GDP grows 5.5% and unemployment is at 6.9% says Central Bank
Santo Domingo. A happy world. The Dominican economy grew by 5.5% in the first quarter of 2014. Between October 2013 and March 2014, 72,000 new jobs were created and thanks to the magic of a new methodology, the unemployment rate is 6.9% in the Dominican Republic. Yes, 6.9%, according to Hector Valdez Albizu, the governor of the Central Bank. The new methodology used by the Central Bank consists of only taking into consideration “the ‘open’ unemployed population” for calculating the official unemployment rate of the country, which will give as a result the open unemployment rate, which at this time is 6.9% of the economically active population.
According to the methodology used until 2013, the official figure of unemployment the Central Bank published was determined by the “expanded unemployment rate”, and was based on the number of unemployed that exist in the country, independent of whether or not they are looking for work.
For this reason, the official unemployment rate for 2013 is 15%, which in 2014 will “methodologically” become 6.9%.
In its report on “Growth, Jobs and Social Cohesion in the Dominican Republic”, the International Labor Organization (ILO) notes that the official definition of unemployment in the Dominican Republic is different from the international statistical standards, because it include workers who, because they are “discouraged”, no longer look for work.
They explain that in many developing countries, which includes the Dominican Republic, a low level of “open” unemployment “is not necessarily an indicator of well-being, or of full employment, but rather “that it reflects the generalized poverty” where a great number of persons cannot afford to be unemployed, so therefore they are obliged to take sporadic jobs on their own “in order to survive.”
According to the ILO, the official unemployment rate in the Dominican Republic exposes a broad group of “under-employed” workers, who no longer look for jobs, because in their daily lives they have to try and survive, or because they believe that there are no jobs available in the labor market. “All of the countries made fun of us, because we used an unemployment rate that was not in agreement with the other countries,” Valdez Albizu alleged.
And he added: “what we use is the open (rate).” When he was asked if they would no longer report the broad unemployment rate, he answered: “No, that has died.”
What Is not counted, does not count, it is said. According to information from the National Statistical Office for 2012, the difference between the rates of open and broad unemployment rates was 365,266 persons, which under generalized poverty live and die each day. They are like that today. And they will be like that tomorrow, but invisible.
Hector Valdez Albizu said that the commercial banks have an excess of liquidity because they have more than RD$20 billion in”paid overnight short term deposits.”
Through the overnight deposit window, the commercial banks deposit excess funds for a few days, for which the Central Bank pays them at a 6.25% rate, which is the same as the interest rate of the monetary policy. The issue came up after a question regarding to the cause of why the banks are not lending and the interest rate is not falling.
Current surplus is US$93.4 million
During a press conference held on Monday, the governor of the Central Bank, Hector Valdez Albizu, reported that for the first time since the first quarter of 2007, the country showed a surplus in its current accounts. This corresponded to the first quarter of 2014 and was for a total of US$93.4 million, which is US$46.8 million more than what was registered eight years ago.
In addition the official reported that the economy grew by 5.5% in the first quarter of 2014.
During the quarter the most dynamic sectors were Mining (+35.3%); Bank financing (+14.6%); Construction (+14.6%); Hotels, bars and restaurants (+8.9%); Farming (+6.25%); Services (+6.1%); Manufacturing (+5.9%); Health (+5.9%); Transportation (+3.9%); Commerce (+3.5%); and Education (+3.5%).
The income generated by the tourist sector increased in US$127.3 million, as it grew 9% in relation to the year before. Regarding the family remittances, which grew by 3.5%, which reflects the recovery of the United States economy where 60% of them originate, noted Valdez Albizu.
He attributed the growth of the construction sector to the “rise” in private construction and to the public investment by the government in school construction.
He reported that the nominal sales reported by the formal companies to the Directorate General of Internal Taxes showed a yearly increase of 7.6% during the January-March 2014 period.
In the meantime, loans to the private sector by the financial sector grew in a year to year rate of 13.8%.
Category: DR News |