Although inflation was the protagonist in the economic outlook for 2022, the fact that that year has ended does not mean that the high cost of food and products has ceased. In fact, according to the International Monetary Fund (IMF), due to the pressure exerted by high prices, slowing growth and global uncertainty, many people in the region will see their standard of living fall this year.
In its most recent update, inflation presented notable variations in Latin America. After having reached 14.8% in 2022, they project that it would be reduced to 9.9% in 2023 and 7.0% in 2024.
For that period, the Dominican Republic would go from an average of 7.2% at the end of 2022, to 4.9% in 2023 and 4.0% in 2024. These projections occur at a time when the region’s middle class is also facing a situation more unstable economy.
The IMF advises central banks not to weaken “their determination” to reduce inflation. While he understands that rate hikes in many of the region’s economies are about to end, they cite they will likely need to stay high for some time to ensure inflation returns to target.
In this sense, the Central Bank of the Dominican Republic (BCRD), after having increased the monetary policy interest rate (TPM) 10 times in less than a year, up to 8.50%, has maintained it for three consecutive months. . In total, it increased 550 basis points since November 2021.
According to the most recent statement, the decision was due to the behavior of inflation. They indicated that the prices of most raw materials, particularly oil, have moderated, while the global costs of container transport have been reduced.
The IMF also urges that fiscal policy should emphasize social spending to support the poor while reducing public debt. In the country, the BCRD points out that at the domestic level, prices responded to the monetary restriction program and to the subsidies implemented by the Government.
However, in December some agricultural products with a high incidence in the basket were affected by adverse weather conditions, causing monthly inflation for December to reach 0.96%.
At the regional level, both in 2023 and 2024, Argentina will face the highest inflation, reaching 60% and 44%, respectively. Neighboring Haiti ranks as the second nation with the highest prices. It will be 21% this year and 13.4% the next. These are the only nations that will continue to fight against the digits.
During the newly begun 2023, most countries will struggle with inflation between 7% and 5%. Costa Rica, the Dominican Republic, and Paraguay will sail at an average of 4%, while Bolivia, Panama, Peru, Belize, Ecuador, and El Salvador will be below 3.5%. By 2024, with the exception of Argentina and Haiti, the countries will deal with inflation below 5%.