Dominican Republic: Economic activity growth eases in July
Economic activity rose 12.1% year-on-year in July (June: +12.7% yoy). For the year so far, comparing to the same period in 2019 to strip out the significant base effect, economic activity growth was 3.5% in January–July.
Looking at the breakdown for July, growth was aided by resurgent activity in construction, manufacturing and the hospitality industry. The latter was aided by a reactivated tourism sector, with visitor numbers edging back up towards pre-pandemic levels in the month.
Meanwhile, annual average economic activity growth rose to 5.3% in July (June: +3.6%), signaling an improving trend in the economy.
The good reading led the Dominican Republic Central Bank to raise its growth forecasts, with GDP now seen above pre-pandemic levels by the end of 2021, which would signify one of the fastest recoveries in the region. While year-on-year GDP growth readings will continue to ebb ahead on a less favorable base effect, underlying momentum should strengthen in H2 as the vaccination rollout continues at home and abroad, tourist arrivals recover and as U.S. stimulus measures bolster remittances and demand for the Dominican Republic’s exports.
Analysts at the EIU are bullish about prospects:
“The Dominican Republic is set to be one of the fastest countries in the region to recover from the coronavirus-induced recession, returning to pre-pandemic real GDP levels this year (compared with 2022 for most other economies). Following a 6.7% contraction in 2020, we expect real GDP to grow by 11.2% in 2021. The recovery will be propelled by strong workers’ remittance inflows from the US (buoyed by a sizeable stimulus package and an ongoing rebound there). Inflows will stimulate domestic demand throughout the year, boosting private consumption.”