Remittances to Dominican Republic Fall, But Remain Above Pre-Pandemic Levels

Latest quotes

Santo Domingo — Remittances received by citizens in the Dominican Republic between January and February declined by 2.9% compared to the first two months of 2021, but the amount wired remains above pre-pandemic levels.

According to data from the country’s central bank (BCRD), between January and February 2022, remittances received totaled $1.50 billion, compared to $1.55 billion in the first two months of last year.

However, the figure for the first two months of this year is $430.4 million and $325 million higher than the amount sent in the first two months of 2020 and 2019, respectively, when the subsidy schemes that were implemented after March 2020 and ended in September 2021 were not yet in place, the BCRD said.

In February 2022, remittances totaled $748.8 million, down 1.6% on the same month of 2021.

Remittance flows are now adjusting to a new level, but which is higher with respect to the pre-pandemic average, the bank said.

“The United States’ labor market conditions is one of the main factors that continues to influence the behavior of remittances, as 84.5 % of February’s flows came from that country. During February, the U.S. unemployment rate fell slightly to 3.8%, from 4% in January, while U.S. Hispanic unemployment fell from 4.9% in January to 4.4% in February,” the bank said.

In addition to the U.S., remittances also came from Spain, which represented 6.5 % of the total; Haiti, with 1.2 %, and Italy with 0.9 %, while other countries from which transfers were made include Switzerland, Canada and Panama, among others.

Forecasts

This year, the bank forecasts that the flow of remittances will remain strong, with a recovery of tourism close to pre-pandemic levels, sustained growth in exports and a significant increase in foreign direct investment, mainly in the tourism sector.

“These developments will contribute to a greater flow of foreign exchange into the country, and will help maintain the relative stability of the exchange rate,” the bank said. At end-February, the exchange rate had appreciated 5.3% year-on-year.

“All of this, together with the country’s strong macroeconomic fundamentals, should favor it riding out possible adverse shocks arising from the conflict between Russia and Ukraine,” the bank added.

The increased flow of foreign currency has allowed for the country’s international reserves to grow, and which by the end of February hit a record $14.84 billion, representing 14.8% of GDP, and equivalent to 7.2 months of imports, according to the bank.