Dominican Republic: Remittances Showing Strong Rebound Despite COVID-19

By Gerelyn Terzo*

Tower and Auditorium of the Central Bank of the Dominican Republic/ Rafael Calventi/ Wikimedia Commons/ Creative Commons License

The Dominican Republic’s economy has not escaped the slowdown caused by coronavirus, but one of its most important engines of growth – remittances from expatriates – has shown a strong resurgence in recent months.

  • The DR’s economy has been on a rollercoaster since the onset of the pandemic. The World Bank projects it contracted 4.3 percent in 2020, with the fallout continuing to reverberate throughout the country this year and next. This comes after decades of expansion, including annual growth of 6.1 percent between 2015 and 2019. Much of the country’s growth for decades has been fueled by personal remittances, hovering around 8.3 percent of GDP as of 2019.

Remittances plummeted more than 20 percent in March 2020, when the shock of the pandemic first hit, but they rebounded soon after, and a broader turnaround in the second half of 2020 appears to be helping the Dominican Republic toward a course of recovery. Families depend on funds from family members abroad for consumption, savings and investing.

  • By May, money transfers into the country from the United States rebounded nearly 18 percent, thanks to a Dominican diaspora that sent approximately $638.7 million home to their families. That was close to double the amount sent the previous month. Remittances have shown particularly strong growth since July, when transfers surpassed $827 million, 29.3 percent over July 2019.
  • Since then, the Dominican migrant community has not disappointed – more than compensating for the dip in remittances during the early COVID period. The Central Bank announced in December that “the flow of foreign currency continues to improve.” It pointed to a 27 percent year-on-year increase in remittances in November 2020, when they reached $707.5 million. For the January-November 2020 period, remittances climbed to nearly $7.4 billion compared to roughly $7.1 billion for all of 2019.
  • Nearly 85 percent of the flows over the past eight months originated from the diaspora in the United States, where unemployment among Latinos dropped about a half percent per month in late 2020. Other major sources are Spain and Italy, where Dominican migrants number 158,000 and 43,000, respectively.

Lockdowns and travel bans have ravaged the tourism industry, which customarily accounts for another 7‑8 percent of GPD. The number of visitors in November was one quarter that of the same month a year ago – making remittances an even more important input for the DR economy. Migrants living in the United States are likely working jobs that are considered essential during COVID in sectors of the economy such as healthcare. Regardless of how tough times get abroad, moreover, migrants from the Caribbean and Central America know that conditions are likely to be even more difficult back home – and these expatriates are more prone to sacrificing meals for themselves to ensure families back home can survive. A Santo Domingo local on social media suggested constructing a statue – similar to one in San Salvador in honor of Salvadoran expatriates – to honor the Dominican diaspora, who “against all odds” got the money through. The trajectory of COVID is still unknowable, but migrants’ commitment to helping family back home is already clear.

February 18, 2021

* Gerelyn Terzo is an analyst and writer on remittance flows and cryptocurrencies. This article is adapted from one she wrote for Sharemoney.

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