The Dominican Republic is one of the largest and most resilient growing economies in Latin America. The central bank and its governor, Héctor Valdés Albiz, have lagged behind the country’s low, steady inflation rate for almost 24 years, with an average annual growth rate of 6%. “The main outcome of this system has been to maintain macroeconomic stability,” said Valdez, noting that during difficult times, in particular, he saw the loss of about 20% of GDP during the 2003 economic crisis. I admit it. Central banks that have demonstrated resilience have not only recovered, but they have also benefited. They approved 18 regulations of the Monetary and Financial Law to strengthen prudential standards, and since 2004 the regulation and supervision of Dominica’s financial system have improved significantly, restoring growth and stability to the economy.
To mitigate the impact of the 2020 COVID-19 crisis, central banks responded quickly by adopting financial flexibility measures. They cut the policy rate by 150 basis points to a historic low of 3.0% per annum and cut the active interest rate from 14% to 9.5%. Introduced a liquidity provision program of approximately 5.0% of GDP, issued 92,000 loans and provided debt restructuring through financial intermediaries. Frozen debtor risk classification and provisions in the pre-pandemic phase. It also secured $650 million in disbursements through the International Monetary Fund’s rapid financing, benefitting the most vulnerable sectors and sustaining the largest number of businesses and jobs.
These measures have accelerated the economic recovery, and since June 2021, funds have gradually been repatriated through the Liquidity Supply Program. Banks continue to demonstrate strong solvency (19.1%). High profitability (23.5% ROE and 2.3% ROA) and low warpage coefficient (1.6%) by July 2021. Private loans and deposits continue to grow by about 10% and 12% respectively, indicating that the sector has indeed outperformed the numbers during the pandemic.
Meanwhile, the Dominican Republic is one of the first recipients of foreign direct investment in the region, reaching US$3 billion in 2019. It fell to $2.55 billion in 2020, but with a rapid economic recovery in 2021 and plenty of stimulus available, there are high hopes. There are several laws that provide tax incentives and legal protections for investors in line with the goals of the SDGs. Many sectors also offer interesting FDI opportunities such as tourism, free trade zones, mining and the film industry.
Today, growth is revised up to 11% in 2021, with nominal GDP estimated at about $91.5 billion, above pre-pandemic nominal output levels and the region’s best-projected growth of 5.0-5.5%. one of the rates. In addition, as the country is eyeing the Middle East market, the new business will be encouraged for exports of agricultural and consumer goods such as tropical fruits and tobacco, which are expanding their presence in the region, as well as new opportunities for joint ventures. Opportunities are expected. Clean, etc. Energy power plants and port infrastructure are currently being developed according to this model.