IMF with Positive Outlook for Dominican Republic

According to the international organization the outlook is favorable and the risks to the economy are moderate, and production growth for 2019 is expected to range between 5.25% and 5%.

Tuesday, June 11, 2019

Economic growth rebounded to a record high of 7% in 2018, with positive momentum maintained in the early part of 2019, the International Monetary Fund reported after concluding its last visit to the Caribbean country.

From the IMF statement:

June 11, 2019. On June 5,2019, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation [1] with the Dominican Republic.The economy rebounded to a record high growth of 7 percent in 2018, with the positive momentum carrying into early 2019. The return to above potential growth in 2018 reflected a strong private investment and consumption response to a timely monetary impulse after the slowdown in 2017, favorable external conditions and a continued strengthening of labor markets. The very strong economic performance over the past several years, aided by the authorities’ policies, led to substantial reduction in poverty, inequality and continued income convergence to advanced economy levels. The acceleration in activity has not put pressures on either internal or external balances: inflation remained subdued and the external position strong. This allowed monetary and fiscal policies to switch to neutral-to-tightening gear in 2018, guiding activity towards potential levels.

The outlook is favorable, with moderate and balanced risks to growth. Growth is expected to moderate to around 5½ percent in 2019 and 5 percent over the medium-term, both within the estimated potential range. The moderation will be driven by a slowdown in credit expansion, a less supportive external environment, and higher oil prices. Inflation is expected to rise gradually to the central bank’s target range of 4±1 percent with the pickup in food and oil prices. The external position is projected to remain broadly consistent with fundamentals and more than adequately financed by FDI. Main downside risks to the outlook are weaker-than-expected external demand and higher energy prices. On the upside, the domestic demand momentum in the near term could be stronger than anticipated, reflecting the solid income growth.

Executive Board Assessment
Executive Directors commended the authorities for the strong economic performance, including dynamic growth, low inflation, stable external position, and improved social outcomes. Directors noted that while the outlook remains favorable, it is subject to risks. They encouraged the authorities to take advantage of the current favorable environment to further increase the economy’s resilience to shocks by building fiscal and reserve buffers, while strengthening long‑term growth and social outcomes through reforms to address structural bottlenecks.

Directors welcomed the authorities’ commitment to improve the fiscal position, including through ambitious tax administration reforms to curb evasion, mobilize revenues, and improve governance. Nonetheless, given that public debt is trending up despite strong growth, Directors called for further efforts to improve debt sustainability. They underscored the need for a front‑loaded fiscal adjustment aimed at widening the tax base and curtailing the electricity sector’s drag on the budget, while safeguarding fiscal space for growth‑enhancing public investment and social spending. Directors also supported adoption of a medium‑term fiscal framework, with a clear policy anchor and fiscal responsibility elements, to ensure policy credibility and limit fiscal risks.

Given subdued inflation, Directors supported maintaining the current neutral monetary policy stance, while remaining data dependent should pressures emerge. They welcomed the continued efforts to strengthen the monetary policy framework, highlighting the dividend from anchoring inflation expectations, and supported plans to recapitalize the central bank and introduce the foreign exchange trading platform to increase transparency and efficiency of foreign exchange markets and policies. In light of the favorable external position, Directors encouraged the continued accumulation of international reserves.

Directors welcomed financial system stability and wide–ranging reforms to further enhance financial resilience. They supported the ongoing modernization of the institutional framework for systemic risk oversight, strengthening of banking regulation and supervision, and cybersecurity reforms. They encouraged the authorities to take further action, including to strengthen the supervisory oversight of non‑bank financial institutions. Directors welcomed recent progress in updating the AML/CFT legal framework and encouraged the authorities to enhance the effectiveness of the regime.

Directors emphasized the importance of continued structural reforms to address impediments to higher productivity, income convergence, and social inclusion. Building on recent gains, they encouraged further measures to improve the business environment, remove trade and investment barriers, and continue reforms to education, health, and the pension system. Directors reiterated the need to decisively address the long–standing structural weaknesses that continue to weigh on potential growth, particularly losses in the electricity sector and inefficiencies in the product and labor markets. They also noted the need to broaden and strengthen the social security system, which will require additional fiscal space.

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Growth is expected to accelerate to 5.5% in 2018, supported by reinvigorated credit growth and benign external conditions.

From a statement issued by the IMF:

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Nicaragua Praised by the IMF

February 2016

The IMF noted the positive evolution of all the country's economic indicators, and the drastic fall in poverty, with an increase of 33% in per capita consumption.

From a press release issued by the IMF:

On January 28, 2016, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Nicaragua.

Panama As Seen by the IMF in July 2015

July 2015

The IMF expects economic growth will continue and recommends that the authorities take advantage of the benign inflation level to suspend price controls.

From a press release issued by the IMF:

On June 10, 2015, the Executive Board of the International Monetary Fund (IMF) concluded the Article IV consultation1 with Panama.

Honduras as Seen by the IMF at the end of 2012

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GDP is expected to grow 3.3% in 2012, supported by strong domestic demand, and inflation should fall to 5.7%.

From the press release by the IMF:

An International Monetary Fund (IMF) mission visited Honduras during November 26-December 10 to conduct discussions for the 2012 Article IV consultation.