Valdez Albizu informed He told the IMF staff and Bevilaqua that the Dominican economy recovered. It will be faster than expected in 2021, with a remarkable growth of 12.3%, equivalent to an expansion of 4.7% compared to the actual production level of the year 2019, before the pandemic. Likewise, he pointed out that the good performance has been maintained in the first quarter of this year with an accumulated growth of 6.1%, as a result of interannual variations of the monthly indicator of economic activity (IMAE) of 6.3%. in January, 5.8% in February and 6.4% in March 2022.
The governor highlighted that the process of economic reactivation benefited from of the broad monetary stimulus program of approximately 5% of the gross domestic product (GDP) implemented at the beginning of the Covid 19 crisis, as well as the as well as the significant improvement in the health situation. Indeed, the positivity of the virus is at minimum levels, with an average of less than 1% in the last four weeks, while the lethality is located at 0.7% (one of the lowest in the world).
In addition, Valdez Albizu pointed out The rapid recovery of tourism, receiving some five million visitors in 2021, generating income of some US$5.68 billion. “During the first quarter of 2022, more than 1.7 million tourists were received, which allows us to project that this year the 6.5 million visitors registered in 2019 could be reached”.
“ “In the international context, the Dominican Republic stands out for its effectiveness in responding to the effects of the pandemic, registering stronger economic growth than we had anticipated,” said Esteban Vesperoni, IMF Chief of Mission..”
Similarly, family remittances exceeded US$10.4 billion in 2021 and accumulated approximately US$2.4 billion in the first quarter of 2022, while foreign direct investment (FDI) received during the first quarter of the year stood at around US$1 billion, which could indicate that they would reach some US$3.4 billion by the end of the year.
Inflation pressures< br />Regarding prices, Valdez Albizu stated that the dynamics of inflation have been affected by the persistence of external shocks, similar to what has happened in the rest of the world. The increase in the prices of raw materials, especially oil; the high costs of container transport and other disruptions in supply chains have delayed the convergence of inflation to the target. In effect, the accumulated inflation in the first quarter of 2022 was at 2.80%, while the interannual inflation to March reached 9.05%, aggravated by the effects of the war between Russia and Ukraine.
Under this scenario, the governor highlighted that the Central Bank initiated At the end of 2021, a monetary normalization plan, through an increase in the monetary policy rate by 250 basic points, until it reaches 5.50% per year; At the same time, the excess liquidity of the financial system has been significantly reduced through open market operations. The implementation of these measures has been reflected in an increase in bank interest rates and a moderation in monetary aggregates, which are currently expanding at rates lower than nominal GDP growth.
Although the current situation represents a complex macroeconomic environment, the Dominican Republic is in a position of strong macroeconomic fundamentals, with high growth, which is estimated in a range of 5.0-5.5% for the year. 2022, a recovered labor market, low exchange rate pressures and high levels of reserves; elements that contribute to the resilience capacity of our economy and to facilitate the adoption of measures to accommodate the adverse shock in the best possible way.
IMF Recognition
Esteban Vesperoni, head of the mission, confirmed The IMF estimate that the Dominican economy has shown remarkable resilience and a rapid recovery. He pointed that “in the international context, the Dominican Republic stands out for its effectiveness in responding to the effects of the pandemic, registering stronger economic growth than we had anticipated.” In addition, he highlighted “the sequence of policies applied in the country, which has made it possible to issue a clear signal of firm steps forward”, thereby expressing congratulations for what has been achieved.
Vesperoni recognized “The reality of a complex international context that affects most of the world’s economies, with the war in Ukraine being the main reason for the inflationary pressures that inevitably affect prices, especially of raw materials.” He pointed Also as a challenge for stability in 2022, the normalization of monetary policy in the United States, which will go away. gradually producing.
The executive director of the IMF, Afonso Bevilaqua, requested He took the floor to express that it was an honor to be present at the meeting, pointing out that the issues raised by the governor were relevant due to their importance in the interest of the international organization in evaluating the state of the Dominican economy. . Likewise, he pointed out that Valdez Albizu’s approach “is compatible with the quality of macroeconomic management and the strength of the Dominican economy.” expressing that the vocation of the Central Bank of the Dominican Republic is to strengthen the link with the International Monetary Fund, since it is an excellent ally in times of uncertainty.
The governor was accompanied by the lieutenant governor, Clarissa de la Rocha de Torres; the manager, Ervin Novas Bello; the deputy general manager, Frank Montaño Peña; the deputy manager of Monetary, Exchange and Financial Policies, Joel Tejeda Comprés; the adviser to the Government, Julio Andújar Scheker; and the deputy manager of National Accounts and Economic Statistics, Ramón Antonio González Hernández.
In turn, the director of Monetary Programming and Economic Studies was present. , Joel González; the director of the International department, Brenda Villanueva; the Director of Regulation and Financial Stability, Máximo Rodríguez; and the director of the Treasury department, Yamileh García Belén,
The IMF mission was made up, along with Esteban Vesperoni and Afonso Bevilaqua, by Pamela Madrid, Nicolás Ferná ;ndez Arias, Mario Mansilla, Hassan Adan, Dirk Van Grolleman and the Dominican representative in that organization, Frank Fuentes.