Good news. Remittances received in the Dominican Republic continue at record highs. Remittances are practically donations that stimulate the economy. The BCRD highlights the importance of these remittances, which have a multiplier effect on consumption, investment, and financing for the most vulnerable sectors of the economy.
The Central Bank (BCRD) reports that from January to May 2024, remittances reached US$4.38 billion, a 5% increase compared to the same period in 2023. This growth trend continues the pattern observed throughout 2023. In May alone, remittances were US$887.1 million, surpassing the same month in 2023 by 0.7%.
The Central Banks says the US economic performance is the key factor driving remittance growth. 87.3% of formal remittances in May originated from the United States, or US$713.8 million. The US unemployment rate has remained at a low 4% in May, despite a slight increase from 3.9% in April, with the creation of 272,000 new jobs. Additionally, in the US, the Purchasing Managers’ Index (PMI) for the non-manufacturing sector rose to 53.8 in May, indicating a return to expansion in the services sector, where a large portion of the Dominican diaspora is employed.
According to the Central Bank, the countries to send the most remittances in the first five months of the year are United States 87.3%, Spain 4.8%, Haiti 1% and Italy 0.7%.
The National District received 39.2% of remittances, followed by Santiago 12.8% and Santo Domingo province 7.9%.
Overall, the BCRD expects a favorable outlook for foreign currency inflows in 2024, driven by tourism, foreign direct investment, exports, and remittances. Remittances and FDI are projected to reach US$10.4 billion and US$4.5 billion, respectively, by the end of the year. These inflows will support continued exchange rate stability, with the Dominican peso depreciating by 1.9% compared to the end of 2023.
The impact of the remittances on the Dominican economy is significant. The increased foreign currency inflows have also allowed the Dominican Republic to maintain an adequate level of international reserves, which reached US$13.93 billion at the end of May, covering approximately five months of imports and equivalent to 11.3% of GDP, above the IMF’s recommended thresholds.
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Central Bank
20 June 2024