DR economic growth points to 10.7% by the end of 2021

The governor of Central Bank of the Dominican Republic (BCRD), Héctor Valdez Albizu, received in person the head of mission of the International Monetary Fund (IMF), Esteban Vesperoni, who counted in virtual mode with the members of his work team, who will jointly carry out an evaluation of the recent performance of the Dominican economy, its macroeconomic projections and the implementation of policies.

Valdez Albizu offered a general overview of the state of the economy of the Dominican Republic with the most relevant data regarding growth, monetary policy, inflation and the behavior of the external sector.

Regarding growth, the governor stated that the Dominican Republic continues its sustained recovery process, highlighting the monthly indicator of economic activity (IMAE) for January-September of 12.7%, influenced by the good performance of sectors with high productive chains such as construction , local manufacturing, free zones and trade. “The projections of increase for 2021 they point to an expansion of more than 10%, which could be around 10.7% ”, he estimated.

These positive perspectives are supported by the gradual improvement of the sightseeing, since some five million non-resident visitors are expected for the entire year 2021, as well as advances in the national vaccination plan that has managed to inoculate around 77% of the adult population with one dose and more than 63% with two doses.

Also, the governor highlighted the execution since March 2020 of the broad monetary easing plan worth RD $ 215 billion, approximately 5% of the gross domestic product (GDP), accompanied by a 150 basis point reduction in the monetary policy rate.

This monetary policy measure contributed to maintaining high levels of liquidity in the financial system, enabling an expansion of private credit in local currency of around 10%. As the economy consolidates its recovery, the central bank of the Dominican Republic began in August of this year the gradual and orderly return of the liquidity provided to financial intermediation entities during the pandemic, in support of the productive sectors.

Valdez Albizu pointed out that inflationary dynamics It has been affected by transitory supply shocks associated with higher prices of oil and other raw materials, as well as the absence of containers and the increase in global freight costs, which have affected imports. He noted that the BCRD forecasting system indicates that inflation would gradually converge to the rank target of 4% ± 1% by mid-2022.

Regarding the external sector, the governor affirmed that remittances will exceed US $ 10 billion by the end of 2021 and that the flows of investment Foreign Direct (FDI) remain high, estimating that they would be around US $ 3 billion by the end of the year.

Likewise, the levels of international reserves remain at historically high levels, estimating that they will close in 2021 close to US $ 12.5 billion, equivalent to 7.2 months of imports and 13.7% of GDP, which exceeds the metrics recommended by the IMF.

Valdez Albizu pointed out that, in the Dominican case, the distribution of the US $ 650 million for the allocation of special drawing rights (SDR) by the IMF, was used to strengthen the international reserves of the Central Bank.

The governor highlighted the great work carried out by the President of the Republic Luis Abinader to boost the different sectors of the economy and achieve their resilience, as well as the transcendental role played in this regard by the country’s private sector.

The head of the IMF mission, who participated in person in the meeting with Frank Fuentes, the Dominican representative before that body, was virtually accompanied by Pamela Madrid, Hassan Adan, Ben Sutton, Nicolás Fernandez-Arias, Dirk Jan Grolleman, Mario Mansilla and Evelyn Carbajal.

Present with the governor were the lieutenant governor, Clarissa de la Rocha de Torres; the manager, Ervin Novas Bello; the assistant manager General, Frank Montaño; the assistant manager of Monetary Policies, Exchange and Financial, Joel Tejeda; the Deputy Manager of National Accounts and Economic Statistics, Ramón González; and the government’s economic advisor, Julio Andújar Sckeker.

Likewise, the director of the department of Monetary Programming and Economic Studies Joel González; the director of the Department of Regulation and Financial Stability Máximo Rodríguez; the director of the International department Brenda Villanueva; and the director of the Treasury department, Yamileh García Belén.

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