The Governor of central bank, Hector Valdez Albizumet with the board of the National Council of Private Enterprise (Conep), headed by its president, Pedro Brache, in which the governor presented a report on the economic situation and future prospects of the Dominican Republic.
As reported by the bank in a press release, the business representation expressed confidence in the economic growth of the country and its directors said they were convinced that with the support of the government and the management of the central bank the country will overcome the effects derived from the international economic and geopolitical situation.
During the meeting, Pedro Brache highlighted: “The rate of attracting foreign direct investment, the behavior of the tourism sector, the balanced and sustained value of our currency, the income from remittances from the Dominican diaspora and the strength of the free zones, are only part of the elements that are strengthening the resilience and recovery capacity of the Dominican Republic, which currently presents a very favorable horizon despite the turbulent climate abroad.”
While Governor Valdez Albizu highlighted the “valuable assessment that other countries in the region and international organizations make with respect to the economic development, macroeconomic and fiscal policy of the Dominican Republic, to the point of constituting a point of reference and consultation for institutions interested in implementing measures such as those that have been carried out in our country”. At the same time, praised the role of the Dominican private sectorwhich today contributes more than 85% to the nation’s growth.
Foreign investment
Valdez Albizu presented to the board of directors of the Conep the most recent data on the behavior of the Dominican economy, offering a comparison with the countries of Latin America to show the strength of the fundamentals reflected in the performance of the nation, “which is why we are being a point of attraction for foreign direct investment, especially in the tourism sector, which has captured around 30% of this investment in recent years”.
The governor announced that the Monthly Indicator of Economic Activity (IMAE) registers an accumulated variation of 5.5% in the period January-August 2022, thus maintaining the same average growth exhibited during January-July, after having experienced an increase of 5.4% in the month of August compared to the same month of the previous year.
He pointed out that the growth forecasts at the end of 2022, according to the economic models of the central bank, are 5% or higher, around their potential level. By the end of the year, it estimated that foreign direct investment would be between 3.5 and 4.0 billion dollars, which would make it possible to cover the current account deficit, which would be between -3.0% and 3.5%.
Regarding the labor market, Valdez Albizu indicated that the total number of employed persons increased by approximately 170 thousand people from June 2021 to June 2022, recovering the pre-pandemic level of 4.7 million people; while the open unemployment rate fell from 8% at the beginning of 2021 to 5.2% today.
Tourism
Regarding tourism, he pointed out that income from this sector reached 5,759.2 million in January-August, corresponding to the 4.9 million tourists entering the country in the same period. It is projected that some 7.2 million tourists would be received by the end of 2022 and that some 8,400 million dollars will be generated for this concept.
Continuing with the external sector, the governor informed the Conep that family remittances reached 6,518.8 million dollars between January-July; and total exports, in their interannual variation, reached 15.9% in January–July. Regarding national exports, in the same period the interannual variation was 20.0%, and in the free zones it was 12.8%.
Valdez Albizu reported that as a result of the dynamism of foreign exchange-generating activities, to date there has been an accumulated appreciation of the Dominican peso of 7.6%, one of the highest in Latin America, with most of the countries in the region in depreciation situation.
Inflation
He indicated that to face inflationary pressures, the central bank has increased the monetary policy rate (TPM) up to 8.00% per year, a favorable situation when compared to rates such as those of Argentina (75.00%), Brazil (13.75%), Chile (10.75%), Uruguay (10.25%) , Colombia (10.00%), Mexico (9.25%), Costa Rica (8.50%) and Paraguay (8.50%). He reported that developed countries such as the United States (3.25%), Canada (3.25%) and the United Kingdom (2.25%), have also increased their TPM.
He pointed out that the economic measures implemented have contributed to the year-on-year inflation beginning to moderate from 9.64% in April 2022 to 8.80% in August. Indeed, the variation of the CPI in August was 0.21% with respect to the month of July 2022, the lowest monthly inflation in the last 27 months. He clarified that it is not true that the Dominican Republic has one of the highest inflation rates in Latin America, indicating that there are nine countries in the region with accumulated inflation and eight countries with higher year-on-year inflation.
On the other hand, the Governor pointed out that private loans in national currency remain dynamic, growing around 14.0% year-on-year in August 2022, as a reflection of the boost in domestic demand.
Finally, he stated in his report that as of August 2022 the return on capital (ROE) of the Dominican financial system is 22.6%; that the ratio of profitability in relation to its assets is 2.6%; while its solvency is 16.3% and delinquency stands at 1.0%.
About, Christopher Paniaguamember of the board of directors of Conephighlighted the commitment of multiple banks to make contributions to the consolidation of an inclusive and sustainable economy, an objective in which the BCRD contributes to raising.
Valdez Albizu concluded by emphasizing that the DR is an economy in which one can bet “because it has strong macroeconomic foundations and social and political peace, which are the essential elements to continue attracting foreign direct investment.”
