SANTO DOMINGO.- The Central Bank of the Dominican Republic (BCRD) reported yesterday that the monthly indicator of economic activity (IMAE) registered an expansion of 4.7% during the month of September of this year, thus accumulating an average year-on-year growth of 5.1% in January-September 2024.
According to preliminary economic activity results through September 2024, this performance has occurred within a stable price environment, with inflation remaining at the lower end of the target range of 4.0% ± 1.0% this year. This is a result of the monetary and fiscal policies implemented, which have allowed for the timely mitigation of risk factors for the Dominican economy. In
this regard, it is important to emphasize that the observed trajectory of economic activity demonstrates the resilience of the national productive sector in the face of the current global context, where the expectations of economic agents have been affected by the uncertainty associated with geopolitical conflicts in the Middle East and Eastern Europe.
Despite the global outlook, the United States of America (USA), the country's main trading partner, posted year-on-year growth of 2.7% in the third quarter of 2024. Meanwhile, year-on-year inflation stood at 2.4% in September of this year, indicating a smooth transition toward its target. Meanwhile, the Federal Reserve decided at its most recent meeting in September to reduce its benchmark interest rate by 50 basis points (bps) and it is expected to continue decreasing throughout the remainder of 2024. In this context, the International Monetary Fund (IMF) revised its 2024 growth projection upward to 2.8%, an increase of 0.2 percentage points.
In addition, the expansion of the Monthly Index of Economic Activity (IMAE) in January-September positions the Dominican Republic as the fastest-growing economy year-on-year among its Latin American peers, according to the latest available data published by the countries. This result is also in line with the forecasts of various international organizations and the government's inter-institutional macroeconomic framework, whose projections point to an expansion of around 5.0% and position the country as the leader in terms of economic activity growth in the region by the end of 2024.
The 5.1% year-on-year change in January-September 2024 is attributed to the performance of activities such as construction (4.4%) and free zone manufacturing (6.5%), with exports under this regime reaching US$6,404.1 million during that period. Likewise, services activities as a whole showed a cumulative increase of 5.3% compared to the same period of the previous year, among which financial intermediation (7.9%), hotels, bars and restaurants (6.3%), transportation and storage (5.9%), real estate and rental activities (5.7%), and communications (5.1%) stand out.
Regarding financial intermediation activity, it showed a year-on-year increase in its real added value of 7.9% in January-September, this result being influenced by the 16.2% expansion of credit granted to the private sector in national currency, equivalent to an additional RD$309,554.3 million compared to September of the previous year.
An important aspect to highlight is that, although mining registered an average year-on-year variation of -6.1% in January-September, this activity showed a positive result in the months of August at 8.5% and September at 16.9%, supported by the increase in gold production in the country's main deposit.
Regarding construction, this sector showed a year-on-year variation of 4.4% in the January-September period, which is reflected in the increase in sales volumes of the main inputs used in the development of infrastructure works.
Regarding the value added of the hotel, bar, and restaurant sector, this experienced a year-on-year increase of 6.3% in January-September, significantly influenced by passenger arrivals through the various airport terminals. It is projected that approximately 8.5 million tourists will be received by the end of this year.
Finally, the Dominican economy is well positioned to maintain a growth rate around its potential, taking into account the strength of its macroeconomic fundamentals, the resilience of the productive sectors, and the improvement in country risk indicators in international markets.
