Public spending accelerates, but deficit target seems intact
The economy continues to slow, with 3.8% y/y growth in October 2022, 1 ppt lower than in September. Accumulated growth in January-October 2022 (5.2%) remains around the 5% potential level. Inflation saw its greatest reduction since April, with CPI rising 7.6% in November 2022, from November 2021.
Given lower growth in economic activity and inflation, the Central Bank decided to maintain the monetary policy rate at 8.5%, similar to its October level. But bank interest rates rose in November, while the nominal exchange rate continued depreciating, by September 1st to its lowest level since the pandemic began.
Public spending has accelerated sharply in recent weeks, due to strong growth in current spending, which was 151% higher from November 1st-December 2nd than the monthly average for January-October. However, the question is whether the government will end up with a deficit lower than budgeted, given that as of December 2nd only 68% of the capital spending budgeted for 2022 had been executed.
The situation in Haiti continues to have repercussions in the Dominican Republic, not only in terms of increased migratory pressure from Haitians to Dominican territory, but also in terms of additional international pressure for the Dominican Republic to allow Haitians to resettle there.
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