SANTO DOMINGO –The Central Bank of the Dominican Republic (BCRD) reported that remittances received in January 2024 reached US$874.1 million, a 9.0% increase compared to the same month of the previous year and a 15.1% increase compared to January 2022.
The BCRD explained that the economic performance of the United States was one of the main factors influencing remittance flows, as 85.7% of formal flows in January, totaling US$641.1 million, originated from that country.
Meanwhile, the overall unemployment rate in the United States was 3.7% in January, unchanged from December 2023 and remaining at pre-pandemic levels. Similarly, the unemployment rate for Latinos remained unchanged in January at 5.0%. Additionally, the Institute for Supply Management's (ISM) non-manufacturing Purchasing Managers' Index (PMI) registered a value of 53.4 in January, up from 50.5 in December 2023, starting the year with a constant expansion of the services sector, where most of the Dominican diaspora is employed.
The Central Bank of the Dominican Republic (BCRD) also highlights the receipt of remittances through formal channels from other countries in January, such as Spain, which received US$42.3 million, representing 5.7% of the total. Spain is the second largest recipient of remittances from the Dominican diaspora abroad. Haiti and Italy followed, with 0.8% and 0.7% of the total flows received, respectively. The remaining remittances were received from countries such as Switzerland, Canada, and Panama, among others.
Regarding the distribution of remittances received by province, the Central Bank of the Dominican Republic (BCRD) indicates that the National District received 36.7% in January, followed by the provinces of Santiago and Santo Domingo, with 13.6% and 7.8%, respectively. This reveals that more than half (58.1%) of remittances are received in the country's metropolitan areas.
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 January were mostly used for household expenses (94.3%), 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 of the Dominican Republic (BCRD) further reports that cash was the most frequently used payment method for formal remittances received, accounting for 93.2%. Debit cards were used for 5.4% of remittances, and the remaining 1.4% was divided between bank transfers and credit notes.
Analyzing the evolution of the external sector after the close of 2023, the Central Bank of the Dominican Republic (BCRD) anticipates a favorable trend in foreign exchange inflows during 2024, driven by tourism revenues, foreign direct investment (FDI), 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 year-end. These foreign exchange inflows contribute to the current relative stability of the exchange rate, such that as of the end of January 2024, the Dominican currency had depreciated by 1.2% compared to the end of 2023.
The institution highlights that the increased flow of external income has also allowed for the maintenance of an adequate level of international reserves, which reached US$14,371.3 million at the end of January. This level represents 11.7% of GDP and approximately 5.1 months of imports, exceeding the thresholds recommended by the IMF.
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.
