Experts and economists, who participated in the Think Economics annual economic event of the Swiss-Dominican Chamber of Commerce and Tourism (CCTDS) agreed that the reactivation of public investment, using public-private partnerships, will be key in achieving results above what is projected in 2022. The theme of the Think Economics meeting this year was “The Next Generation Recovery.”
“President Luis Abinader and his government team have shown us in these last 15 months how to efficiently manage a health crisis and accelerate the economy. Issues such as sustainability and the commitments made at COP26 are being contemplated in this next generation recovery,” explained Gaetan Bucher, president of the CCTDS. “Dominican Republic is one of the only countries in Latin America that will close 2021 with a GDP above pre-pandemic levels,” he stressed.
Swiss ambassador to the Dominican Republic, Rita Hammerli-Weschke spoke at the event of the challenge to transform the economies of developing countries to be sustainable without compromising their competitiveness.
The specialists agreed that the epicenter of the pandemic is currently between Europe and the United States, especially the latter for the Dominican Republic since we receive the main flows of tourists and foreign investment.
Dominican Republic ambassador in Switzerland, economist José Sánchez Fung explained that the country must be alert to increases in the reference rate for monetary policy in the United States.
From a regional point of view, Alonso Cervera, chief economist for Latin America at Credit Suisse, said that in Latin America, monetary and fiscal policies have been expansionary and lax. Elements that have driven the economy to grow 6.5% on average in the region. According to Credit Suisse, global growth in 2022 will be 4.3%, a figure that could improve as restrictions are relaxed.
“In Latin America in 2021, the economies surprised us favorably, with 6.5% growth, but it will probably slow down a lot with just 1% growth. The basis for comparison is going to be high, and many countries are already withdrawing fiscal stimulus”, he explained.
The Covid variants will be one of the challenges facing the authorities, who will have to remain vigilant. As a neighboring country, the instability in Haiti will have an impact, said Raul Ovalle, managing partner of Analytica.
“Despite our success, we must continue with the vaccination process to continue growing because in general, when the Dominican economy grows, it does so for a long time. Haiti’s situation is also important,” he observed. He also remarked that Dominican growth rate has been the highest in the entire region. He highlighted how in 2021 the country has recovered quite robustly and diversified not only in sectors but also in employment.
On the other hand, Ovalle added that the recovery of global and domestic demand has impacted prices, so inflation is above the region’s target range and average.
“By the end of 2022, inflation would be converging with the Central Bank’s target range. The authorities’ stance would be contractionary and the key challenge is the reactivating of public investment, using public-private partnerships. We expect, for example, that the fiscal deficit will return to pre-Covid levels and that there will be a prudent withdrawal of monetary stimulus,” he said.
The Superintendent of Banks of the Dominican Republic, Alejandro Fernandez Whipple, pointed out that the Dominican monetary and financial authorities injected a massive liquidity provision to the financial system and provided regulatory flexibility, especially with debtors.
The Central Bank has stated the country is expected to close with growth at around 11%, substantial improvements in the labor market, and moderation of the inflation rate in the second half of 2022.
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El Caribe
Swiss-Dominican Chamber of Commerce
15 December 2021