IMF projects Dominican Republic's real GDP to grow nearly 4 percent in 2024
Date
7/25/2024 9:10:11 AM
(MENAFN) The International Monetary Fund (IMF) has projected that the Dominican Republic's real gross domestic product (GDP) growth will align with its long-term trend of approximately 5 percent in 2024 and beyond, with inflation expected to stabilize around the 4 percent target. This forecast comes despite the country's economic growth slowing to 2.4 percent in 2023, a decline attributed to tighter global and domestic financial conditions, diminished export demand, and domestic challenges, particularly those related to climate change.
The IMF's Staff Concluding Statement of the 2024 Article IV Mission highlights that the slowdown in growth and the decline in commodity prices contributed to inflation converging more quickly than anticipated to its target range by May 2023. In response to these economic conditions, the Banco Central de la República Dominicana (BCRD) implemented a cautious reduction in its key policy rate, which allowed for greater exchange rate flexibility. Additionally, fiscal policy was adjusted prudently with increased public investment to bolster the economy.
The IMF also noted improvements in the country’s current account balance, which narrowed to 3.6 percent of GDP last year. This reduction was driven by falling commodity prices and record levels of travel income. The current account deficit was fully financed by foreign direct investment (FDI), demonstrating a robust inflow of investment into the country.
Looking ahead, the IMF projects that the current account deficit will continue to narrow gradually, potentially falling to less than 3 percent of GDP in the medium term. This anticipated improvement is supported by lower energy costs, increased tourism, and higher revenues from free trade zones. The overall outlook suggests a continued recovery with balanced growth and inflation targets, underpinned by strategic fiscal and monetary policies.
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