Dominican Economic Activity Grew 2.4% In May, The Highest Rate So Far This Year

• The Dominican Republic's Ministry of Economy, Planning, and Development has released the “Macroeconomic Situation Report: Situation Monitoring” for June 2023. The report reveals that the Monthly Indicator of Economic Activity (IMAE) experienced a year-on-year growth of 2.4% in May, surpassing the growth rates recorded in the first four months of the year. The IMAE's cumulative growth for the initial five months of 2023 stood at 1.4%.
• This positive economic performance is attributed to the successful implementation of coordinated expansionary monetary and fiscal measures, bolstering the country’s robust macroeconomic fundamentals.
• As for growth projections, the real GDP is expected to grow by 4.0% in 2023, and economic agents forecast a growth rate of approximately 5.0% for 2024, indicating a promising outlook for the Dominican economy.
• In terms of inflation, the report states that it was within the target range (around 4.0% - the mid-point of the target range) established in the monetary program for June, with a year-on-year variation of 4.00%. This rate is the lowest recorded since July 2020. Core inflation, which excludes volatile items, registered an interannual variation of 5.33%.
• Since May, the Central Bank has embarked on a monetary easing process. Analysts predict a continued reduction in the policy rate on a gradual basis, with a cumulative cut of 75bps expected by the end of the year. Further reductions in 2024 will depend on the overall inflation dynamics, particularly the impact of the recent surge in food commodity prices on domestic inflation.
• The report also highlights the groups that contributed to attenuating the variation in the price index for June, particularly in the Housing and Transportation categories, which experienced negative variations and incidences in the overall inflation rate.

(Source: Dominican Today)