The Central Bank of the Dominican Republic (BCRD) released the preliminary results of the Dominican economy as of October 2023 on Friday.
According to the information, the monthly indicator of economic activity (IMAE) registered a year-on-year expansion of 3.6% in October 2023, the highest monthly rate of the current year. This is after registering year-on-year growth of 2.6% in the third trimester of 2023. The monetary policy transmission mechanism is operating favorably, indicating that the Dominican economy continues its recovery process. It would be reaching its potential growth rate in 2024, according to the Bank’s forecast system.
The year-on-year growth in October is mainly explained by the performance of hotels, bars and restaurants (9.0%), financial services (6.4%), construction (4.7%), agriculture (4.1%), and manufacturing of free zones (3.4%).
Construction presents favorable variation rates for the fourth consecutive month, reflecting the effectiveness of the liquidity provision measures. This has accelerated the transmission mechanism of monetary policy, along with the greater pace of execution of public capital spending compared to the same period last year.
Loan disbursements have amounted to a total of RD$158,000 million, at rates no higher than 9.0% annually. This, along with a reduction of 125 points in the monetary policy rate, has led to a drop in weighted average lending rates of approximately 200 basis points.
Analyzed in accumulated terms, the IMAE registered an average variation of 1.9% during January-October 2023 compared to the same period in 2022. The activity with the most significant contribution to this year’s growth is hotels, bars, and restaurants, explaining approximately 40.0% of it.
The arrival of tourists by air has contributed to the growth in the real added value of the Hotels, Bars and Restaurants activity, leading to a historical record of visitors to the country in the first ten months of the year.
Financial intermediation activity showed a year-on-year variation of 6.6% in its real added value in January-October 2023. The performance of the sector is influenced by the 19.3% year-on-year expansion of credit granted to the private sector in local currency.
An analysis of agricultural activity shows an inter-annual growth of 3.9% in January-October 2023. The performance of the sector is due to the increase in the production of the main items of national consumption, such as bananas, chicken, and eggs.
Finally, the solidity of the macroeconomic fundamentals and the resilience of the productive sectors of the Dominican economy allow it to continue advancing on the path of economic reactivation in a context in which inflation will remain within the target range of 4.0% ± 1.0% during the next year’s monetary policy horizon.