Dominican Republic to have one of the best economic performances by 2023, according to experts
DR to have one of the best economic performances by 2023, according to experts
International and local economists agreed during their participation in THINK ECONOMICS 2022, the annual event of the Swiss-Dominican Chamber of Commerce and Tourism (CCTDS), that the Dominican Republic will face 2023 with a resilient and stable financial system.
“The exogenous factors of the international context such as the post-pandemic situation or the war conflict between Ukraine and Russia, have highlighted the dynamic management of the government of President Luis Abinader. A common strategy of confidence has been created for markets and investors,” explained Gaetan Bucher, president of the CCTDS.
With the deterioration of the global environment anticipated in 2023, with close to 60% of economies below their growth trend, including the US, Euro Zone, and China, where price stability in the medium term will require additional interest rate increases by Central Banks in advanced economies, specialists stressed that the International Monetary Fund’s outlook points to the Dominican Republic obtaining the highest growth in Latin America next year, where it will have leadership over traditionally strong countries such as Brazil or Mexico.
“The reality is that the conduct of fiscal policies in the Dominican Republic has been quite successful, including the conduct of health policy,” explained Alonso Cervera, chief economist for Latin America at Credit Suisse.
The economists explained that the Dominican Republic faces challenges to boost growth even through formal employment since, according to data from the Inter-American Development Bank, Latin America has very high levels of informality, around 55%, and in the case of the Dominican Republic, 58%.
“There are two major areas in which the Dominican Republic has many opportunities and it’s capacity to generate new wealth: international trade and tourism,” said Ernesto Selman, leader for Mexico and the Dominican Republic of the Inter-American Development Bank (IDB).
Regarding risk management, Raul Ovalle, managing partner of Analytica, noted that Haiti had faced a sequence of shocks since the beginning of the pandemic that has deepened the historical divergence between the per capita income of the two nations.
Regarding regulation, Alejandro Fernandez, Superintendent of Banks, pointed out that in 2020 the monetary stimulus was over RD$210,000MM, about 5% of GDP and that regulatory measures in response to COVID-19 have been based on a regime of flexibility in liquidity measures, credit stimulus, and gradualness. Something that has led to a robust recovery.
“The net assets of the financial system from September 2017 to September 2022 have had a percentage of 12.1%. The gross credit portfolio has increased by 8.57%, and there has been a real year-on-year growth in private credit in local currency. Commercial loans increased by 18.2%. Rates have returned to pre-pandemic levels; however, margins have narrowed.”
Regarding public debt, economist Raúl Ovalle pointed out that as of 2023, public debt is expected to increase. “In proportion to the size of the economy it will resume the gradual growth path that characterized public finances during the two decades prior to the pandemic.”
About the CCTDS
The CCTDS was founded more than 20 years ago as a non-profit private law entity that develops and supports programs and projects to foster, promote and invest for the benefit of trade, industry, and tourism between Switzerland and the Dominican Republic. In addition, the Chamber supports entrepreneurship and training activities in search of excellence and permanent innovation. Hence, the THINK events (INNOVATION, LOGISTICS, ECONOMICS, ENERGY, and TOURISM).