After analyzing recent developments in the external sector, the Central Bank of the Dominican Republic (BCRD) forecasts continued significant foreign exchange inflows for the remainder of the year, driven by remittances, tourism, exports, and foreign direct investment. This will contribute to maintaining the current relative stability of the exchange rate, which showed a cumulative appreciation of 7.0% as of the end of September 2022.
SANTO DOMINGO –The Central Bank of the Dominican Republic (BCRD) reported that remittances received in the first nine months of the year totaled US$7,309.4 million. It also highlighted that this amount exceeds by US$2,016.5 million the remittances received in the first nine months of 2019, a period prior to the start of the COVID-19 pandemic. During that time, the United States did not yet have the aid programs that were implemented after March 2020 and ended in September 2021. Therefore, when comparing the flows received through September 2022 with those of the same period in 2021, a reduction of approximately US$551.9 million is observed.
In September 2022, remittances totaled US$790.6 million. These figures reaffirm the establishment of a new level of monthly remittance flows of around US$800.0 million. In this regard, comparing this September 2022 amount with the average value for the same month during the pre-pandemic period of 2015-2019, which was US$453.8 million, reveals a significant increase.
The issuing entity explains that the economic performance of the United States is one of the main factors continuing to influence remittance flows, as 84.9% of September's flows originated from that country. During that month, the Institute for Supply Management's (ISM) non-manufacturing PMI registered a value of 56.7, indicating the continued expansion of the U.S. services sector, where the Dominican diaspora in the U.S. is primarily 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, each receiving 0.8% of remittances. The remaining remittances are distributed among countries such as Switzerland, Canada, and Panama, among others.
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 14.5% and 8.9%, respectively. This indicates that more than half (57.5%) of remittances are received in the country's metropolitan areas.
Analyzing the flows of September 2022 according to the gender of the recipient, men predominate, with 52.9%, while women captured the remaining 47.1% of the remittances received through formal channels.
After analyzing recent developments in the external sector, the Central Bank of the Dominican Republic (BCRD) forecasts continued significant foreign exchange inflows for the remainder of the year, driven by remittances, tourism, exports, and foreign direct investment. This will contribute to maintaining the current relative stability of the exchange rate, which showed a cumulative appreciation of 7.0% as of the end of September 2022.
The institution highlights that this greater flow of foreign currency has also allowed the accumulation of international reserves, which by the end of September 2022 stood at over US$13.8 billion, representing around 12.3% of GDP and equivalent to about 5.7 months of imports, metrics that exceed the levels recommended by the IMF.
He says that 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$8.7 billion, and FDI exceeding US$3.5 billion.
