Dominican Republic eyes a rapid recovery

Significance

This less-pronounced drop can be explained by a minor uptick in tourism, thanks to border reopening in July, and increased remittances. Improvement is expected to continue as the recovery of the productive sectors consolidates, driven by Central Bank easing measures and government actions to mitigate pandemic impacts.

Impacts

• A decision by neighbouring Haiti to impose a USD800 fee on Dominican exports will jeopardise the external sector.
• Persistent political and economic difficulties in Haiti will drive continued undocumented migration, threatening bilateral relations.
• No additional exchange pressure is expected for 2021, as foreign exchange generating activities will continue to improve.
• Inflation expectations, within the short-term target range, will allow monetary policy to remain accommodative.