Dominican Republic: Contraction in economic activity eases in May
Economic activity was down 13.6% year-on-year in May. While softer than April’s 29.8% drop—thanks to the easing of some social distancing requirements—May’s reading still marked the second sharpest fall on record. In the January-May period the economy shrank 8.8%, driven by steep falls in the hotels, bars and restaurants; construction; and mining sectors.
While the economy should gradually recover moving into H2, this is partly contingent on a loosening of restrictions. In this regard, momentum will be held back by elevated new Covid-19 infections, which in mid-July led the government to declare a strict curfew for 20 days.
Regarding the medium-term outlook, Carlos de Sousa, economist at Oxford Economics, comments: “We expect a sharp rebound in 2021, supported by expansionary fiscal and monetary policies, but the economy will remain below its pre-crisis trend as the tourism sector is unlikely to recover its 2019 level until 2023.”