The delegation included executives from the corporations Bank of America, Metlife, Wellington, Finisterre, Allianz, Prudential, Baillie Gifford and HSBC.
The Governor of Central Bank of the Dominican Republic (BCRD), Hector Valdez Albizumet with a delegation from Investment Banks international organizations that are in the country visiting different public and private institutions, analyzing the current situation and future perspectives of the Dominican economy.
Valdez Albizu offered the executives of the companies Bank of America, MetLife, Wellington, Finisterre, Allianz, Prudential, Baillie Gifford and HSBCholders of important international investment funds, a complete review of macroeconomic policy, the measures adopted to face the crisis and strengthen growth, as well as the current situation of the main Dominican economic sectors.
The governor began his report by highlighting that the Dominican economy has maintained growth above its potential, registering an expansion of 5.6% in the January-June period, after growing 5.8% year-on-year during the month of June. He indicated that the dynamism of the economic activity this year it has been driven mainly by the hotel, bar and restaurant sectors; health, free zones, transport, storage and trade, among others.
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Valdez Albizu noted that “this favorable performance has contributed to a recovery of jobs in relation to the pre-pandemic; in fact, the rate of open unemployment has decreased from 8.0% in the first quarter of 2021 to 5.2% in the second quarter of 2022”.
He announced that, according to the economic models applied by the BCRD, economic growth is expected for the closing of 2022 around 5.0% – 5.5%, one of the highest expansions in the region, consistent with estimates by international organizations, such as the International Monetary Fund (IMF) and the World Bank (WB).
In another order, the governor informed investors that “the performance of tourism has been very remarkable after the arrival of 4.3 million non-resident passengers between January-July 2022, for an increase of 74% compared to the same period of 2021 and higher than 2019. In this regard, he advanced that “more than 7 million tourists are expected at the end of 2022.”
To complement the information on the external sector, he informed them that remittances amounted to US$5,669.7 million in the January-July period and that“in the same upward trend, total exports grew by 16.5% during the first half of 2022.”
Regarding the account deficit current, Valdez Albizu expressed that “It would be between 3% and 3.5% of the gross domestic product (GDP), being comfortably covered by foreign direct investment (FDI), which is projected at around US$ 4,000 million.
The governor specified that “the dynamism of foreign exchange-generating activities has contributed to the relative stability of the exchange rateobserving an accumulated appreciation of the currency of 7.7% as of August 22, 2022”.
In this context, the BCRD has been buying foreign currency with the aim of strengthening reserves international markets and avoid a sharp drop of the exchange rate that could affect the sectors that generate foreign currency. “So far this year, international reserves have increased by more than US$ 1,000 million and only in August they have bought more than US$ 500 million through the electronic currency platform”, he explained.
Monetary policy and prices
Valdez Albizu He stated that “in this scenario of higher inflationary pressures, the BCRD began a process of normalization of monetary policy at the end of 2021, reversing the expansive stance implemented during the pandemic; In this way, efforts are made to avoid risks of overheating of the economy, as well as a deterioration of the differential with respect to external interest rates”.
Likewise, he indicated that “the BCRD has increased its monetary policy rate by 475 basic points since November of 2021, going from 3.00% to 7.75% annual, one of the smallest increases in Latin America (below average). Additionally, excess liquidity has been reduced through open market operations and the gradual return of the resources that had been granted during the pandemic.”
Finally, reported that year-on-year inflation has It has been moderating recently, going from a maximum of 9.64% in the month of April 2022 to 9.43% in July. Forecasts indicate that inflation will continue to moderate, converging to the target range of 4% +/-1% in the second half of 2023.
The Governor concluded his speech emphasizing that the Dominican economy is on the right track and that it can be bet on the future of our economy, noting that the BCRD will continue to monitor financial conditions global and local to take the necessary measures that allow the achievement of inflation objectives and maintenance of macroeconomic stability.
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At the meeting were present Alexander Muller, Lucas Martin, Jose Hernandez Ortiz, and Adam Sandelovsky, by Bank of America; José del Rosal, by Metlife; Gabriel Tenorio, for Wellington; Andy Fee, for Finisterre; Alexander Robey, for Allianz; Mindaugas Lepeska, by Baillie Gifford; Martin Soler, for HSBC; Ning Sun, for AIG; and Fernando Castro, by Neuberger Berman.
They accompanied the Governor Valdez Albizu, Lieutenant Governor Clarissa de la Rocha de Torres, the manager Ervin Novas, the deputy manager of Monetary, Exchange and Financial Policies Joel Tejeda, the deputy manager of National Accounts Ramón González, the economic adviser of the Government Julio Andújar, the director of Programming Monetary Joel González and the director of the department International Brenda Villanueva.
