IMF: Dominican Republic Economy Slows Down, Fiscal Position Deteriorates

By the Caribbean Journal staff

The Dominican Republic’s economy has slowed down this year, according to the International Monetary Fund, which recently concluded a staff visit to the country.

The meeting, which took place from Sept. 10 to Sept. 18, aimed to review economic developments and “lay the foundation” for the upcoming Article IV consultation.

“This year, the economy has slowed down, and inflation declined, while the fiscal and external positions remain weak,” said Przemek Gajdeczka, who led the mission. “Real GD growth was 3.8 percent in the first half of 2012, supported by agriculture, commerce and tourism.”

Inflation fell rapidly in the same period to 2.2 percent, below a target range of 5.5 percent plus-or-minus 1 percent from the Central Ban’s inflation-targeting regime.

“The fiscal position deteriorated in the first half of 2012,” Gajdeczka said, resulting in an overall publics sector deficit of about 3.3 percent of GDP by June.

“The short-term macroeconomic outlook poses a challenge to the authorities, reflecting the need to strengthen the domestic macroeconomic framework, in particular to significantly tighten the fiscal position and to cope with risks emanating from the global economy,” he said.

The fund expects real GDP growth to hover around 4 percent this year and in 2013, with a continued low projection for inflation.

The mission included talks with Dominican Republic President Danilo Medina, members of the Economic Cabinet, senior government officials and private sector and union leaders.

 

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