Franco Uccelli of Bear Stearns concludes that the first quarter numbers confirm that the consolidation of the economic recovery continues. “All in all, DR’s external performance confirms that the country’s recovery continues and that external liquidity conditions are improving,” he writes.<\/p>\n
Uccelli explains that while much of the focus has been on monetary and fiscal out-performance and better-than-expected growth levels, the country’s external accounts are also recording impressive results. He mentions that tourism revenues were up by almost 26% during the first quarter, total exports grew by 5% boosted by strong growth in non-free zone exports, and imports were up by 22%, with non-free zone imports, a proxy for private consumption, expanding by more than 33%. Although remittances were virtually unchanged during the quarter, their contribution of some US$550 million to the national economy still ranks them as one of the country’s foremost generators of foreign exchange.<\/p>\n
Uccelli explains that despite a larger merchandise trade deficit (the result of growth in imports outpacing export expansion), a higher services surplus and healthy current transfer levels allowed Dominican Republic to record a current account surplus of 6.2% of GDP.<\/p>\n
He points out that there has been a notable improvement in the country’s capital account deficit, which declined by 74%, supported by a 46% increase in FDI inflows and lower levels of new external indebtedness, combined with a dramatic reduction in capital flight (as measured by the errors & omissions balance, which dropped from -US$310 million in 1Q04 to -US$17 million in 1Q05) and the aforementioned robust current account surplus to underpin a whopping 62% increase in the country’s foreign reserve position. Net international reserves have continued to accumulate since the end of the first quarter and now total more than US$1.1 billion (Central Bank definition), an 87% improvement on end-2004 levels.<\/p>\n","protected":false},"excerpt":{"rendered":"
Franco Uccelli of Bear Stearns concludes that the first quarter numbers confirm that the consolidation of the economic recovery continues. “All in all, DR’s external performance confirms that the country’s recovery continues and that external liquidity conditions are improving,” he writes. Uccelli explains that while much of the focus has been on monetary and fiscal … <\/p>\n