Sharp slowdown and inflation rebound greet a gloomy and uncertain 2023

DOMINICAN REPUBLIC - Report 17 Jan 2023 by Magdalena Lizardo

November 2022 confirmed the trend of a sharp slowdown in economic activity that began in September, while December brought the surprise of a strong rebound in monthly inflation. The y/y rise of the Monthly Economic Activity Index in November 2022 was 2.9%, with an average monthly fall of 0.95 ppts in October and November. In December, monthly inflation was 0.96%, more than three times higher than the monthly average of 0.31% in August-November 2022. There was also an exchange rate surprise, in which monthly depreciation in December (1.94%) was double the monthly average depreciation in October-November. However, compared to December 31st, 2021, the peso remains appreciated, at -1.9%.

The government continued to expand spending in December, and a preliminary estimate places the central government's fiscal deficit at 3.6% of GDP, slightly less than established in the 2022 supplementary budget deficit (3.9%), but higher than the deficit in the original 2022 budget (3%).

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