Initial reports from the DR’s Central Bank indicate that the economy is most likely to end the year with a 3.5% increase. This is slightly higher than the 3% growth originally estimated for the Gross Domestic Product. According to the CB’s preliminary report, there is a direct correlation between the growth of the GDP and private credit. The authorities say the economy responded well to monetary measures taken to reactivate bank lending to the private sector. These measures included a reduction in prime rate, bank reserve levels, changes in banking prudential norms and liquidity provision levels that resulted in declines in bank lending rates that stimulated borrowing. The bank lending rate declined from a 25.17% average in January 2009 to 13.73% average in December. The declining interest rate created an incentive for private credit, and generated RD$34 billion in credit in 2009.
The Central Bank said that the recovery began in the quarter April-June 2009 with a 1.8% growth rate, which increased to 3.4% for the July-September quarter. The Central Bank says that given its solidity and stability of the financial system, Dominican banks were able to respond rapidly to the stimulating measures.
The sectors of the economy that most benefited from these changes were commerce, the real estate market, agriculture, construction, manufacturing and small business loans.
The report states that the level of gross international reserves hovers around US$3.2 billion and net international reserves register at around US$2.8 billion.
International liquid reserves also registered at US$1.6 billion. The balance of payment has also experienced increased strengthening, registering a deficit of -5.25% in 2009, a vast increase compared to the -9.7% increase of the GDP in 2008, for a reduction of 4.5%. This is partly due to a decrease in imports of US$3.73 billion, particularly oil imports which decreased by US$1.72 billion. The deficit of the current accounts closed the year at US$2.2 billion while foreign direct investment registered US$2.06 billion.
Hoy writes that the DR’s 2.1% growth during the first 9 months of the year was the highest growth rate in Latin America.