Foreign direct investment “almost entirely” financed the 3.8% deficit recorded in the current account of the balance of payments in 2023, where the transactions of goods, services, investments, and transfers between the Dominican Republic and the rest of the world are recorded, the Central Bank reported.
According to a press release, the governor of the Central Bank of the Dominican Republic (BCRD), Hector Valdez Albizu, said that foreign investment amounted to US$ 4,381 million in 2023, driven by the tourism, energy, and real estate sectors.
This vigorous activity, together with the $10.157 billion in remittances that the country received throughout last year, plus the $12.9 billion contributed by Dominican exports, not only helped cover this deficit but also increased the bank’s international reserves.
These reserves – which guarantee that the Central Bank can offset imbalances in the balance of payments, meet its monetary obligations, and maintain the stability of the Dominican peso – closed at $15.464 billion last year.
This amount is equivalent to six months of imports and about 13% of GDP, “exceeding the thresholds recommended by the International Monetary Fund (IMF),” the governor stated to his international counterparts while taking part in the Central American Monetary Council’s 60th Anniversary.
Recovery of the Dominican Economy
Although the Dominican economy closed with a 2.4% growth in 2023 – 2.5 percentage points less than in 2022, when it closed at 4.9% – Valdez Albizu indicated that the economy registered a remarkable recovery in the last months of 2023, with an expansion of 4.2% in the fourth quarter and 4.7% year-on-year in December alone.
So, prospects remain that the Dominican economy will continue its growth trend in terms of gross domestic product (GDP), allowing it to reach around 5.0-5.5% per year by 2024.
Furthermore, the highest monetary authority indicated that, during 2023, there was a significant reduction in inflationary pressures which was the main economic achievement accomplished last year.
Implementing more favorable monetary and fiscal measures allowed Dominican inflation to drop “below the target range of 4.0% ± 1.0%,” from a maximum of 9.64% in April 2022 to 3.32% by January 2024.
Valdez Albizu indicated that these advances created the space to initiate a monetary stimulus plan that reduced the monetary policy rate by 150 basis points, which stood at 7.00% per year until now.
Employment Improvements
At the 300th meeting of the CAMC, the governor appreciated how the Dominican economy’s performance had led to progress in the labor market, and to illustrate this, he pointed out that the employed population has increased steadily, reaching 4.9 million workers, “the highest figure ever”, and equivalent to an annual increase of 178,000 employed at the end of 2023.
CAMC Celebrates 60th Anniversary
The Central American Monetary Council celebrated its 60th anniversary from February 22 to 23 of this year in the city of San Salvador, El Salvador. The meeting was attended by the presidents and governors of the region’s central banks, as well as different experts from international organizations.
This anniversary was commemorated by recognizing the trajectory, impact and contributions of the multilateral organization to the macroeconomic and financial stability of the region.
Those present reflected on the main transformations that the organization has undergone over time, as well as the challenges that lie ahead. Tribute was also paid to the staff of the Executive Secretariat for their years of service.
During the event, the governor of each central bank in the region had the opportunity to present the current macroeconomic context of his country and its prospects for 2024.
These presentations focused on the evolution of economic activity, inflation, financial conditions, and economic forecasts for each country.
Most of the presentations agreed on the importance of having managed to reduce inflation and bring it around its target range in most countries while maintaining the growth trend of the countries within the region, thus achieving higher GDP growth by the end of this year.
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