The Ministry of Economy, Planning and Development (MEPyD) maintains its growth projection for the Dominican economy at 5.0% unchanged, due to the levels of uncertainty that are managed in international markets, a figure that it considers positive compared to forecasts made for other countries in the region.
In its Macroeconomic Outlook 2022-2026the ministry explained that the performance of world economic activity has been affected by the effects of the armed conflict between Russia Y Ukraineas well as the persistence of supply chain disruptions, the “faster and longer-than-expected” price escalation, and the resurgence of cases of COVID-19.
In this context, international organizations have revised down the growth prospects in a large number of economies, including the advanced ones. However, at the national level, the Dominican economy is expected to grow 5.0%, a forecast that is maintained with respect to the observations at the beginning of the year.
Regarding prices, external inflationary pressures, considered by the Ministry as “more persistent than expected”, have affected the behavior of local prices, for which it is expected that the inflation year-end is located at 8.5% to converge to the target range of 4% ± 1% during 2023.
The document points out that, under these conditions, global projections of economic growth continue to be revised downwards. The world economy is expected to grow around 3.6% at the end of 2022 and 3.2% in 2023, although with notable differences between economies.
The analysis of the MEPyD maintains that, internally, the condition of the Dominican Republic as a net importer of some articles produced abroad, positions it as a country potentially vulnerable to external shocks such as those currently occurring.
In this context, it is expected that the inflation average is located at 9.0% for an increase of 0.5 percentage points, with respect to the March Macroeconomic Outlook and the year-end Outlook at 8.5% with an increase of 1.5 percentage points in 2022, converging to the target range of 4% ± 1% during 2023.
In addition, it points out that, in recent months, the conflict between Russia and Ukraine has contributed to exacerbating the behavior of the price of crude oil, which is quoted in international markets above 110 dollars, and of some cereals such as wheat and corn. trading at historically high levels.
As a result of a greater flow of currency recently registered, which has influenced, among other things, the appreciation trend of the exchange rate, it is expected that the average exchange rate will close at 56.6 pesos for each dollar, a reduction of RD$ 0.8 with respect to the March 2022 forecast and an appreciation rate of 1.17% relative to the 2021 average.