Tuesday, January 2, 2018

Dominican Rep. maintains rate, sees higher 2018 growth

       The Central Bank of the Dominican Republic (BCRD) maintained its monetary policy rate at 5.25 percent and forecast that economic growth would accelerate to between 5.0 and 5.5 percent in 2018 from around 4.5 percent by the end of 2017 as monetary conditions are expected to remain favorable.
       The BCRD reiterated its statement from recent months that economic activity had reacted positively to its easing of monetary policy, with credit to the private sector up by around $55 billion since August for annual growth of more than 11.5 percent, helping boost domestic demand.
        Early data from the monthly economic activity indicator showed a 6.8 percent rise in the month of November for annual growth of 4.2 percent in the first 11 months of the year. 
        In the second quarter the economy of the Dominican Republic grew by an annual rate of 5.3 percent, down from 5.9 percent in the first quarter.
        On July 31 the BCRD cut its rate by 50 basis points and lowered the legal reserve ratio by 2.2 percentage points.
        The central bank added international prices of primary goods had continued their upward trend in recent months while international financial conditions remain favorable for emerging economic in the short term due to "the abundant liquidity worldwide."
        The positive external environment was helping boost foreign exchange earnings and international reserves amid a relatively stable exchange rate. 
       The Dominican peso has steadily depreciated against the U.S. dollar for the last decade and was trading at 48.4 to the dollar today for a decline of 4.5 percent since the start of 2017.
        Headline inflation in the Dominican Republic, which suffered damage from Hurricane Maria in late September 2017, rose to 4.14 percent in November, in line with the central bank's target range of 4.0 percent, plus/minus 1.0 percentage point.
       The BCRD has projected that inflation by the end of this year will be around the lower limit of its inflation target.
       Core inflation was 2.31 percent in November.
       The World Bank has approved a US$150 million loan to the Dominican Republic to help deal with natural disasters and the bank has said it expects this to support economic activity in the fourth quarter of this year.





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