LatinNews Daily - 08 December 2022

In brief: Fitch upbeat on Dominican economy

* International credit ratings agency Fitch has forecast that the Dominican Republic’s GDP will grow 4.8% in 2022, which it says reflects “a strong carryover effect from 2021 and intra-year momentum that has moderated but been resilient to global shocks”. According to Fitch, which has reaffirmed the Dominican Republic’s Long-Term Foreign Currency Issuer Default Rating (IDR) at ‘BB-’ with a stable rating outlook, a “booming tourism sector (arrivals have surged past their 2019 levels) has led growth this year, while domestic demand has cooled somewhat but remains supported by a strong labour market, high credit growth, and a robust investment pipeline”. Fitch projects that growth will decelerate to 3.7% in 2023 due to the global economic slowdown and “the lagged effect of monetary tightening, but remain broadly resilient given favourable investment dynamics”. It highlights that the investment/GDP ratio, currently above 30%, is the highest in the Latin America and Caribbean region. However, Fitch forecasts that the non-financial public sector deficit will rise to 3.1% of GDP in 2022 from 2.5% in 2021, below the ‘BB’ median of 4.6%. It also the “weak” electricity sector as a key fiscal vulnerability, noting that the government has had to “plug an operational deficit among distributors that is on track to reach 1.4% of GDP, its highest level since 2014”.

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