Dominican Republic: Banks Project A Rapid Improvement In The Economy, Despite Its Slow Growth

• Credit projections within the financial sector are experiencing an approximate 16% increase, indicating significant activity in productive sectors despite the relatively low economic growth observed in the country in 2023.
• The rising trend in financing has led Rosanna Ruiz, the executive president of the Dominican Association of Multiple Banks (ABA), to suggest that the country might return to its potential economic growth range of 4.5% to 5.5% sooner than anticipated, spanning the remainder of the year and into 2024.
• Ruiz, in discussions with journalists specializing in economics, emphasized that the Central Bank’s estimates are on target. However, she highlighted credit behaviour as a key indicator reflecting the progress in various economic sectors, including MSMEs, construction, and real estate.
• Julio Lozano, Director of Economic Studies at ABA, discussed the behaviour of credits and mentioned that the Bank Credit Expectations Index (IEC) reached 55.1 in the second quarter of the year, indicating positive statistics for loan demand in the financial sector.
• Although economic activity grew by 2.9% year-on-year in July, with an accumulated growth of 1.4% in the first seven months, the government revised its growth outlook for 2023 downward. The revision lowered the projected growth rate from 4.25% to 3%, attributing the adjustment to economic uncertainty on both the international and local fronts.
• During discussions, Ruiz also emphasized the need for comprehensive tax reforms in the country, explaining that simpler and lower tax structures can help reduce tax evasion and encourage formal economic activity. She expressed the ABA’s opposition to a general rule proposed by the General Directorate of Internal Taxes (DGII), which designates certain entities as withholding and collection agents for various taxes, citing potential negative impacts on formality and incentives.

(Source: Dominican Today)