The Ministry of Economy, Planning and Development highlighted the positive prospects for the country’s economic dynamics and its reactivation in the second half of this year.
“In fact, for the month of July, the growth of economic activity stood at 2.9% year-on-year,” stated the Vice Ministry of Economic and Social Analysis through the Directorate of Macroeconomic Analysis in a technical note on the country’s situation and regional growth.
The expansion is due to the significant improvement in manufacturing activities.
This recent result reflects the effects of the liquidity provision facilities and the reductions in official interest rates, which are part of the stimulus package. The monetary policy implemented by the Central Bank and the continuity given by the Government in the granting of subsidies to certain items have also had an impact on mitigating the increases in the price level of the main products of national consumption.
Year-on-year inflation stood at 3.95% in July, the lowest inflation rate since June 2020 (2.90%).
“If we compare ourselves with the Central American region, we rank fourth with the lowest year-on-year inflation. And if we compare with the year-end projections, which have been revised downwards given recent performance, we are among the top three economies with the lowest projected closing inflation at 4%,” says the Ministry of Economy.
The effects of a more neutral monetary policy still have a way to go, which allows us to affirm a more accelerated reactivation for the remainder of the year and a rebound in the economy for the beginning of 2024.
“Although the Dominican Republic may maintain a vulnerable condition given its insularity and be affected not only by global economic dynamics -to a greater extent than other countries in the region- but also by adverse climatic effects, the strength of the country’s macroeconomic fundamentals is evident,” he says.
It should be noted that controlled inflation within the ranges established by the authorities, a stable exchange market, and a constantly growing external sector reflect the continued good position of the country in the region.
International perspective:
The Ministry of Economy indicates that the international panorama continues to generate downward pressure on the growth prospects of the economies of the world and the region.
It points out that the slowdown in China’s economic activity, the persistence of inflationary pressures in the central component, the tightening of financial conditions, inflationary pressures in the underlying part, and the tightening of financial restrictions, as well as the intensification of geopolitical conflicts and the still uncertain outcome of the war between Russia and Ukraine are factors that have maintained a downward bias in the economic outlook, given the levels of uncertainty they generate.
However, he points out that the most recent projections from international organizations such as ECLAC place the Dominican Republic as the third country in Central America with the highest growth by 2023, at 3.7%, only surpassed by Panama and Costa Rica.
“This confirms the positive outlook for the country’s economic dynamics and its reactivation for the second half of the year,” he concludes.