The average hotel occupancy rate was above 70% in March. This trend continued in April, according to preliminary data from the Minister of Tourism, which indicates that 626,010 tourists arrived in the country, representing a 91% increase compared to April 2021.
SANTO DOMINGO – Foreign direct investment increased by 11.3% year-on-year in the first quarter of this year, reaching approximately one billion dollars, demonstrating that investors maintain confidence in the strength of the country's macroeconomic fundamentals.
This is established by the preliminary results of the monthly indicator of economic activity (IMAE), of the Central Bank of the Dominican Republic (BCRD), which states that this amount is in line with the year-end outlook, which amounts to US$3,410.3 million, comfortably financing the current account deficit projected for the aforementioned year.
In response to external pressures stemming from the war between Russia and Ukraine, 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.
These monetary policy decisions are in line with the monetary measures implemented in most advanced economies and in the Latin American region. In the United States of America (USA), with year-on-year inflation of 8.5% at the close of the first quarter of 2022, the highest level recorded in four decades, the Federal Reserve (Fed) increased the federal funds rate by 25 basis points to a range of 0.25%–0.50% annually, with further increases expected for the remainder of the year.
Central banks in Latin America have also continued to raise their benchmark interest rates. Notable increases include those in Brazil (975 basis points), Argentina (900 basis points), Chile (650 basis points), Paraguay (600 basis points), Peru (425 basis points), Colombia (425 basis points), Uruguay (400 basis points), Costa Rica (325 basis points), and Mexico (225 basis points).
Additionally, the report states, the Central Bank of the Dominican Republic (BCRD) has complemented the increases in the monetary policy rate with measures aimed at reducing excess liquidity in the financial system, through open market operations and the gradual return of resources that had been provided during the pandemic. Indeed, these measures have accelerated the monetary policy transmission mechanism, influencing the adjustment of domestic interest rates and moderating the growth of monetary aggregates to roughly the same level as nominal GDP growth.
The report cites the hotels, bars, and restaurants sector as exhibiting an average year-on-year increase of 39.3% in terms of real value added, contributing approximately two percentage points (pp) to the IMAE 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.
External sector
Regarding the external sector, it maintained a remarkable performance, with total goods exports reaching US$3,302.8 million in January-March 2022, representing a year-on-year increase of 13.7%. Domestic exports led the way, increasing by US$213.4 million (an annualized increase of 16.9%). Exports from free trade zones totaled US$1,830.4 million in January-March 2022, expanding by US$184.1 million, equivalent to an 11.2% increase.
Regarding tourism revenue, it registered a value of US$2,109.8 million in the first quarter of 2022, a figure higher by US$1,302.1 million (161.2%) than the same period in 2021, supported by the arrival of 1.7 million tourists in the first three months of this year.
On the other hand, remittances stood at US$2,396.2 million, explained by the favorable working conditions maintained by Dominicans residing abroad, mainly in the United States of America.
