency highlighted.
It adds that these foreign exchange inflows contribute to the current relative stability of the exchange rate, such that as of the end of March 2024, the national currency had depreciated by 1.7% compared to the end of 2023.
The institution highlights that the increased flows of external income have also allowed for the maintenance of an adequate level of international reserves, which reached US$13,814.0 million at the end of March. This level represented 11.2% of the gross domestic product (GDP) and approximately 4.9 months of imports, exceeding the thresholds recommended by the IMF.
The Central Bank of Costa Rica (BCR) reported that during the first quarter of 2024, remittances received reached US$2,635.6 million, increasing 6.2% compared to the same period of the previous year.
The organization highlighted that, as in 2023, remittance flows continue to grow year-on-year. Specifically, in March, US$925.5 million in remittances were received, exceeding the same month in 2023 by 1.1%.
The Central Bank of the Dominican Republic (BCRD) explains that the economic performance of the United States was one of the main factors that influenced the behavior of remittances, since 86.4% of the formal flows in March originated from that country, some US$727.8 million.
On the one hand, overall unemployment in the United States stood at 3.8% in March, a slight decrease from the 3.9% recorded in February, with the creation of 303,000 new jobs. As for Latino unemployment, it fell to 4.5% in March after reaching 5.0% in February.
It highlights that, additionally, the non-manufacturing Purchasing Managers' Index (PMI) from the Institute for Supply Management (ISM) registered a value of 51.4 in March, below the 52.6 of February 2024. Despite this, the index still shows that the services sector, where most of the Dominican diaspora is employed, continues to expand.
The issuing entity indicates that remittances constitute a vital support system for the families that receive them and directly contribute to reducing poverty and inequality. In this regard, the flows received in March were mostly used for household expenses (96.5%), a figure consistent with previous studies conducted by the Center for Latin American Monetary Studies (CEMLA). The remainder was used to pay off debts of the recipient households.
The Central Bank reaffirms its commitment to monitoring the current economic environment in order to continue taking the necessary measures to counteract the impact on the Dominican economy of the prevailing challenging international landscape, in order to guarantee price and exchange market stability.
