In the report “Macrofinancial Linkages and Growth at Risk in the Dominican Republic” published on 15 November 2019, the International Monetary Fund (IMF) calls the attention of the Dominican Republic to the economic realities that are currently playing out in the country’s key trading partners, the United States and the European Union. The IMF warns that these events can dampen trade and competitiveness.
The report analyzes the possible reaches of possible external shocks on the domestic economy. The IMF points out that a negative shock on the availability of domestic credit would have a strong negative impact on the DR’s growth. The entity stresses the importance of monetary policy as well as other policy instruments such as creating fiscal space, accumulating adequate foreign reserves, as well as building liquidity and capital buffers in the banking system in “good “ times to help cushion the effect of a potential economic downturn.
The report examines how macrofinancial conditions affect the growth outlook. The IMF focuses on risks to GDP growth in the country using quarterly data for 1996-2018. Based on 32 indicators, the IMF determined that the Dominican Republic’s growth distribution appears most vulnerable to negative shocks to domestic financial conditions, domestic leverage, domestic demand and external demand, with additional repercussions from the external cost of borrowing in the longer run.
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IMF
Diario Libre
18 November 2019