By Amelia Cuesta
Editorial Staff El Inmobiliario
The new year has arrived, and with it, new goals and new desires: buying a home, making investments, paying off debts, opening a business…
It is a reality that the cost of living is increasing, so in order to fulfill new dreams and achieve proposed goals, it is extremely important to have good financial organization and know what we can expect from our economy in 2023.
El Inmobiliario interviewed economist, consultant and academic Francisco Tavárez, who shares his opinion and knowledge on the subject.
What economic expectations can the Dominican Republic have for 2023?
The international economic outlook is not promising. According to forecasts from international organizations, there is a high probability of recession in advanced economies, including the United States. Growth will be moderate, and this scenario would affect remittances, foreign investment, exports, and tourism revenue in the Dominican Republic.
Although growth of 4.5% to 4.7% is projected for the country, caution is advised that the international scenario may affect the national economy more than expected.
The Dominican Republic is a small, globally open economy, and therefore, international events would particularly affect it. The situation warrants caution, as international financing would also become more expensive due to interest rate hikes by major central banks worldwide in response to inflation.
What would you say will be the advantages and disadvantages that will arise in the Dominican economy during the course of the year?
One of our economic advantages is the resilience achieved through the productive diversification the country has built. At the same time, sectors like tourism and free trade zones, which are important sources of foreign exchange, have remained quite dynamic.
Regarding the disadvantages, I believe that government financing would be more complicated due to a less favorable international financial environment. Inflation will remain high, so even if it decreases, it will continue to affect household incomes, especially those of lower-income households that consume high-consumption goods and services.
What do you recommend to people to organize their finances at the beginning of the year?
The beginning of the year is always a good time to plan priorities and goals, including financial ones.
In that sense, the first thing is to have a clear definition of your income and expenses, for which it is essential to formulate a personal budget.
By keeping a budget that identifies these income and expense flows, it would be much clearer to define a roadmap to deal with accumulated debts and to determine the need for financing if required in the medium and long term.
It is also important to set financial savings goals to cope with unforeseen expenses and personal objectives: acquiring a home, vehicle or other asset of interest.
As the saying goes, habits make the man; therefore, the habit of saving builds healthy finances.
Do you think the construction sector will grow this year?
The increase in construction input prices, coupled with higher weighted average interest rates in 2023, will affect home purchases and, consequently, the construction sector.
Growth is likely to be moderate, due to these economic factors that will undoubtedly have an impact.
What advice do you offer to those who plan to buy a home this year?
In this year 2023, with more adverse financial conditions, it is advisable to accumulate savings and invest in financial instruments that will make those savings profitable now with more attractive rates.
Once financial conditions improve and inflation decreases, obtaining a loan will become easier and more convenient. If you have a good down payment, it's essential to secure the best possible financing, preferably with a fixed interest rate and a long term.
What is the ideal time for people to buy a home?
The ideal time is a combination of the general economic situation and personal financial reality.
Ideally, this moment should coincide with an economic reality of moderate interest rates and a personal financial condition that allows access to housing with good leverage of the initial down payment, committing the buyer for a shorter period.
About Francisco Tavárez
Bachelor of Economics, specialist in economic policy and public finance with more than 8 years of public and private experience; managing partner of the consulting firm Erudición where he offers consulting on economic issues, especially in public finance, economic policy and labor market; professor at the Autonomous University of Santo Domingo (UASD) since 2018.
