The Business Climate Index improved in the last quarter of 2020

The Business Climate Index (ICE) continued to rise for a third consecutive quarter, going from 48.9 in the July-September 2020 quarter to 55.9 in the last quarter of 2020, which is a consequence of the balance of opinion of Dominican businessmen about the Dominican economy , the international economy, the branch of activity, the investment climate and the company.

On the other hand, the Industrial Confidence Index (ICI) showed a downward behavior, going from 59.5 in the July-September quarter to 52.6 in the October-December 2020 quarter.

When comparing the fourth quarter of 2019 with the fourth quarter of 2020, the information reveals that the Industrial Confidence Index is higher, but that the Business Climate Index is lower.

The Industrial Confidence Index measures the perceptions that industrialists have regarding the behavior of sales, production and inventories in industries, thus indicating the existing probabilities that industrialists will increase or not their production in the short term.

For the fourth quarter 2020, the increase in real production was slightly below the expectations reflected in the survey corresponding to the third quarter 2020. While the production expectations for the third quarter 2020 stood at 24.5, the report of real production placed them at 23.9.

Expectations for the first quarter of this year (January-March 2021) are at -2.3. The opinion balance of the production of the surveyed companies was 15.1 compared to the same quarter of the previous year.

Regarding sales in the industries for the fourth quarter 2020, the sales balance was higher than the projected expectations. Expectations were 18.6, while the opinion balance was 32.1.

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Expectations for the next quarter (January-March 2021) are at 0.0. The percentage of companies that exported in the third quarter 2020 increased slightly, going from 68% in the July-September quarter to 74% in the October-December 2020 quarter.

Regarding the companies that made investments to increase their production capacity, the percentage of companies that invested in “Plant and / or equipment” rose in the fourth quarter of 2020, reaching 20%, after continuously decreasing the four previous quarters. While investments in “Machinery” went from 12% in April-June 2020 to 24% in July-September 2020 and to 30% in the October-December 2020 quarter.

The number of companies that invested in “Technology” in October-December 2020 rose slightly, reaching 11%, after decreasing from 18% in the first quarter of 2020 to 11% in the April-June 2020 quarter and 9% in the quarter July-September 2020.

In April-June, 49% did not make any investment, this percentage decreased for the July-September quarter since 40.0% stated that they did not make any investment. For the October-December 2020 quarter, 36.4% of companies affirm that they will not make any investment. However, only 25% report that they did not make any investment.

The Business Climate Index (ICE) established in the Industrial Situation Survey, measures the perceptions of entrepreneurs about the investment climate, the national economy, the international economy, the situation of their company and about the branch or subsector of activity in that operates said company. In other words, it is about the perceptions that entrepreneurs have regarding the environment in which they develop their businesses, establishing the extent to which they feel more or less optimistic in relation to these various indicators.

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Comparing the fourth quarter 2020 with the third quarter 2020, in the applied survey the perception of entrepreneurs decreased. Regarding the perception of the Dominican economy, it was located on neutral ground; it improved but remains in negative terrain in the perception of the international economy, and improved and is located in positive terrain in the indicators of: branch of activity, investment climate and company.

The Industrial Situation Survey (ECI), prepared by the Association of Industries of the Dominican Republic (AIRD), summarizes the result of the performance and perceptions of entrepreneurs through the calculation of two main indices: 1) The Industrial Confidence Index (ICI) and, 2) the Business Climate Index (ICE).

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