Construction activity experienced an average year-on-year growth of 6.3% in January-March 2022, a variation that places the level of the volume index of the aforementioned activity at 24.6% above that recorded in January-March 2019 and 30.8% higher than in the same period of 2020.
SANTO DOMINGO.– Despite the challenges it has faced recently, the construction sector maintains its dynamism, growing by 6.3% and placing itself among the main sectors that boosted the Dominican economy in the January-March quarter of this year, according to the monthly economic activity indicator (IMAE) of the Central Bank of the Dominican Republic (BCRD).
According to the preliminary economic results for March 2022, released by the Central Bank of the Dominican Republic (BCRD), the Monthly Index of Economic Activity (IMAE) registered a growth of 6.4% in March of this year, which, together with the variations of 6.3% in January and 5.8% in February, results in a year-on-year expansion of 6.1% during the first quarter of 2022.
Among the economic activities that had the greatest impact on the dynamism of January-March 2022 are: hotels, bars and restaurants (39.3%), other service activities (11.0%), transport (8.8%), communications (8.2%), commerce (7.8%), energy and water (7.5%), health (7.3%), public administration (7.4%), manufacturing in free zones (6.8%), construction (6.3%), among others.
Construction activity experienced an average year-on-year growth of 6.3% in January-March 2022, a variation that places the level of the volume index of the aforementioned activity at 24.6% above that recorded in January-March 2019 and 30.8% higher than in the same period of 2020.
This means that the sector continues to solidify its position as one of the most significant contributors to the Dominican economy, due to its substantial multiplier effect and its ability to drive growth in other productive activities. According to the report, the sector's performance during the first quarter of the year was driven by the execution of privately funded residential, industrial, and tourism development projects, as well as major civil engineering and infrastructure projects undertaken by the government.
Similarly, the results at the end of March are reflected in the performance observed in local sales volumes of the main inputs for this industry, such as rebar (31.2%) and cement (2.6%), as well as in the revenue generated from the sale of the remaining materials (34.0%). Conversely, the imported volume of asphalt cement decreased by 1.1%
Other lines
The hotel, bar, and restaurant sector showed an average year-on-year increase of 39.3% in terms of real value added, contributing approximately two percentage points (pp) to the IMAE (Monthly Index of Economic Activity) result for January-March 2022. The sector's dynamism is supported by external demand for the country's tourism services, reflected in the arrival of 1,714,947 non-resident passengers during the first quarter of the year, equivalent to a year-on-year growth of 139.2%, primarily from the United States. The average hotel occupancy rate was above 70% in March. This trend continued in April, according to preliminary data provided by the Minister of Tourism, which indicates that 626,010 tourists arrived in the country, representing a 91% increase compared to April 2021.
On the other hand, regarding commerce and transportation, these activities showed a notable increase in their added value of 7.8% and 8.8%, respectively, during the period under analysis. These two sectors are interconnected through the distribution chain of goods for local consumption. In this sense, the results are consistent with the sustained flow of local and imported goods in the economy, the increase in the volume of goods transported to points of sale for commercialization, as well as the greater dynamism in land passenger transport, associated with the rebound in private consumption. The combined contribution of these two activities to the growth of the Monthly Index of Economic Activity (IMAE) in January-March was 1.6 percentage points, representing one-third of the aforementioned year-on-year increase of 6.1%.
Monetary policy and inflation
Regarding prices, inflation dynamics continue to be affected by more persistent external pressures than anticipated, associated with the increase in the price of oil and other raw materials important for local production, the high cost of freight, and other disruptions in global supply chains, which have intensified with the conflict between Russia and Ukraine. Indeed, the average price of oil rose from US$71.7 in December 2021 to US$108.5 per barrel in March 2022. In this context, accumulated inflation during the first three months of the year reached 2.80%, while year-on-year inflation stood at 9.05% at the end of March.
Given this scenario, and taking into account the rapid economic recovery, the Central Bank of the Dominican Republic (BCRD) continues to implement measures to counteract external shocks to prices and contribute to the convergence of inflation to the target range. Indeed, since November 2021, the BCRD has increased its monetary policy rate by 250 basis points, bringing it to its current level of 5.50% per annum, in line with the international cycle of interest rate hikes.
Source: Listín Diario
