Moody’s raises growth projection of the Dominican Republic for 2021
The risk rating agency Moody’s raised the economic growth projection of the Dominican Republic to 6% for this year, because of the rapid deployment of vaccination against COVID-19, which has even had a faster rate than that of other countries in the region.
“The rapid pace of the launch of the vaccine will support a faster reopening of national activity, including construction, commerce, and other services, and will support a faster recovery in the tourism sector”, says the recent report from the rating agency.
He added that the improvement in tourist activity is related “to the favorable structure” of the sector “which is not as exposed to cruises as other destinations in the Caribbean. About a third of the tourists that the Dominican Republic receives, Moody’s said, come from the United States, where the rating agency expects strong growth this year.
The risk rating agency Moody’s also reported that the Dominican Republic shows a low susceptibility to risks and that the levels of vulnerability to external events and possible fiscal illiquidity remain contained.
Ratings
It is because of these estimates that the agency reaffirmed the Dominican Republic’s Ba3 rating and maintains a stable forecast for the country’s economy.
“The stable outlook reflects Moody’s view that the Ba3 rating captures the balance of risks for the Dominican Republic’s credit profile”, Moody’s said this week.
The rating agency highlighted that the current account deficit is “fully financed”, that there are higher dollar reserves to cover future debt maturities and that the country has a “proven track record of accessing markets in times of turmoil”.
Moody’s highlighted in its report on the country that there are favorable levels of economic resilience in the face of the impact of the coronavirus by the Dominican Republic, despite its dependence on the tourism sector, “supported by solid medium-term growth prospects”.
The expectation of the risk rating agency in the Dominican Republic is that the fiscal restriction and reforms to improve income will be favorable for debt management and will balance the unexpected increase in debt levels registered throughout 2020 due to the pandemic.
A moderate hike for 2021
As of February 28th of this year, the balance of the external and internal debt of the non-financial public sector (NFPS) totaled 47,193.9 million dollars, equivalent to 60% of the Gross Domestic Product (GDP), according to recent data from the Directorate of Public Credit of the Ministry of Finance. Moody’s also raises growth projection for the Dominican Republic for 2021
“Moody’s expects government debt levels to rise only moderately after the significant increase in 2020, and anticipates that the government will pursue revenue-enhancing reforms that will ease fiscal constraints stemming from a limited tax base,” the measurement agency said. risk.
The rating agency also estimates that balance of payments and government liquidity risks will remain contained and projects that economic growth will return to its pre-pandemic rate of around 5% in the medium term.
“The stable outlook is also supported by a banking sector that remains resilient, despite the anticipated deterioration in asset quality,” the report said.