In the midst of an uncertain global economic context, the Dominican Republic has maintained a positive outlook in its economic dynamics and has experienced a significant reactivation during the second half of the current year.
According to data provided by the Vice-Ministry of Economic and Social Analysis, the country’s economic activity experienced an impressive year-on-year growth of 2.9% in the month of July. This achievement is a testament to the resilience and adaptability of the Dominican economy at a time when many countries are facing considerable economic challenges.
What factors have contributed to this economic expansion?
Substantial improvement in several key economic sectors has been a major factor behind this growth. Local manufacturing, construction, trade, commerce and transport activities have seen a marked recovery, offsetting the slowdown in demand observed in the first half of the year.
It is also important to note that these improvements are not the result of chance. The country has implemented effective measures to stimulate its economy. One of the most significant factors has been the ease of liquidity provision, which has allowed companies to maintain their operations and reactivate projects that were on hold due to economic uncertainty.
In addition to liquidity, the Central Bank has implemented policy rate cuts as part of a monetary stimulus package. This has contributed to the mitigation of increases in the price level of key domestic consumer goods, which is positive news for citizens.
Speaking of inflation, in July, the Dominican Republic managed to maintain year-on-year inflation at 3.95%, the lowest figure since June 2020 (2.90%). Compared to other Central American countries, the country ranks fourth with the lowest year-on-year inflation. In addition, year-end projections have also been revised downwards, placing the Dominican Republic among the three economies with the lowest projected inflation for the end of the year, at 4%.
What does the future hold?
The Ministry of Finance notes that the effects of a more neutral monetary policy still have room to further contribute to the economic recovery. This suggests that we can expect growth to accelerate further in the coming months, with an even stronger rebound in early 2024.
Despite potential challenges, such as insularity and exposure to adverse climatic factors, the country’s macroeconomic fundamentals remain sound. Controlled inflation, a stable foreign exchange market and a growing external sector are clear signs that the Dominican Republic remains well positioned in the region.
While the outlook points to a soft landing for the US economy in the near term, doubts remain about the sustainability of this economic resilience. The Committee considers the odds of a recession next year to be just below 50%.
International perspective
Although the international economic outlook presents challenges, such as the economic slowdown in China, geopolitical tensions and global uncertainty, recent ECLAC projections place the Dominican Republic as the third fastest growing country in Central America by 2023, surpassed only by Panama and Costa Rica. This supports the positive outlook for the country’s economy.
The Dominican Republic has demonstrated its resilience and economic adaptability during the second half of the year. Efforts to stimulate the economy are bearing fruit, and the nation is on a positive path to economic recovery. Although challenges persist globally, the future looks bright for the Dominican economy.
