Conflict between Israel and Iran could hit the Dominican economy, according to Haivanjoe Ng Cortiñas

Santo Domingo. – Economist Haivanjoe Ng Cortiñas warned that the intensification of the war conflict between Israel and Iran could translate into negative consequences for the economy of the Dominican Republic, due to the direct impact it is already having on international oil prices and global inflationary projections. Ng Cortiñas pointed out that the rise in WTI crude (from US$62 to US$73 per barrel amid the conflict) already represents a challenge for economies that largely depend on imported energy, as is the case of the Dominican Republic, whose external energy dependence is around 84%. This situation, he explained, could generate additional pressure on internal inflation, the exchange rate, and the country's oil bill.

If the upward trend in oil prices continues, he warned that the national oil bill could increase by at least US$420 million by the end of 2025, exceeding US$5.1 billion annually. This scenario would translate into greater fiscal pressures, inflation, loss of purchasing power in households, and possible adjustments in monetary policy.

"The rise in oil prices and geopolitical tension also threaten to affect interest rates, making credit more expensive and hindering investment. We are facing a possible perfect storm that would impact transportation, food production, electricity, and price stability in the local market," he indicated. Ng Cortiñas also highlighted that part of the international risk is due to the strategic importance of the Strait of Hormuz (partially controlled by Iran) through which a fifth of the world's gas and oil trade passes, which exacerbates uncertainty in the energy markets. According to their estimates, if international pressure on prices continues, Dominican inflation, which stood at 3.84% in May, could close the year between 4.36% and 5.04%, exceeding the Central Bank's official target, despite government subsidies for fuels and electricity.

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Finally, he warned that this situation could weaken the local currency, as the demand for dollars as a safe haven against uncertainty increases, which would further compromise the macroeconomic stability of the country.