Dominican Republic: The economy rediscovers a spring in its step in Q3
October 23, 2019
The economy bounced back in Q3 from a sharp slowdown in the second quarter, according to Central Bank data (Q3: +4.9% year-on-year; Q2: +3.7% yoy).
The Central Bank’s recent monetary easing—in the form of 100 basis points of rate cuts since June and a DOP 34 billion liquidity injection—was likely key to this improved performance. Private-sector credit growth has accelerated notably since the easing was implemented, averaging over 10% year-on-year in Q3. This, coupled with robust remittances growth, should have buttressed private consumption. Looking at individual economic sectors, over the first nine months of the year growth was driven chiefly by construction, services and agriculture, with manufacturing performing more sluggishly amid a less favorable external environment.
Looking ahead, monetary stimulus measures should continue to feed through to the economy in coming months, aiding consumption and investment. Turning to 2020, growth is likely to ebb in line with a slowing U.S. economy, although the Dominican Republic should continue to strongly outperform the regional average.
Author: Oliver Reynolds, Economist