SANTO DOMINGO.- Among most economic agents, both national and foreign, there is a consensus that today the Dominican economy exhibits a better investment climate and greater economic and financial stability than a few years ago and during the Covid-19 pandemic, according to the article "Growth and Stability Prospects in the Dominican Republic" signed by Osvaldo Lagares and contained in Página Abierta, a forum of analysts of the Central Bank (BCRD).
The publication highlights that the Dominican Republic's economic growth of 2.4% was maintained in an environment of monetary and financial stability, and that it will return to its potential of 5% by the end of 2024, according to estimates from the World Bank and the International Monetary Fund (IMF).
He asserts that in 2023 the Dominican Republic closed with an adequate economic performance, in a context of decreased domestic demand, increased international commodity prices, geopolitical tensions and adverse effects derived from extreme events associated with climate change.
According to the report, productive activities in the country have expanded, inflationary pressures have decreased, and employment has increased to historic levels, promoting stability, growth, and national economic development. This performance has contributed to improving the country's risk rating outlook, as published by the main international risk rating agencies.
Reasons
The Emerging Markets Bond Index (EMBI) for the Dominican Republic, calculated by the US financial services firm JPMorgan Chase, which serves as a benchmark for country risk in emerging and developing economies, has been placed 32.5% below the regional average for Latin America and 22.6% below the global average, at levels lower than those of economies such as Mexico, Colombia and Panama.
By 2024, the main economic outlook for the Dominican Republic points to economic growth returning to its potential path of 5%, inflation remaining around the center of the policy target range of 4.0% ± 1.0%, and interest rates trending downwards, provided risk factors do not intensify.
The exchange rate is expected to remain relatively stable around its average historical variation, given the foreign exchange income received by the country, where these incomes are forecast to exceed the performance exhibited during 2023, when remittance flows reached US$10,157.2 million, tourism income stood at US$9,828.9 million and foreign direct investment amounted to US$4,381 million.
Macroprudential policy measures and the proper management of liquidity by financial intermediaries, to reduce systemic risk and facilitate the channeling of resources to productive sectors, households and SMEs, will contribute to the expansion of credit and boost the economy in an environment of price stability and financial system stability.
The measures
He argues that thanks to the timely implementation of monetary and fiscal policy, inflation has been controlled, which was the main objective of economic policy, as President Luis Abinader recently indicated.
The monetary policy measures adopted in the country allowed the country to close 2023 with an inflation rate of 3.57%, the release of legal reserve resources at a rate of up to 9%, for RD$190 billion, of which there are currently around RD$30 billion in circulation for liquidity management of financial intermediation entities.
And, RD$149,353.8 million for the productive sectors, households and MSMEs, benefiting economic agents with more than 27,600 loans, which has contributed to boosting productive activities in an environment of financial stability.
Regarding GDP per capita, it indicates that the Dominican Republic's gross domestic product (GDP) per capita reached US$11,200 at the end of 2023, placing the country as a middle-income economy and the seventh largest in Latin America.
Furthermore, the stability of the foreign exchange market has been maintained, where the selling exchange rate of the US dollar in the spot market showed a year-on-year depreciation of only 3.3% at the close of 2023, below the average of the last five pre-pandemic years of 3.6%.
It also highlights the great stability of the country's financial system, the global economic outlook published by the International Monetary Fund (IMF), and the risks associated with geopolitical conditions in Eastern Europe and the Middle East and their impact on maritime freight costs, as well as the drought in the Panama Canal, among other risks that could be resolved by mid-2024.
