The Dominican Republic’s Central Bank (BCRD) has published the preliminary results of economic activity up until May 2024. In May alone, the monthly economic activity indicator (IMAE) identified a 4.3% growth rate. This is in spite of uncertainties around election cycles and potential impacts from a series of proposed reforms in fiscal, constitutional and labor sectors.
In the initial five months of 2024, the average annual growth rate was 4.9%. This reflects the successful implementation of the Central Bank’s liquidity provision program which began in mid-2023 and has enabled positive monetary and financial conditions.
The initiatives have resulted in a approximately 20.3% annual growth of private credit in the national currency in May 2024, which amounts to an additional RD$290,071.4 million. Notable increases include funds allocated for consumption (RD$88,122.4 million), home purchases (RD$43,100.8 million), commerce (RD$42,417.6 million), construction (RD$27,109.5 million), manufacturing industries (RD$19,889.1 million) among others. Additionally, economic performance aligns with the Government’s capital expenditure pace, costing RD$62,781 million from January to May 2024, equivalent to 0.8% of the Gross Domestic Product (GDP), this is similar to the same period last year.
Moreover, it is noteworthy that resilience has been shown by the domestic production apparatus despite a challenging international environment where interest rates of the United States of America (USA), our principal trading partner, are relatively high. Added to this are the economic agent’s expectations being impacted due to uncertainty originated from geopolitical disturbances in the Middle East and Eastern Europe which have led to an increase in raw material prices.
Forecasts from several international organizations are in alignment with the IMAE expansion noted in January-May, predicting the Dominican Republic to become one of Latin America’s fastest-growing economies by the end of 2024.
The annual variation of 4.9% comes from performance in sectors such as hotels, bars, and restaurants which saw a 9.2% variation, financial services (7.8%), rental and real estate activities (6.0%), free zone manufacturing (5.8%), storage and transportation (5.7%), water and energy (5.2%), other service-based industries (5.2%), communications (5.0%), construction (4.4%), healthcare (4.4%), education (4.1%), agriculture (4.0%), commerce (3.4%), and local manufacturing (2.7%), among others.
The activity within hotels, bars, and restaurants demonstrated an annual variation of 9.2% for January-May 2024. This growth was primarily due to the influx of 3,716,262 tourists by air and an additional 1,284,635 land-based tourists, totaling 5,000,897 visitors in the first five months of 2024. In addition, the consolidated credit portfolio directed towards this sector saw an increase of 27.6% in comparison to May 2023.
In regards to construction, which influences other economic sectors significantly, there was a 4.4% year-on-year growth from January to May 2024. It is estimated this sector will witness a surge in the upcoming months as the potential effects of the proposed reforms this year pave way for clearer expectations.
In addition to this, local manufacturing experienced an average annual growth of 2.7% in the initial five months of 2024, primarily attributed to other food products and the common metals manufacturing sector. Also, a 5.8% annual expansion in the real added value of free zone manufacturing is largely due to exports amounting to US$3,469.0 million during January-May 2024.
The agriculture sector noted a 4.0% annual growth from January to May, with boosts in rice, banana, avocado, chicken, egg production, etc. during this period, for which the Government’s technical and financial support to nationwide agricultural producers through the Ministry of Agriculture was key.
Last but not the least, except for mining which saw a 16.5% drop due to a temporary halt in the ferronickel extraction company’s operations since December 2023 and a slowdown in the gold extraction process, all the economic sectors recorded a positive performance from January-May 2024. This slowdown was due to plans to adapt the facilities necessary for sustaining mining activities in the country’s main deposit.