SANTO DOMINGO.-In the period January-August of this year, remittances received by the country reached US$6,518.8 million; of that figure, 52.9% was received by men, while women received 47.1%, arriving through formal channels, according to reports from the Central Bank of the Dominican Republic.
The Central Bank explains that the economic performance of the United States (USA) is one of the main factors that continues to influence the behavior of remittances, since 84.0% of the flows in August came from that country.
The monetary policy governing body highlights that the amount of remittances from January to August exceeds by US$1,792.8 million those received in the first eight months of 2019, a period prior to the start of the Covid-19 pandemic, in which the United States did not yet have the aid schemes that were implemented after March 2020 and ended in September 2021.
For the above reason, when comparing the flows received in August 2022 with those of the same period in 2021, a reduction of about US$512.9 million is observed.
In August 2022, remittances totaled US$849.2 million, exceeding the amounts received in June and July. These figures reaffirm the establishment of a new level of monthly remittance flows of around US$800.0 million.
Comparing this amount for August 2022 with the average value for the same month in the pre-pandemic period of 2015-2019, which was US$527.7 million, shows a significant increase.
During August, the Institute for Supply Management (ISM) non-manufacturing PMI registered an increase, going from 56.7 in July to 56.9 in August, thus demonstrating the continued expansion of the service sector of the North American economy, a sector in which the Dominican diaspora in the US is generally employed.
The Central Bank of the Dominican Republic (BCRD) also highlights remittances received from other countries, such as Spain, which accounts for 6.2% of total Dominican diaspora residents abroad, and Haiti and Italy, which account for 1.3% and 0.8% of remittances received, respectively. The remaining remittances are distributed among countries such as Switzerland, Canada, and Panama, among others. It is worth noting that remittances received from Europe have been affected to some extent by the depreciation of the euro against the dollar, as well as by geopolitical conflicts.
Regarding the distribution of remittances received by province, the Central Bank of the Dominican Republic (BCRD) indicates that the National District received the largest share, 34.1%, followed by the provinces of Santiago and Santo Domingo, with 14.3% and 9.0%, respectively. This indicates that more than half (57.4%) of remittances are received in the country's metropolitan areas.
After evaluating the recent performance of the external sector, the Central Bank of the Dominican Republic (BCRD) estimates that this sector will maintain its dynamism throughout the remainder of the year, particularly in remittances, tourism, exports, and foreign direct investment. This will contribute to a greater inflow of foreign currency into the country and help maintain the current relative stability of the exchange rate, which showed a year-on-year appreciation of over 7.0% as of the end of August 2022.
The institution highlights that this increased flow of foreign currency has also allowed for the accumulation of international reserves, which, as of the end of August 2022, stood at over US$14 billion, representing approximately 12.5% of GDP and equivalent to about 5.8 months of imports. These metrics exceed the levels recommended by the IMF, contributing to the Dominican Republic maintaining a favorable external position.
All these elements, combined with the country's robust macroeconomic fundamentals, indicate that the Dominican Republic's external sector has particularly suitable conditions to accommodate shocks from a complex and uncertain international environment, projecting that this sector would close 2022 with remittances close to US$10 billion, record exports of around US$14 billion, tourism revenues above US$8 billion, and FDI exceeding US$3.5 billion.
