Growth decline deepens
February growth data confirms that the Dominican economy has entered a low-growth period. In February, estimated growth reached just 0.7% compared with February 2024. This adds to January's growth of only 2.2%, bringing cumulative growth for January and February to 1.5%. Once again the sharp decline in construction during the first two months of the year (-7.7%) stood out. There were also slowdowns in free-zone manufacturing, and tourism and commerce (1.8% vs. 5.5% in 2024). Our forecasts project a significant slowdown in real GDP growth in 2025, plummeting to 3.9% from 5% in 2024.
The inflation rate reached 0.31% in March, and accumulated inflation over the past 12 months was 3.58%. Thus, for the 16th consecutive month, inflation has remained within the target range, and below its central value (4% ± 1%). Meanwhile, core monthly inflation was 0.4%, and the y/y core rate stood at 4.24%. Our outlook for 2025 is that inflation will remain within the target range.
Monetary policy stayed on course in March. Monetary aggregates remained relatively stable compared to the first two months of the year, while the Central Bank kept the policy interest rate unchanged at 5.75%. However, Central Bank securities in circulation increased by 4.9%, reflecting a moderation or slight reversal of the expansionary policy adopted in H2 2024.
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