GDP growth at 7.1% in 2014; CAD reduces to 3.1% of GDP; inflation was the lowest since 1984

DOMINICAN REPUBLIC - In Brief 11 Jan 2015 by Pavel Isa

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The Central Bank released GDP growth figures for 2014. Expansion of economic activities was estimated at 7.1% compared to 2013. The figure is well above expectations and is the highest rate registered in Latin America, whose average reached only 1.1%. Leading activities were mining (20.9%), construction (11.4%) and tourism (7.9%). Other activities that registered relatively high rates of growth were finance (8.6%), education (8.4%), health services (7.6%) agriculture (5.2%), local manufacturing (5.0%), and commerce (4.7%). Although is not unusual that Central Bank’s growth figures are received with skepticism by the public opinion, there is evidence that economic expansion was strong in 2014. Credit to the private sector increased by 19.5%, and credit for production increased by 17.3%. Most of the credit was for construction (55.8%), manufacturing (10.2%), agriculture (7.8%) and commerce (4.5%). Also credit to small and micro enterprises increased by 30%. Also, tourist arrivals reached a record figure (5.14 millions) in 2014, more than 450 thousand arrivals than in 2013 (an increase of 9.6%). Foreign exchange revenues from tourism reached USD 5.6 bn, an increase of 10.6% compared to 2013. CAD reduced in one percentage point of GDP in 2014 compared to 2013, reaching 3.1%. This means a return to its “normal” or historic level. For decades, average level of CAD in the Dominican Republic was around 3% of GDP until the second half of past decade when it expanded significantly. Also international net reserves closed at USD 4.65 billions, more than USD 263.9 millions than in December 2013. However, it only represents 3.2 months of imports (excluding those from the free zones)...