The Central Bank of the Dominican Republic (BCRD) has announced that preliminary figures for the first half of 2024 show foreign direct investment (FDI) is reaching US$2.37 billion, a significant 0.9% uptick from the same period last year. This robust performance underscores the continued confidence of international investors in the Dominican Republic as a prime destination for their capital, says a release from the Central Bank.
The country has solidified its position as the second largest recipient of FDI in the region, behind Mexico, according to the United Nations Conference on Trade and Development (UNCTAD). The BCRD anticipates that FDI for the entire year will surpass US$4.5 billion.
A breakdown of the preliminary data reveals that the tourism and energy sectors were the primary beneficiaries of FDI, accounting for over half of the total inflow. The energy sector, in particular, has seen a remarkable expansion, with its share of FDI increasing from 7.5% in the first half of 2019 to 25.5% in the corresponding period of 2024, driven by government incentives for renewable energy projects. The real estate sector, closely tied to the tourism industry, has also experienced substantial growth following the recovery from the Covid-19 pandemic.
In addition to the surge in FDI, the Dominican Republic has also recorded substantial growth in remittances and exports. Remittances increased by 4.4%, while total exports exceeded US$6.8 billion, a 2.3% year-on-year increase.
The Central Bank of the Dominican Republic (BCRD) reported that remittances received between January and July 2024 reached a record US$6.16 billion, marking a 4.2% increase of US$250.9 million compared to the same period last year. Notably, in July 2024 alone, the country received US$921.9 million in remittances, representing a 3.7% year-on-year growth. These funds, primarily from the Dominican diaspora, play a vital role in boosting consumption, investment, and supporting vulnerable sectors of the economy.
The BCRD attributed the strong performance of remittances to the robust US economy, which is the origin of 83% of formal remittances in July. Despite a slight increase in the US unemployment rate to 4.3%, the non-manufacturing Purchasing Managers’ Index (PMI) rose to 51.4 in July, signaling expansion in the service sector where a significant portion of the Dominican diaspora is employed.
Notably, gold exports rose by 10% due to improved production and higher international prices.
Tourism revenue also reached new highs, totaling US$5.7 billion in the first six months of the year, a 14.1% increase compared to the same period in 2023. This growth was fueled by a surge in tourist arrivals, both by air and cruise ship.
The combined inflows from FDI, remittances, tourism, and exports have bolstered the Dominican Republic’s foreign exchange reserves, contributing to the stability of the exchange rate. The BCRD estimates that total foreign exchange earnings for the year will reach approximately US$43 billion.
Looking ahead, the BCRD forecasts a positive outlook for foreign exchange earnings in 2024, driven by tourism, foreign direct investment (FDI), exports, and remittances. The institution estimates year-end remittances of around US$10.5 billion, FDI inflows exceeding US$4.5 billion, and tourism earnings surpassing US$10.6 billion. These robust inflows have contributed to the relative stability of the exchange rate, which depreciated by 2.1% against the US dollar in July compared to the end of 2023.
As a result of these strong external inflows, the country’s international reserves reached US$15.23 billion in July 2024, providing adequate coverage of 5.8 months of imports and equivalent to 12.3% of GDP, surpassing the IMF’s recommended thresholds.
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Central Bank
Central Bank
13 August 2024