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Governor of the Central Bank and Conep evaluate future perspectives of the DR economy

Gobernador del Banco Central y el Conep evalúan perspectivas futuras de la economía de RD

The Governor of the Central Bank of the Dominican Republic (BCRD) and the National Council of Private Enterprise (Conep), met to assess the current and future perspective of the economy of the Dominican Republic.

During the meeting, Pedro Brache highlighted that “the rate of attracting foreign direct investment, the behavior of the tourism sector, the balanced and sustained value of our currency, the income from remittances from the Dominican diaspora and the strength of the free zones, are only part of the elements that are strengthening the resilience and recovery capacity of the Dominican Republic, which currently presents a very favorable horizon despite the turbulent climate abroad.”

On his side, Governor Valdez Albizu highlighted the estimable assessment that other countries in the region and international organizations make with respect to the economic development, macroeconomic and fiscal policy of the country, to the point of constituting a point of reference and consultation for institutions interested in implementing measures such as those that have been implemented in our country.

In turn, he praised the role of the Dominican private sector, which today contributes more than one 85% to the growth of the nation.

Valdez Albizu presented to the board of directors of Conep, the most recent data on the behavior of the Dominican economy, offering a comparison with Latin American countries to show the strength of the fundamentals reflected in the performance of our nation, “which is why we are being a point of attraction for foreign direct investment, especially in the tourism sector, which has captured around 30% of this investment in recent years.”

The governor announced that the Monthly Indicator of Economic Activity (IMAE) registers an accumulated variation of 5.5% in the period January-August 2022, thus maintaining the same average growth exhibited during January-July, after having experienced an increase of 5.4% in the month of August compared to the same month of the previous year.

In addition, he pointed out that the growth forecasts at the end of 2022according to the economic models of the Central Bank, are of a 5% or higher, around its potential level.

By the end of the year, it estimated that foreign direct investment would be among the US$3,500 and US$4,000 million dollars, which would make it possible to cover the current account deficit, which would be between -3.0% and 3.5%.

Regarding the labor market, Valdez Albizu indicated that the total number of employed persons increased by approximately 170 thousand people from June 2021 to June 2022, recovering pre-pandemic level of 4.7 million of people; while the open unemployment rate fell from 8% at the beginning of 2021 to 5.2% nowadays.

In the tourism section, highlighted by the governor as one of the essential pillars of growth, he pointed out that income from this sector reached US$ 5,759.2 million in January-August, corresponding in the same period to the 4.9 million tourists admitted to the country. It is projected that some 7.2 million tourists for the closing of 2022 and that they are generated by this concept some $8.4 billion.

Continuing with the external sector, the governor informed Conep that family remittances reached US$ 6,518.8 million between January – July; and total exports, in their interannual variation, reached

Regarding national exports, in the same period the year-on-year variation was 20.0%, and in free zones 12.8%.

Valdez Albizu reported that as a result of the dynamism of foreign exchange-generating activities, to date there has been an accumulated appreciation of the Dominican peso of 7.6%, one of the highest in Latin America, with most of the countries in the region in a depreciating situation.

Likewise, it indicated that in order to face inflationary pressures, the Central Bank increased the monetary policy rate (TPM) up to 8.00% per year, a favorable situation when compared to rates such as those of Argentina.a (75.00%), Brazil (13.75%), Chile (10.75%), Uruguay (10.25%), Colombia (10.00%), Mexico (9.25%), Costa Rica (8.50%) and Paraguay (8.50%). He reported that developed countries such as the United States (3.25%), Canada (3.25%) and the United Kingdom (2.25%), they have also increased their TPM.

He pointed out that the economic measures implemented have contributed to the year-on-year inflation beginning to moderate from a 9.64% in April 2022 to 8.80% in August. Indeed, the variation of the CPI in August was 0.21% with respect to the month of July 2022, the lowest monthly inflation of the last 27 months.

In addition, he clarified that it is not true that the Dominican Republic has one of the highest inflation rates in Latin America, indicating that there are nine countries in the region with accumulated inflation and eight countries with higher year-on-year inflation.

On the other hand, the Governor pointed out that private loans in national currency are growing and maintaining their dynamism, growing around 14.0% year-over-year in August 2022, reflecting the boost in domestic demand.

He stated in his report that as of August 2022 the return on capital (ROE) of the Dominican financial system is 22.6%; that the ratio of profitability in relation to its assets is 2.6%; While your solvency is 16.3% and delinquency stands at 1.0%.

In this regard, Christopher Paniagua, member of the board of directors of Conep, highlighted the commitment of multiple banks to make contributions to the consolidation of an inclusive and sustainable economy, an objective in which the BCRD contributes to raising.

Valdez Albizu highlighted the country’s cybersecurity system, whose level is among the best in the world, to which all financial intermediation entities are invited to join. In turn, he expressed his confidence that the Dominican Republic is moving decisively towards a promising future, praising the work carried out by the President of the Republic, Luis Rodolfo Abinader Corona.

He stressed that the DR is an economy that can be bet on since it has strong macroeconomic fundamentals and social and political peace, which are the essential elements to continue attracting foreign direct investment.

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