The Central Bank of the Dominican Republic (BCRD) reported that in 2020 remittances reached their highest growth in the last ten years, registering an amount of US $ 8,219.3 million, 16.0% above 2019.
By December, the flow of remittances that entered the country reached US $ 872.3 million, a value higher by US $ 215.6 million (32.8%) than that registered in the same month of the previous year, when it was US $ 656.7 million, details a statement from the institution .
The BCRD explains that The continuous recovery of economic conditions in the United States (USA) after the reopening, the country where 83.8% of the flows in the last 8 months came from, was decisive in the behavior of remittances received.
Evidence of this improvement in the North American economy can be found in the employment figures, with an unemployment rate that went from 14.7% in April, during the worst moment of confinement, to 6.7% at the end of the year. In a particular way, US Hispanic unemployment fell from 18.9% in April to 9.3% in December 2020.
The institution highlights that the Dominican diaspora was one of the communities that benefited the most from this improvement in employment, as well as from the financial assistance provided by the US government to the unemployed in that country, given the high proportion of Dominicans who work are regularized. At the same time, it highlights that after the approval of the new economic support package by the US Congress, this aid is expected to continue during the first months of 2021.
He adds that a relevant indicator of the behavior of the North American economy is the purchasing managers index (PMI), which reflects the behavior of manufacturing activity. This indicator reached its maximum value of 60.7 in December, 3.2% higher than the 57.5 in November, strengthening optimism about the recovery of the economy. The index registered an average monthly growth of 1.4% since June, when manufacturing activity in the US was reactivated.
Given these results of the United States economy, a better performance of the Dominican external sector is estimated at the end of 2020 than expected at the beginning of the pandemic. In effect, the flow of foreign currency in the economy remained in constant recovery as of May, with the increase in remittances, the improvement in exports from free zones, the reopening of airports and hotels, as well as the higher gold exports, with which a current account deficit of around 2.0% of GDP is expected, which would be among the lowest in Latin America.
In addition, important companies in the communications, energy, mining and free zone sectors have announced significant investments to be carried out in the coming years, some starting this year, which reflects the confidence of investors in the resilience of the economy. Dominican; allowing that this year just ended, despite the pandemic crisis, foreign direct investment (FDI) would reach some US $ 2,554.3 million, which, according to preliminary figures, would be the highest compared to that of Central American and Caribbean countries, as well as that of other Latin American countries with economies similar to that of the Dominican Republic.
The BCRD highlights that this level of FDI in the country would cover almost twice the estimated deficit of 2.0% of GDP in current account. This improvement in the flow of foreign currency, together with the Central Bank’s participation in the foreign exchange market through its Electronic Foreign Exchange Trading Platform, allowed maintaining the relative stability of the exchange rate, and the accumulation of international reserves, which reached about US $ 10,750 million at the end of 2020, the highest level recorded historically, equivalent to 13.7% of GDP and 7.3 months of imports, values that exceed the thresholds recommended by the IMF of 10% of GDP and 3 months of imports.
The Central Bank reiterates that it remains alert to continue taking the necessary measures to guarantee price and exchange market stability during the process of reactivating the Dominican economy.