The year-on-year change for the month of November is 5.8%.
SANTO DOMINGO- The Central Bank of the Dominican Republic (BCRD) reported yesterday that since July the construction sector has registered consecutive positive variation rates, placing itself in November of this year as one of the main sectors with the best year-on-year performance.
““An important aspect to highlight is that the construction sector, which has a significant multiplier effect and pull on other economic sectors, has been registering consecutively positive variation rates since July,” says the report on the preliminary results of the Dominican economy as of November 2023.
The Central Bank maintains that this situation reflects the faster pace of execution of public capital spending compared to the same period of the previous year, as well as the favorable impact of the liquidity provision measures with securities as collateral implemented by the monetary authorities to accelerate the transmission mechanism of monetary policy.
The report adds that, in this regard, the facilities provided by the Central Bank this year have allowed for the disbursement of approximately RD$159 billion in loans at rates no higher than 9.0% annually through financial intermediaries. "This, coupled with the 150-basis-point reduction in the monetary policy rate, has led to a decrease in the weighted average of market interest rates, which in turn has positively impacted the recovery of economic growth," the report states. The
agency specified that the year-on-year variation for November is mainly explained by the performance of the following sectors: hotels, bars, and restaurants (10.5%), financial services (7.4%), construction (5.8%), agriculture (3.8%), commerce (3.8%), and local manufacturing (3.8%), among others.
He emphasized that the monthly economic activity indicator (IMAE) registered a year-on-year expansion of 4.2% in November 2023, the highest monthly rate of the year, exceeding the 3.6% observed in October and the 3.1% of September 2023.
“As can be seen, the IMAE exhibits a recovery trend since August, consistent with the monetary policy transmission mechanism, which continues to operate favorably. According to the Central Bank's forecasting system, real gross domestic product (GDP) is projected to close the current year with growth of around 2.5%, slightly higher than the Latin American average of 2.2% estimated by Consensus Forecasts, and returning to its potential growth rate of around 5.0% in 2024.
Similarly, the performance of local manufacturing stands out, registering a 3.8% year-on-year increase in its real value added in November 2023. This result aligns with the monthly manufacturing activity indicator (IMAM) compiled by the Association of Industries of the Dominican Republic (AIRD), which rebounded in November of this year, rising from 45.8 in October to 58.0 in November, surpassing the 50.0 mark, the threshold at which the sector's outlook is considered positive.
Analyzing the IMAE in cumulative terms, it shows an average year-on-year variation of 2.1% during January-November 2023, with hotels, bars, and restaurants, at 10.7% growth, being the sector with the greatest impact on economic activity this year.
The performance of the real value added of the hotels, bars, and restaurants sector was primarily driven by air passenger arrivals, which reached an unprecedented 7,191,101 tourists between January and November 2023. It should be noted that, considering the 1,932,985 cruise ship passengers received through November, the total number of visitors to the country in the first eleven months of the year reached 9.1 million. In this regard, it is projected that this total, which includes both air and sea arrivals, will exceed 10 million by the end of 2023, representing foreign exchange earnings for the country of approximately US$10 billion.
Regarding financial intermediation activity, it exhibited a year-on-year variation of 6.6% in its real value added during January-November 2023. This performance was influenced by the 19.8% year-on-year expansion of credit granted to the private sector in local currency as of the end of November 2023, equivalent to an absolute increase of RD$266 billion in loans channeled.
Finally, the strength of the macroeconomic fundamentals and the resilience of the Dominican economy's productive sectors allow it to continue advancing along the path of economic reactivation, in a context where inflation is expected to remain within the target range of 4.0% ± 1.0% over the monetary policy horizon.
