The Economist report praises President Abinader’s economic policy
According to the March report from the Intelligence Unit of The Economist magazine, the Dominican Republic is set to be one of the countries in the region that will overcome the recession-induced by the pandemic the fastest.
The report indicates that productive activity will recover by the middle of the year and explains that the Central Bank is able to maintain exchange rate stability.
“The Dominican economy is poised to be one of the countries in the region with the fastest recovery from the recession-induced by the pandemic. It is expected that after a 6.6% GDP contraction in 2020, real growth will reach 5.3% by 2021”, explains the Economist report.
It stands out as positive aspects that affect the recovery process, the moderation of spending, the projection of a low level of inflation, and the confidence that the economic policy implemented by the Government of President Luis Abinader creates in investors.
“Real GDP growth will average 4.5% annually between 2022-2025; while private consumption, investment and the demand for Dominican products and services by the United States are gaining ground”, adds the report published in March.
It also explains that the Central Bank has “a large cushion of international reserves that, according to the figures registered for the month of February, reached 11.96 billion dollars, which represents an approximate coverage of eight months of importation, and this also indicates that the institution is able to intervene to maintain the stability of the exchange rate”.
Spending moderation stands out
According to the report, the government’s expectation is to reduce the fiscal deficit to 4.6% of GDP in 2021, compared to the 7.9% that has been estimated for 2020. This will be possible thanks to the moderation of spending and the partial recovery of revenues to pre-pandemic levels that this administration has implemented.
On the other hand, he points out that the Dominican Republic depends a lot on the import of hydrocarbons, which is why consumer prices will remain highly sensitive to global movements in the price of crude oil.
“Expected inflation during the period will remain at the officially established levels of 3-5%”, the report adds.
It also points out that the prospects for the Dominican economy in 2021 will be marked by frequent government intervention to maintain consumption and investor confidence and predicts that stimulus measures will be lower once economic activity recovers by mid-2021.
Political initiatives
In political terms, The Economist analysis estimates that the government of President Abinader will continue in the short term focused on the development of the vaccine program that began in mid-February and the guarantee of providing enough doses to immunize the entire population.
“Political stability will improve in 2021 as President Abinader’s administration since he took office, has benefited from spearheading well-received anti-corruption and good governance initiatives”, says The Economist.
Likewise, it values the fulfillment of the promises of the Head of State to provide pensions to sugarcane workers, increasing the number of citizens insured by the National Health Insurance (Senasa) and the improvements that point to transparency in bureaucratic processes.
On the international front, the report indicates that relations with the United States will remain close during the new Joe Biden administration, due to the strong ties in investment and trade and the DR-CAFTA.