The IMAE result for January-June places the Dominican Republic as the fastest growing economy year-on-year in Latin America.
The Central Bank of the Dominican Republic (BCRD) reported that the monthly indicator of economic activity (IMAE) registered an expansion of 6.2% during the month of June of this year compared to the same month of the previous year, thus accumulating an average year-on-year growth of 5.1% in the first half of 2024.
The agency highlights, in offering the preliminary results of economic activity as of June 2024, that this behavior has taken place in an environment of price stability as a result of the monetary and fiscal policies implemented, which has allowed for the timely management of risk factors for the performance of the Dominican economy.
"In this regard, it is important to point out that the trajectory observed by economic activity shows the resilience of the national productive apparatus in the face of the current global context, in which interest rates in international markets remain relatively high compared to what was expected at the beginning of the year, in addition to the fact that the expectations of economic agents have been affected by the uncertainty associated with geopolitical conflicts in the Middle East and Eastern Europe, which has been reflected in greater volatility in commodity prices," the Central Bank statement says.
It adds that despite this outlook, the United States of America (USA), the country's main trading partner, registered an annualized quarter-on-quarter variation of 2.8% in the second quarter of 2024, higher than analysts' expectations. Meanwhile, inflation in that major economy is expected to continue converging toward the target set by the Federal Reserve (Fed), which is crucial for initiating an easing of international financial conditions. In this sense, a decrease in the US interest rate by the Fed would, in turn, provide greater freedom to act in terms of domestic monetary policy to support economic growth without jeopardizing the achievement of the inflation target.
The IMAE (Monthly Index of Economic Activity) results for January-June place the Dominican Republic as the fastest-growing economy year-on-year in Latin America, according to the latest available data. Furthermore, the pace of economic expansion is in line with the forecasts of various international organizations, which project the country as the regional leader by the end of 2024.
The 5.1% year-on-year increase in January-June 2024 was driven by the performance of sectors such as construction (4.9%) and free trade zone manufacturing (5.9%), with exports under this regime reaching US$4,197.8 million during the same period. Additionally, the services sector as a whole showed a cumulative increase of 5.5% compared to the same period of the previous year, with notable growth in real estate and rental activities (5.9%), transportation and storage (5.8%), communications (5.3%), and hotels, bars, and restaurants (8.7%), the latter largely supported by the arrival of 4,475,133 tourists by air during the first six months of the year.
In other news, agricultural activity showed a year-on-year growth of 4.2% in January-June of this year, with increases in the production of plantains, bananas, avocados, chicken, eggs, among others, in which the technical and financial support to agricultural producers at the national level provided by the Government through the Ministry of Agriculture has had an important impact.
It is worth highlighting the year-on-year expansion of 16.5% in credit granted to the private sector in national currency, equivalent to an additional RD$244,957.6 million compared to June of the previous year, which has contributed positively to the performance recorded by the economy.
Finally, as can be seen, the results of the Dominican economy in the first half of this year are favorable, placing it in a good position to continue expanding at its potential rate, maintaining its status as one of the most attractive destinations for foreign direct investment, taking into account the strength of its macroeconomic fundamentals, the resilience of its productive sectors, and the improvement in country risk indicators in international markets.
