Construction declines slowed real GDP growth
Economic activity recorded a significant slowdown in January. The y/y real GDP monthly growth rate was only 2.2%, less than half of the 5% average observed in 2024. The main explanation was the -7.3% contraction of the construction sector.
Monthly inflation in February stood at 0.32%, while the y/y rate reached 3.56%. This marked the 15th consecutive month in which inflation remained below the central value of the target range (4% +/- 1%).
In that month, DOP continued to depreciate at a significantly faster pace than expected, at 0.9% in a month, and 5.9% y/y. That was 1.2 ppts higher than January’s 4.7% depreciation rate. Uncertainty related to a volatile international environment continues to put pressure on the Dominican foreign exchange market.
Growth of monetary aggregates y/y in February was like that of January. The Central Bank has maintained its policy course, seeking to avoid or delay a return to a more restrictive stance, and higher interest rates. However, achieving this may be difficult, given the international context.
In mid-February the Dominican government carried out a large-scale $4.882 billion financial operation in international markets. This operation included the repurchase of bonds maturing in 2026, valued at $2.382 billion, and the issuance of global bonds worth $2.5 billion. This will provide significant fiscal relief for 2026.
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