Economic and market outlook

What it is about

Opening panel of the Second Annual Risk Conference (September 26, 2024) on the economic and market outlook. The supporting presentation, with 10 slides, places the global economy after the pandemic and then focuses on the situation of the Dominican Republic.

It sets out three features of the global context (a more conflictive world, an economic divergence between China and the United States, and the unexpected legacy of COVID in fiscal policy), compares the economic models of China and the United States, shows the international monetary policy cycle and reviews the Dominican Republic's position against other sovereign issuers in the region.

Objectives

• Explain the changes in the global economic and geopolitical environment after COVID.
• Show what phase the international monetary cycle is in.
• Assess the Dominican Republic's macroeconomic and financial position against its peers.

Key takeaways

1. China is no longer the engine of global growth that it was for 40 years and faces a prolonged deflationary recession; the world depends more on the United States and the European Union has lost relevance.
2. The return of fiscal policy and state spending as a growth driver has effects on inflation and on debt levels.
3. Since December 2023 a new cycle of monetary expansion began, according to the international monetary pressure index presented.
4. The Dominican economy grows steadily but with signs of moderation; it depends more on the external sector (remittances equal to 7.6% of GDP, about 50% of tourist arrivals from the United States and 15% of exports).
5. Debt service is rising and credit to the State is a pillar of the financial system, the capital market and the pension system; in sovereign bonds, the country showed a spread of 201 basis points over US Treasuries, a BB rating and a stable outlook.