Monday, November 6, 2017

Dominican Republic: economic update October 2017

Annual inflation rate was 3.8% in September just below the 4% BCRD target.
The BCRD reduced its official rate by 50 basis points from 5,75% to 5.25% on July 31, 2017 since then the annual inflation rate and monetary aggregates have inched slightly higher:

Economic activity has not already showed too much reaction to the more accomodative BCRD monetary policy: the monthly indicator of economic activity has stopped its downtrend and it may have bottomed while the loans dynamic remain in its downward trend.

IMAE Y/Y growth rate and its yearly average

Hard currency inflows from tourism and foreign remittances remain strong showing solid growth rates.
September 2017 low foreigners' arrival in the Dominican ariport are clearly a result of the bad hurrican season (IRMA and MARIA) and should be trated as an outlier.

The Dominican Republic 5.95% USD sovereign bond maturing in 2027 is still very well bid trading close to its all time high (and lowest spread over Treasuries) and has not showed any sign of weakness or contagion so far despite some emerging markets concern about Venezuela debt restructury.

We have noticed a reduction in BCDR foreign reserves over the last 2/3 months and this must be monitored in the coming months:

Wednesday, July 19, 2017

Dominican Republic economic update July

New ecomomic statistics released over the last 30 days confirm a stable inflaction picture with the June IPC  slowing at 2.55% on an annula basis well below the central bank target, thanks to the tight control of the central bank on the monetary aggregates M1 and M2 :
IPC June 2017

M1 and M2 July 2017

Private Sector lending July 2017

With the central bank focused on keeping in check the main monetary aggregates a moderate groth rate of  manufacturing activity is not surprising: the IMAE index indicating a 4 to 5% growth rate well be low last year average.

IMAE index July

The Jan 27 5.95% USD bond of the Dominican Republic is well bid trading around  a 5.18% yield level signaling good market confidence and optimism in the Dominican Republic: the yield is higher than last month but this is the result of year US long term rates with the spread over the US treasury stable at approximately 290/300 basis points.

2027 Dominican Sovereign Bond

Good news from airport arrivals and extrenal remittances both solidly up from last year:

Tourist Airport arrivals keep growing at approximately 6% on an annual basis

I quarter remittances up almost 15% vs last year