According to the figures given in the report, RD$11,732 million has been disbursed for construction.
SANTO DOMINGO.- The construction sector registered a year-on-year growth of 2.1%, placing it among the sectors that experienced significant improvements last July, in relation to its performance in the first half of the year, as reported yesterday by the Central Bank of the Dominican Republic (BCRD).
“The value added of construction activity showed a year-on-year growth of 2.1% in July 2023, demonstrating its recovery given the more favorable conditions observed in the current economic climate, fostered by the availability of resources made available by monetary authorities through financial intermediaries, lower interest rates, greater execution of public capital spending, and the stabilization of the price of inputs used in this activity,” according to the preliminary results of the Dominican economy for July 2023.
The organization states that construction is a sector that stands out for its great capacity to drive other economic activities, so its reactivation contributes to the dynamism of the national productive apparatus.
The Central Bank of the Dominican Republic (BCRD) report also states that the Monthly Index of Economic Activity (IMAE) registered a year-on-year growth of 2.9% in July 2023. “With this result, the average variation of the IMAE during January-July 2023 was 1.4% compared to the same period in 2022, with the Hotels, Bars, and Restaurants sector, at 11.9% growth, having the greatest impact on this result.”
According to the report, the year-on-year growth rates in July were: hotels, bars, and restaurants (9.1%), financial services (6.9%), health (6.2%), real estate and rental services (5.6%), agriculture (5.1%), communications (5.9%), commerce (4.7%), construction (2.1%), local manufacturing (1.6%), free zone manufacturing (1.6%), transportation and storage (0.6%), among others.
“It is worth noting that this result in July largely reflects the favorable reaction that the Dominican economy is having to the monetary stimuli implemented by the BCRD since May of this year, in an environment where year-on-year inflation is within the target range of the monetary program of 4% ± 1%.”.
The Central Bank adds that, given the lags in the monetary policy transmission mechanism, these measures are expected to continue their spillover effect, accelerating this mechanism and supporting the economic recovery for the remainder of the year through improved performance in the productive sectors. In this regard, it is worth noting that private credit in local currency grew by 17.0% in July compared to the same month in 2022.
Among the measures arranged by the Central Bank of the Dominican Republic (BCRD) are the reduction of the monetary policy rate (MPR) by 75 basis points cumulatively to July, complemented by a liquidity provision program, through which the Monetary Board has to date authorized financing of around RD$110 billion to be channeled by financial intermediation entities through loans to productive sectors and households under favorable conditions.
According to the figures provided in the report, resources have been disbursed specifically to commerce (RD$45,017 million), consumption and housing (RD$16,883 million), construction (RD$11,732 million), manufacturing (RD$6,990 million), health (RD$1,816 million), and agriculture (RD$1,350 million). The remaining funds have been allocated to other economic activities, as well as for liquidity management and to ensure the proper functioning of the monetary policy transmission mechanism.
Analyzing the performance of the Monthly Index of Economic Activity (IMAE) in cumulative terms during January-July 2023, the impact of services as a whole stands out, constituting approximately 60% of GDP and showing a year-on-year expansion of 3.3% during that period. Among these, the performance of hotels, bars and restaurants (11.9%), health (9.2%), financial services (6.5%), communications (6.4%), real estate and rental activities (5.3%) and other service activities (4.5%) stands out.
The Hotels, Bars, and Restaurants sector showed an 11.9% increase, maintaining its position as the sector with the greatest impact on the overall growth of the Monthly Index of Economic Activity (IMAE) so far in 2023. The dynamism of this sector is primarily driven by external demand for the country's tourism services. In this regard, unprecedented levels of non-resident passenger arrivals by air have been recorded, totaling 4,879,696 visitors between January and July 2023. Including cruise ship arrivals, which reached 1,418,750 passengers by July, the total number of visitors stands at 6.3 million, achieving a historic record according to figures reported by the Ministry of Tourism and the Dominican Port Authority.
Agricultural activity registered real growth of 3.7% during January-July 2023, with July standing out at 5.1%, the highest figure in the first seven months of the year. This sector's performance is explained by increased production of key domestic consumption items such as rice, plantains, chicken, and eggs, among others. Key to this growth have been the timely measures implemented by the Government, through the Ministry of Agriculture and its agencies, aimed at providing technical and financial support to agricultural producers nationwide and ensuring the country's food security.
The Central Bank expects that the monetary stimulus strategy, through which the Monetary Board has authorized resources to be channeled by Financial Intermediaries through loans to productive sectors and households, will continue to foster conditions to support economic recovery for the remainder of the year, with improved performance in the productive sectors. “Thus, these measures are expected to continue contributing to the dynamism of consumption and investment in activities with a broad multiplier effect on economic activity.”.
