SANTO DOMINGO. – Economist Alejandro Arredondo suggested that, given the decline experienced by the construction sector in the country, a series of measures could be implemented to reactivate this important segment of the Dominican economy.
He suggested that the Central Bank of the Dominican Republic could open a line of credit to incentivize this sector and thus boost the economy. However, he warned that this action could result in an increase in the exchange rate.
Furthermore, he pointed out that the release of the legal reserve requirement could also help to revitalize the sector, which has shown losses during the first four months of the year.
During an interview on the program “La Ventana de El Inmobiliario ” , Arredondo emphasized the importance of addressing the informal labor situation, as well as the fundamental role that Haitian labor in construction projects.
These are measures that can be taken, and obviously, one element that we haven't taken into account is the exchange rate, since most of the inputs used for construction come from abroad,” he explained.
The economist drew attention to two materials that have a determining weight in the final price of buildings: rebar and cement.
He noted that rebar represents about 17% of the total cost of a construction project and that, in the case of cement, a bag currently costs between RD$495 and RD$565.
Given that this input is concentrated in a few companies, he suggested that the National Commission for the Defense of Competition should investigate whether the price being used really reflects the market.
Estimates
During his speech, the economic analyst highlighted that, according to the most recent estimates, the Dominican economy has seen its growth projections reduced: initially an expansion of 5% was expected, then it was adjusted to 4.5%, and currently it is projected to be around 3.5% for the first quarter of the year.
Arredondo specified that this slowdown is closely related to the behavior of the construction sector and other key areas of the economy.
“The estimates for the construction sector suggest that inflation could fall to 2%, provided there is a policy to incentivize lower interest rates, which I don't believe will happen anytime soon. Interest rates, another factor affecting the construction sector, remain high,” he explained.
The economist specified that mortgage rates have risen from 14% to 16%, noting that, for the time being, they are not expected to decrease until September.
Photo: Solangel Valdez.
