Dominican economy grows by 3.6% in October

Santo Domingo.- The Central Bank of the Dominican Republic (BCRD) has recently shared preliminary results for the Dominican economy as of October 2023, emphasizing its commitment to transparency and timely exchange of data. The report indicates a positive trend in several key areas.

The Monthly Indicator of Economic Activity (IMAE) showed a significant year-on-year expansion of 3.6% in October 2023, the highest monthly rate of the current year, after a growth of 2.6% in the third quarter. This growth suggests that the Dominican economy is on a solid recovery path and is expected to reach its potential growth rate by 2024.

Sector-specific growth was notable in hotels, bars and restaurants with an increase of 9.0%, followed by financial services with 6.4%, construction with 4.7%, agriculture with 4.1%, manufacturing of free zones with 3.4%, trade with 2.8% and local manufacturing at 1.5%. The construction sector, in particular, demonstrated positive growth for the fourth consecutive month, reflecting the effectiveness of liquidity provision measures and increased public capital spending. This growth also indicates a stabilization of the prices of inputs used in construction activities.

From a monetary policy perspective, the BCRD measures resulted in significant loan disbursements of around RD$158 billion at rates that do not exceed 9.0% annually. The 125-point reduction in the monetary policy rate led to a decrease in average lending rates by approximately 200 basis points.

The tourism sector, particularly hotels, bars and restaurants, expanded by 10.8% from January to October 2023, largely driven by a record number of 6,554,589 air tourists and 1,696,711 cruise passengers during this period. The total number of visitors is expected to exceed 10 million by the end of 2023, contributing more than $10 billion in foreign exchange earnings.

Financial intermediation activity grew by 6.6%, influenced by a 19.3% year-on-year expansion in credit to the private sector. The agricultural sector also experienced growth of 3.9%, driven by increased production of key items for domestic consumption and supported by government initiatives.

In terms of inflation, it is projected to remain within the target range of 4.0% ┬▒ 1.0% over the monetary policy horizon. This outlook underscores the strength of the macroeconomic fundamentals and the resilience of the productive sectors of the Dominican economy, positioning it well for continued economic reactivation.

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