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J. P. Morgan: "DR economy is going full blast"

"PLD appears well-positioned to win 2016 elections"

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J. P. Morgan: DR economy is going full blast
SANTO DOMINGO. The good performance that the Dominican economy has had, registering a 7.2% growth in the first half of this year according to the new methodology used by the Central Bank and exhibiting a functioning of "full steam," according to the global financial company J. P. Morgan, places the Dominican Liberation Party (PLD and a good position to win the presidential elections of 2016.

"The PLD appears to be well-positioned to be victorious for the fourth consecutive time, since President Medina continues being very popular, the economy is working at full steam, and there is a broad macroeconomic stability," says the international entity.

But perhaps what is most important, reflects J. P. Morgan referring to the advantage that the PLD has to compete in the next elections, the Dominican Revolutionary Party (PRD), considered to be the key part of the opposition, is profoundly divided an ever more ill relevant as a political force.

After a recent visit to the Dominican Republic, where the representatives of several economic entities, both public and private, came together, J. P. Morgan issued its thinking regarding the course of the country in the meetings that it held with authorities from the public and private sectors.

In its summary, the financial agency stressed that the economic growth in the country has exceeded the expectations that the government itself had forecast. The government had projected an increase of 4.5% of the gross domestic product and it is probable, according to estimates, that the economy will grow by 5%.

"A great part of the good results have been the support of a prosperous tourist sector, the full upsurge in mineral exports (gold) and the increase of the remittances," they indicated.

In addition, they explain that the rhythm of the depreciation of the Dominican peso has slowed considerably and that so far this year it has depreciated less than 2%, a fraction of the 6% which was registered in the same period in 2013.

J.P. Morgan indicated that there are three factors that have contributed to the significant deceleration. "In the first place, the rate of the monetary policy has risen 200 basic points in the last 12 months, thereby moderating the expectations. In second place, the performance overall the key generators of hard currency have been better than expected, which at the same time has reduced the need for the authorities to intervene in the currency market. And in third place the fiscal consolidation has alleviated the increasing pressure of basic prices including the national currency."

The electric sector

Nevertheless, in it's document on the Dominican Republic, J.P. Morgan says that the electric sector continues to be an important drag on the economy.

They say that the lack of material progress, classifying the long-standing crisis of the electric sector, is seen by many persons as the greatest deception with respect to the current administration.

The increase in the public debt load

In its summary, J.P. Morgan also says that the debt load of the non-- financial public sector (NFPS) as sad a consistently higher tendency, more than double since before the global crisis (less than 19% of GDP) in 2007, to a forecast of 41% by the end of this year. On a consolidated basis, which is including they Central Bank debt, but excluding the intra-governmental debt, the increase was not so substantial in proportion, with respect to GDP passing from 33% in 2007 to a forecast of 49% this year.