The contribution of productive sectors, such as, the services and industrieswill be the great pillars of the economic growth of the country by 2023, which is estimated rwill reduce its dynamism from 5.3% with which it is expected to close this year to 4.5%.
Growth projections for the Dominican Republic increased by 0.3 percentage points since July, settling at 5.3%, which is attributed to the incidence of the service sector, which represents about 60% of total economic activity.ay presented an accumulated interannual variation of 7.2%.
Also, the added value of the industrial sector helped improve national projections, manufacturing in free zones (6.6%), local manufacturing (4.3%) and construction (2.2%) stand out.
These data are contained in the Economic Perspectives Report (2022-2023), published by the Economic Analysis Directorate of the Ministry of Industry, Commerce and MSMEs (MICM).
The analysis explains that inflation and geopolitical conflict between Russia and Ukraine threaten to cause a slowdown Y possible recession worldwide, which will be reflected in the decrease in global production, limitations in the supply chain due to high inflationary pressures and the tightening of monetary policies that will lead to a decrease in the demand for goods.
As another important factor that will affect the economies, the report points out the reduction in Chinese economic activity due to the outbreaks of Covid-19, the crisis in the real estate sector and the appreciation exposed by the dollar, factors that will further restrain world trade.
inflation outlook
According to this report, prepared by the Department of Economic Studies and Projections of the MICM, The Dominican Republic is among the limited group of nations in which the inflation outlook has been revised downward. and it is expected to close the year around 8.0%.
MICM analysts highlight that by 2023, it is estimated that the national economy will once again present levels close to the target range, that is, below 5%.
“The inflation expectations of the Dominican economic agents have presented a slight decrease with respect to previous months; standing at 7.5% by the end of 2022 and by 2023 they are close to 5.7%. This may be due to the fact that economic agents expect a quick and efficient transmission of monetary policy that will allow prices to stabilize”, the report points out.
In recovery
Regarding the labor marketsthe report indicates that they continue to recover, as wage growth has been in line with falls in the unemployment rate and rising inflation expectations.
Explain what, an unemployment rate equivalent to 6.4% is projected in the countryabove the 6.2% reached in 2019. However, the expected rate for the end of the year is expected to represent a decrease of 100 basis points compared to 2021.
By 2023, it is expected that the rate will be reduced to 6.2% in 2023 and with this it will return to the level of 2019.
“It is important to emphasize that, according to the results of the Consolidated National Workforce Survey (ENCFT) of the Central Bank, the informal sector of the economy (excluding domestic service) represents 51.7% of the employed population in the second quarter of 2022.
Additionally, during the referred period, the rate of dopen employment averaged 6.4%is at a level similar to that projected by the IMF for 2022”, highlights the report.
The forecast for Latin America and the Caribbean (LAC) is quite asymmetric, details the report, since it stands at an average of 8.1% at the end of 2022 and is projected at 7.9% for 2023.
Of the large economies in the region, such as Costa Rica, Colombia and Brazil, it is expected that they will have the highest unemployment rates at the end of this year. He adds that the inequality of labor recovery in the region responds, in part, to the heterogeneous growth of the economies.
exports
The volume of the Exports will slow down in some Latin American and Caribbean countries. The projections for the volume of exports of goods for the Dominican Republic are below that reached in 2021, expecting 4.4% for 2022 and 5.9% in 2023.
current account deficit
The current account deficit will be around -3.3% as a percentage of GDP. A value above 2021 (-2.8%), as well as higher than the -2.7% forecast for 2023.