- Accumulated growth records an average year-on-year expansion of 4.9% in January-May 2024.
- The Central Bank (BCRD) reports preliminary results of economic activity through May 2024.
The monthly economic activity indicator (IMAE) recorded an expansion of 4.3% in May of the current year, despite the recent uncertainty associated with the electoral cycle and the impact on expectations from multiple announced reforms in tax, constitutional, and labor areas. Nevertheless, in the first five months of 2024, an average year-on-year growth of 4.9% was achieved.
This performance of the Dominican economy is consistent with the operation of the monetary policy transmission mechanism, reflecting the positive impact of the liquidity provision program implemented by the Central Bank since mid-2023, which has fostered favorable monetary and financial conditions, according to the Central Bank (BCRD) preliminary results on economic activity through May 2024.
Indeed, these measures have succeeded in stimulating private credit in the national currency, expanding by approximately 20.3% year-on-year in May 2024, equivalent to an additional RD$290.071.4 million. Significant increases were noted in credit for consumption (RD$88,122.4 million), housing acquisition (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, the economy’s performance aligns with the pace of government capital expenditure, which amounted to RD$62.781 billion in January-May 2024, representing 0.8% of Gross Domestic Product (GDP), a similar percentage to the previous year’s period.
The economic activity results demonstrate the resilience of the national productive sector amidst the current international environment, where interest rates in the United States of America (USA), our main trading partner, remain relatively high. Furthermore, economic agents’ expectations have been affected by uncertainty associated with geopolitical conflicts in the Middle East and Eastern Europe, reflected in higher commodity prices.
The IMAE expansion from January to May is in line with forecasts from various international organizations, positioning the Dominican Republic as one of the fastest-growing economies in the Latin American region by the end of 2024.
The 4.9% year-on-year variation reflects the performance of hotels, bars, and restaurants with a 9.2% increase, financial services (7.8%), real estate and rental activities (6.0%), free zone manufacturing (5.8%), transportation and storage (5.7%), energy and water (5.2%), other service activities (5.2%), communications (5.0%), construction (4.4%), health (4.4%), education (4.1%), agriculture (4.0%), commerce (3.4%), local manufacturing (2.7%), among others.
The hotels, bars, and restaurants sector showed a cumulative year-on-year variation of 9.2% in the January-May 2024 period. This notable dynamism was largely supported by the arrival of 3,716,262 air tourists and 1,284,635 excursionists, totaling 5,000,897 visitors in January-May 2024. Additionally, consolidated credit directed to the sector increased by 27.6% compared to May 2023.
Regarding construction, which has a significant multiplier effect on other economic sectors, it showed a year-on-year growth of 4.4% in January-May 2024. It is expected that this activity will perform better in the coming months as uncertainties regarding the content of reforms that could be implemented this year are resolved.
Local manufacturing recorded an average year-on-year increase of 2.7% during the first five months of 2024, mainly driven by the performance of other food products and common metals manufacturing. Likewise, the 5.8% year-on-year expansion in the real value added of free zone manufacturing is largely explained by exports totaling US$3.469 billion in January-May 2024.
The agricultural sector showed a year-on-year growth of 4.0% in January-May of the current year, with increases in rice, plantain, avocado, chicken, eggs production, among others, supported significantly by technical and financial support provided to national agricultural producers by the Government through the Ministry of Agriculture.
Furthermore, all economic activities showed positive performance in January-May 2024, except for Mining, which declined by 16.5%. This decline is primarily attributed to the temporary cessation of operations by the ferronickel extraction company since December 2023 and slowdowns in gold extraction due to facility readjustments required for the continuity of mining activities in the country’s main deposit.
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