In 2023, the structure of foreign exchange in the Dominican Republic showed a significant concentration in two sectors: remittances and tourism.
According to an analysis by the Regional Center for Sustainable Economic Strategies (YOU BELIEVE), based on data from the Central Bank of the Dominican Republic (BCRD), the two sources constitute 53.5% of the country’s total foreign exchange earnings.
Remittances last year accounted for 27.3% of the country’s total foreign exchange, a considerable increase driven mainly by the persistent impact of the pandemic.
The phenomenon reflects a trend that has been consolidating in recent years, with money transfers from abroad gaining ground over other sources of foreign currency, such as exports of goods and services. The increased dependence on remittances may pose challenges, as the country becomes more dependent on external income instead of promoting local production and exports, warns CREES.
The tourism sector, another key component in generating foreign currency, has shown signs of recovery after the setback caused by the pandemic. In 2023, tourism revenues contributed 26.2% of total foreign currency, a slight increase compared to the previous year. The growth reflects the effort to revitalize the sector, which has traditionally been one of the economic pillars of the Dominican Republic.
The think tank indicates that “however, not all areas have experienced growth. Free zone exports, for example, have seen a decrease in their share of foreign currency composition, falling to 21.4%” in 2023.
This represents a continuing decline compared to previous years. He adds that national exports have registered a worrying trend, going from being a crucial element in generating foreign currency to representing only 13.3% of the total in 2023. In 2013, exports constituted 21.5% of total foreign currency, demonstrating a significant drop in their share. This decline underlines the need for more effective strategies to boost the export of locally produced goods.
On the other hand, foreign direct investment has shown a slight improvement. In 2023, FDI accounted for 11.8% of total foreign exchange, which marks a small increase compared to previous years. This increase suggests a growing confidence of foreign investors in the local economy.
Comparison between one and the other; suggestion made
When analyzing the evolution of these indicators from 2013 to 2023, it is observed that while national exports have only grown by 11.7% in that period, remittances have increased by a remarkable 138.3%. “The Dominican Republic must try to take advantage of its privileged position as one of the 20 countries in the world with a trade agreement with the United States, where the generation of wealth must be taken advantage of,” CREES states.
