The Ministry of Economy says that the November macroeconomic outlook is for faster than expected recovery of the Dominican economy. The Gross Domestic Product (GDP) projection is for growth in real terms to close at 10.7% by the year’s end.
The information is contained in the Macroeconomic Framework 2021-2025 published by the Vice Ministry of Economic and Social Analysis. The outlook is prepared by the Ministry of Economy, Central Bank and Ministry of Hacienda as a tool for medium-term economic planning.
The Macroeconomic Framework states that this more optimistic economic outlook is based on the dynamism of domestic demand and a significant recovery in tourism. It also states that favorable economic conditions are expected to continue in 2022, with an estimated expansion of 5.5%, which is close to the potential growth rate.
However, it specifies that despite the resilience demonstrated by the Dominican economy, there are still the external risks of the Covid-19 pandemic.
“Indeed, imported inflationary pressures associated with the increase in commodity prices, including oil, as well as the freight crisis and other disruptions in supply chains, have been more persistent than initially expected,” highlights the report.
It specifies that this has forced an upward revision of the year-end and average inflation projections, to 7.5% and 8.0%, respectively.
“For 2022, a gradual convergence of inflation towards the target range of 4% ± 1% is projected, with inflation of 4.5% for the end of the year and 5.0% for average inflation, to the extent that these supply shocks dissipate,” the report indicates.
The prices of several commodities relevant to the Dominican economy have suffered significant increases in their short and medium-term projections.
According to the outlook, the average prices expected for oil in 2021 and 2022 are increasing by 3.9% and 8.8% respectively. At the same time, the prospects for nickel prices are up 19.8% and 21.1% for the same period.
On the other hand, the report indicates that the positive results of the external sector of the Dominican Republic, reflected in the dynamism of remittances and exports, have contributed to a strengthening of international reserves and consequently to a decrease in exchange rate pressures. An average exchange rate of RD$57.30 per dollar is forecast, with devaluation of 1.27% compared to the average for 2020, down from the previous forecast.
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Ministry of Economy
18 November 2021