According to the preliminary results of the Dominican economy, the real Gross Domestic Product (GDP) registered a growth of 4.9% last year 2022, after the monthly indicator of economic activity (IMAE) experienced a year-on-year variation of 3.3% in December, in line with the latest projections of the Central Bank (BCRD)
The results of the Dominican economy during the past year could be achieved despite the challenging global situation, says the institution.
The world economy during 2022 was affected by the significant impact of two successive shocks, the first being the lagged effects of the Covid-19 pandemic and the second the Russian invasion of Ukraine.
The consequences of these events were reflected in restrictions in the aggregate supply and inflationary pressures at a global level, mainly due to the disruptions in the supply chains, the high prices of raw materials (commodities) in international markets, including oil and the increase in container transportation costs. As a consequence, most countries adopted a restrictive monetary stance to control upward price pressures.
The expansion of the GDP in the year 2022 is a reflection of the strong macroeconomic fundamentals of the Dominican Republic, as well as its resilience to face external shocks. This strength, together with the timely and prudent implementation, as events and circumstances demanded, of economic policy decisions, both monetary and fiscal, as well as the climate of social peace, transparency and legal certainty, have been decisive in maintaining stability. economy and the flow of investment in the country, local and foreign.
The foregoing can be seen in the positive assessment of the Dominican economy, both by international organizations and by risk rating firms. A reliable example of the good perception of the Dominican Republic in international markets is the decision to Standard & Poor’s to upgrade the country’s sovereign credit rating from ‘BB-‘ to ‘BB’. It should be noted that prudent fiscal management with efficient debt management was an important element that was taken into account for the aforementioned improvement in the credit rating, in addition to expectations of continuity of appropriate policies in the medium term, as well as diversification. of the Dominican productive apparatus.
Regarding the Nominal GDP, an increase of about US$18,476 million is projected to situate around US$114 billionwhich further improves the ratio of debt to GDP with respect to the previously estimated.
Likewise, this figure allows reaching a GDP per capita of approximately US$10,700 in 2022, higher than the US$8,971.9 verified in 2021, ranking the country as the seventh economy in Latin America. 3
Gross Domestic Product (GDP)
Growth rates 2022 (%) 2022 Jan-Dec
Agricultural sector grew 5.0%, Exploitation of Mines and Quarries -7.2%, Local Manufacturing 2.2%, Manufacturing Free Zones 5.4%, Construction 0.6%, Services 6.5%, Energy and Water 3.6 5, Commerce 5.4 5, Hotels, Bars and Restaurants 24.0 %, Transportation and Storage 6.4%, Communications 4.5%, Financial Services 5.8%, Real Estate and Rental Activities 4.5%, Teaching 4.3%, Health 11.3%, Other Service Activities 8.2%, Public Administration 8.5%
Regarding the details of the behavior of economic activities in 2022, the important incidence of the services sector as a whole, which represents approximately 60.0% of the total size of the economywith an expansion of 6.5% in real terms during the past year.
It was led by the activity hotels, bars and restaurants (24.0%), followed by health (11.3%), other service activities (8.2%), public administration (8.5%), transport and storage (6.4%), services financial (5.8%) and commerce (5.4%).
Agriculture registered a growth of 5.0%; while, within the industrial activity that constitutes about a third of GDP, there were increases of 5.4% in manufacturing in free zones, 2.2% in local manufacturing and 0.6% in construction.
As previously highlighted, the activity with the greatest contribution to the GDP result in 2022 was hotels, bars and restaurants, registering a year-on-year expansion of 24.0% in its real added value.
The behavior of this sector was mainly driven by the total arrival of 7.2 million tourists by air, reaching a historical record. The dynamism was also observed in the unprecedented arrival of 1.3 million cruise passengers through the different ports of the country. In this way, in the past year some 8.5 million visitors entered, according to figures from the Ministry of Tourism.
In the performance of the manufacturing industry during the year 2022, the activity of the free zones stands out, which registered an interannual increase of 5.4%, caused by the increase in its exports of goods to meet external demand. The development that this sector has shown corresponds to the growing number of 4
companies established under this regime that promote the creation of new formal jobs, registering 192,291 employees in the sector as of December 2022, according to information provided by the National Council of Export Free Zones (CNZFE). Likewise, the flow of direct investments destined to the sector in response to the climate of stability and attractive opportunities offered by the Dominican Republic is highlighted.
Working market
According to the National Continuous Labor Force Survey (ENCFT), the economy reached a total employment of 4.77 million workers (including formal and informal), exceeding the level evidenced in the same quarter of 2019, that is, the total observed previously. to the COVID-19 pandemic. This result is equivalent to some 92,642 net new jobs at the end of 2022 compared to 2021, for a year-on-year variation of 2.0%.
It is important to point out that the generation of new jobs was concentrated in the formal occupation, when an increase of 130,561 was verified in said category; while the number of informally employed fell by 37,919 workers. Given this behavior, the percentage of informality, that is, the proportion of employed persons who do not have access to social security benefits through their occupation, decreased by 1.9 percentage points, going from 58.1% in October-December 2021 to 56.2%. in the same quarter of 2022.
On the other hand, the open unemployment rate, which is defined as the percentage of unemployed people who are actively looking for work, contracted by 3.2 percentage points, from 8.0% registered in January-March 2021 to 4.8% in October-December 2021. 2022, and by 2.3 percentage points when compared to the figure of 7.1% reported in the same quarter of 2021.
Monetary politics
During 2022, the BCRD continued to implement a gradual monetary restriction plan with the purpose of mitigating global inflationary shocks, as well as domestic demand pressures, to the extent that domestic economic activity maintained a favorable performance. Indeed, the monetary policy rate (TPM) accumulated an increase of 550 basis points (bps) between November 2021 and October 2022, standing at 8.50% per year in October. Meanwhile, during the last two months of 2022, there was a pause in the cycle of increases in the TPM, estimating that it has reached the appropriate level for inflation to converge to the target range of 4.0% ± 1.0% during the year. 2023.
On the other hand, private credit in national currency varied above 14% year-on-year in December, mainly driven by financing to households that grew around 20% year-on-year, while loans to the productive sectors have slowed down to a expansion of 7.8% year-on-year for the end of the year. 5
The monetary restriction process, together with the fiscal measures implemented to face the higher international prices of