The Central Bank has predicted that the Dominican economy could grow by 6% in 2021, a figure higher than the potential rate, in a context of price stability and strong macroeconomic fundamentals.
This Sunday, the financial institution released a document on the challenges and prospects of the economy for 2021, highlighting that its growth will be due to the concerted action of monetary and fiscal policies and its continued support for domestic demand, together with gradual recovery of economic activity in productive sectors and the eventual in-country implementation of the COVID-19 vaccination program.
The Central Bank reported that despite the adverse climate facing the Dominican economy in the course of 2020, the outlook for this new year 2021 points to renewed optimism, supported by strong macroeconomic fundamentals and undeniable resilience thanks to the positive view of the markets in the Dominican economy that is also verified in the successful Treasury placements of global bonds at historically low interest rates and more favorable terms for amounts of US $ 3.8 billion in September last year and US $ 2.5 billion in this January.
Another statement the Central Bank is giving to justify economic growth in 2021 is December’s operation to manage external liabilities that would reduce debt servicing by more than US $ 1.1 billion over the next four years. These placements reflect the confidence of foreign investors in the policies of President Luis Abinader’s new administration and the resilience of the Dominican economy, the bank’s report said.
The expected growth of 6% will also be due to favorable external financial conditions, according to the Central Bank, along with the expansionary measures that have been taken and the best forecasts in the international environment given the development of new vaccines against COVID-19. ” In this way, the Dominican Republic would be the Latin American country that per capita income would recover the fastest before the pandemic, as the International Monetary Fund (IMF) has stated, ”the entity emphasizes.
Measures taken in 2020
The 2020 provisions to keep the economy dynamic will allow the country to recover in 2021, including financial institutions disbursing more than RD $ 165,000 million through approximately 68,000 loans to businesses and homes through financial intermediation entities.
In addition, preliminary information from the Central Bank shows that the backlog ratio of financial intermediation entities remains low at 1.94% at the end of 2020, while the indicator of Return on Equity (ROE) was at 15.3% and the Return on assets (ROA) at 1.74%.
It also highlights the Luis Abinader government’s implementation of some support programs for productive sectors such as tourism, agriculture, industry and exports, as well as the launch of major infrastructure projects and other strategic projects to be implemented through the public-private partnerships, factors that will help maintain the path of recovery in economic activity over the coming quarters.
World bank forecast
In Latin America, the region is expected to grow by 3.7%, driven by more favorable trade conditions, the normalization of international trade and a gradual improvement in tourism activity.
According to the World Bank, these would be the Latin American countries that would show the highest growth in 2021 Peru (7.6%), Panama (5.1%), Colombia (4.9%), Argentina (4.9%) and Dominican Republic (4.8%).