Dominican Republic

Dominican Republic Economic Activity May 2018

Dominican Republic: Economic activity continues to soar in May

The Dominican Republic’s economy continued its strong trajectory in May, with economic activity rising 6.4% according to the Central Bank’s monthly indicator for economic activity (IMAE, Indicador Mensual de Actividad Económica). The figure was down slightly from April’s blistering 7.5% growth—which had marked a near two-year high—but was still a clear sign that the economy is benefitting from monetary easing implemented last year.

The construction sector continued to be a key growth driver, chalking up a solid 9.9% expansion. The recent strong performance of construction is in large part due to a series of projects underway in the tourism and energy sub-sectors. The commerce; and hotels, bars and restaurants sub-sectors also expanded at robust paces, likely aided by strong consumer spending amid healthy remittances growth and favorable credit conditions.

The economy should continue benefiting from the looser monetary stance in the quarters ahead, while GDP growth figures in Q2 and Q3 should be boosted from a supportive base effect, following soft readings in the corresponding period last year. The economy should also be supported higher real wages and employment—which should buoy private consumption—while the construction sector should support growth. However, the external sector will likely contribute less to the economy—despite solid export growth—as higher international oil prices and stronger domestic demand boost imports.

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