The Central Bank has shared the first insights of the International Monetary Fund regular assessment. The IMF highlights the 5% real recovery the country has experienced.
The Central Bank reported that the IMF mission assessment reveals the Dominican economy has demonstrated remarkable resilience due in large part to the country’s successful response in monetary and fiscal policy.
As reported, Esteban Vesperoni, IMF mission chief has made the point that the recovery of the Dominican economy in 2021 was not a statistical rebound; it is a real recovery of 5% compared to pre-pandemic levels.
Vesperoni head the visiting mission that spent two weeks preparing the economic review to comply with Article IV of the constitutive agreement with the IMF.
The IMF official emphasized that this year presents difficult challenges due to a combination of elements such as the invasion of Ukraine, the pandemic that is gaining strength again in relevant countries such as China, or the necessary normalization of monetary policy by the Federal Reserve (FED) of the United States. The IMF, nevertheless, says that the Dominican Republic enters this period in a situation of strength.
Vesperoni spoke of the economic recovery in 2021 at the sectoral level, highlighting the rebound of the tourism sector for its importance.
He also stressed that the recovery of the Dominican economy in 2021 was not a statistical rebound, it was a real recovery of 5% compared to the pre-pandemic and achieved in a climate of stability, and at times when the external sector has shown strength. He also indicated that he was able to confirm in his two weeks of meetings in the country that the private sector understands and appreciates what has been achieved in terms of monetary policy.
Vesperoni said that inflation is the most important challenge ahead. “There is no country in the world that is exempt from this, since we are talking about energy, food, production chains, transportation, among other challenges of the global economy,” stated Vesperoni.
Regarding the outlook, the head of the IMF mission sees the economy converging to its potential level in a situation of a stable external sector and financial system.
Governor Valdez Albizu pointed out the country has been affected by “a perfect storm on top of another perfect storm.” He was referring to the price of fuels, the availability of freight containers and the cost of freight and the continuing Covid-19 problem that paralyzed airports and commerce.
He also highlighted the efforts made in monetary policy, which served to support micro, small and medium enterprises, the export sector, and the most vulnerable Dominican households, among other beneficiaries.
Valdez Albizu says the Dominican economy recovered faster than expected in 2021, with a remarkable growth of 12.3%, equivalent to an expansion of 4.7% compared to the level of real output in 2019, before the pandemic. He noted that the good performance has been maintained in the first quarter of the current year with a cumulative growth of 6.1%.
The Central Bank governor noted that the economic recovery process benefited from the large monetary stimulus program of approximately 5% of gross domestic product (GDP) implemented at the beginning of the Covid-19 crisis, and by the significant improvement in the health situation. In addition, he pointed to the rapid recovery of tourism. He mentioned that during the first quarter of 2022, more than 1.7 million tourists have been received. The forecast is for the year to reach a record number of seven million visitors.
The IMF Mission, headed by Vesperoni, was composed of Pamela Madrid, Nicolás Fernández Arias, Mario Mansilla, Hassan Adan, Dirk Van Grolleman and the Dominican representative to the IMF, Frank Fuentes.
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Central Bank
IMF
16 May 2022