Economy grows slowly, as campaigning heats up
The Dominican economy grew 2.9% y/y in July, its most robust growth rate so far this year. But growth for January-July 2023, at 1.4% y/y, dispelled any doubts that 2023 would be a lean year. Since 2007, annual growth rates below 1.4% January-July have only occurred during the great recession of 2008, and in 2020. It remains to be seen if July 2023 figures mark the beginning of more persistent growth acceleration.
The Central Bank on August 31st cut the monetary policy rate for the third time since May, to 7.5% per year. But the increase in the lending rate in July and August 2023 has not prevented private sector credit from growing at rates exceeding 18% y/y.
Monthly inflation also accelerated in August, reaching 0.52%. Nonetheless, y/y inflation was 4.27%, within the target range. The exchange rate continued to depreciate in August, accumulating a y/y depreciation of 5.39%.
In H1 2023 there was a significant reduction (-55.8%) in the current account deficit, compared to the same period in H1 2022. Net international reserves increased again in August, to $15.8 billion.
On the fiscal front, in August y/y growth in expenses (31.3%) was substantially higher than the growth in revenues (7.5%). Consolidated public sector debt stood at $72.1 billion in June, of which $54.8 billion belonged to the NFPF, and $19.7 billion to the FPS.
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