The Central Bank of the Dominican Republic (BCRD) released the preliminary results of the Dominican economy as of October 2023 this Friday.
Based on the knowledge, the monthly economic activity indicator (IMAE) registered an inter-annual expansion of three.6% in October 2023, the very best monthly rate of the present yr, after having recorded an inter-annual growth of two.6% within the third quarter of 2023, indicating that the monetary policy transmission mechanism is working favorably and that the Dominican economy continues its recovery process in order that it will be reaching its potential growth rate in the subsequent yr 2024 based on the Central Bank’s forecasting system.
The inter-annual growth for October is principally explained by the performance of hotels, bars and restaurants (9.0%), financial services (6.4%), construction (4.7%), agriculture (4.1%), free trade zone manufacturing (3.4%), commerce (2.8%), local manufacturing (1.5%), amongst others.
A very important aspect to focus on is that construction, a sector with a big multiplier effect and dragging other economic sectors, exhibits favorable variation rates for the fourth consecutive month, which reflects the effectiveness of the liquidity provision measures with collateral securities implemented by the monetary authorities to speed up the monetary policy transmission mechanism, in addition to the upper execution rate of public capital expenditure regarding the same period of last yr and the stabilization in the costs of inputs utilized in this activity.
It is suitable to focus on that through the present yr, the referred measures have meant loan disbursements for some RD$158,000 million at rates no higher than 9.0% every year, which, along with the reduction of 125 points within the monetary policy rate, have propitiated a drop within the weighted average of loan rates of interest by roughly 200 basis points, which implies a greater than complete transfer of the monetary policy signal to market rates.
When analyzing the IMAE in accrued terms, it’s observed that it registered a mean variation of 1.9% during January-October 2023 regarding the same period of 2022, being hotels, bars, and restaurants with an expansion of 10.8%, the activity of more significant contribution to the expansion in the current yr, explaining roughly 40.0% of the identical.
The expansion of the actual added value of the Hotels, Bars, and Restaurants activity is principally explained by the arrival of tourists by air, which amounted to an unprecedented total of 6,554,589 visitors in January-October 2023. It must be noted that considering the reception of 1,696,711 cruise ship passengers by sea in October, the accrued total of tourists to the country in the primary ten months of the yr stands at 8.3 million, a historic record based on figures reported by the Ministry of Tourism. It’s projected that the full number of tourists, i.e., tourists by air plus cruise ship passengers by sea, will exceed 10 million by the top of 2023, representing foreign exchange earnings for the country of greater than US$10,000 million.
Financial intermediation activity showed a year-on-year variation of 6.6% in its real aggregate value in January-October 2023, influenced by the 19.3% year-on-year expansion of credit granted to the private sector in local currency at the top of October 2023, such as an absolute increase ofRD$255,929 million in loans channeled.
An evaluation of agricultural activity shows a year-on-year growth of three.9% in January-October 2023. The sector’s performance is because of the rise within the production of the fundamental items of national consumption, similar to bananas, chicken, and eggs. The measures taken by the Government, through the Ministry of Agriculture and its agencies, which have provided technical and financial support to agricultural producers nationwide and guaranteed the country’s food security, have been fundamental to this performance.
Finally, the strength of the macroeconomic fundamentals and the resilience of the productive sectors of the Dominican economy allows it to proceed advancing on the trail of economic reactivation in a context through which inflation will remain throughout the goal range of 4.0% ± 1.0% over the monetary policy horizon.