PLD primary could go either way
The two main political parties -- the PLD, in power since 2004, and the PRM -- will hold their presidential primaries this weekend. All eyes are on the PLD contest, as in the PRM Luis Abinader is expected to handily trounce former president Hipólito Mejía. But in the PLD, the contest between Gonzalo Castillo, ex-minister of public works and representative of the group led by President Danilo Medina, and ex-president Leonel Fernández, who aspires to reach a fourth term, is being closely watched.
Although until recently we predicted that Fernández would win the primary nomination, our view has changed. Castillo’s thrust has been very strong, and he commands the support of Medina, who still controls most of the PLD. So we cannot yet predict a winner.
Economic activity expansion continues to run below the average of recent years. The August Monthly Economic Activity Indicator (IMAE) showed a GDP expansion of 4.8%, just above that of July (4.6%). That left average January to August growth unchanged at 4.7%.
Inflation continues to be low, and the y/y rate is on track to come in below the target range (of 4.0% ± 1.0%) by yearend. The accumulated rate to August was 1.99%, and the y/y rate was 1.72%.
Monetary aggregates to August showed stable growth, consistent with the expansionary posture adopted by the Central Bank since June.
The DOP plunged 2% in September, 10 times more than the monthly average rate for the previous eight months, to DOP 52.35 per dollar by month’s end. That’s still below what authorities expect it to be by yearend (DOP 53.1) and only a few points above the expected annual average rate (DOP 52.18). We don’t expect this situation to continue, since several potential causes, such as political uncertainty and the decline in tourism, are likely to recede.
Tourist arrivals fell again in August, from August 2018. This was the third consecutive month in which there was a fall from last year. But the dropoff is small in percentage terms, and we expect the arrival numbers to rebound to normal by yearend, when the tourism high season resumes.
Revenue growth has been slower than needed to reach the estimates of the 2019 budget. We think this is due to both an overestimation of revenues and to slower economic growth. It also suggests that the government again won’t meet the 2019 central government fiscal deficit goal, of DOP 75.5 billion, or 1.7% of GDP. This implies that the central government deficit will come in at just above DOP 100 billion, or 2.2% of GDP.
Now read on...
Register to sample a report