Dominican Republic: Economy slows amid subdued domestic demand
March 29, 2013
According to a more complete set of data, GDP grew 3.9% in the fourth quarter over the same period the previous year. The figure was down from the 4.1% expansion recorded in the third quarter and was in line with the preliminary estimate released on 28 February. In the full year 2012, the economy grew 3.9%. The result was broadly in line with Central Bank expectations of a 4.0% expansion and marked a moderation compared to the 4.5% increase recorded in 2011.
The Q4 reading reflected a deterioration in domestic demand, whereas the external sector improved compared to the previous quarter. Total consumption slowed from a 1.6% increase in Q3 to a 1.1% expansion in the fourth quarter, driven in particular by a strong deceleration in government consumption. In addition, fixed investment contracted 0.1%, which contrasted the 11.2% rise seen in Q3.
On the external side of the economy, exports rose 8.6% (Q3 2012: +4.5% year-on-year), while imports dropped 0.5% (Q3: +2.3% yoy). As a result, the net contribution from the external sector to overall growth rose from 0.6 percentage points in the third quarter to 2.3 percentage points in the fourth quarter.
The Bank sees GDP expanding 3.0% in 2013. FocusEconomics panellists are more optimistic than the Central Bank and see the economy growing 3.9% in 2013, which is unchanged from last month's forecast. For 2014, panellists anticipate economic growth to pick up to 4.8%.
Author: Armando Ciccarelli, Head of Data Solutions