Some Information About the Dominican Republic

The Dominican Republic has enjoyed strong GDP growth since 2005, with double digit growth in 2006. In 2007, exports were bolstered by the nearly 50% increase in nickel prices; however, prices fell significantly in 2008, contributing to a slowdown in GDP growth for the year. Although the country has long been viewed primarily as an exporter of sugar, coffee, and tobacco, in recent years the service sector has overtaken agriculture as the economy's largest employer due to growth in tourism and free trade zones. The global recession, has had a significant impact on GDP growth in the latter half of 2008, as tourism and remittances, two of the Dominican Republic's most important economic contributors, showed signs of slowing.

The economy is highly dependent upon the US, the source of nearly three-fourths of exports, and remittances represent about a tenth of GDP, equivalent to almost half of exports and three-quarters of tourism receipts. With the help of strict fiscal targets agreed to in the 2004 renegotiation of an IMF standby loan, President Leonel FERNANDEZ Reyna had stabilized the country's financial situation, lowering inflation to less than 6% in 2007.

A fiscal expansion was expected for 2008, prior to the elections in May, when President Fernandez was reelected president (next elections to be held in May 2012), and for Tropical Storm Noel ongoing reconstruction was also expected to contribute to helping improve the DR economy. Although the economy was growing at a respectable rate in 2007, high unemployment and underemployment remained an important challenge in 2008 and beyond. The reality of the situation with the DR economy, was that inflation rates in 2008 actually grew to over 11% on average for the first 3 quarters. High food prices, driven by the effects of consecutive tropical storms on agricultural products, and education prices, were significant contributors to the jump. The effects of the global financial crisis and the US recession are projected to negatively affect GDP growth in 2009, with a rebound expected in 2010. Although the economy is growing at a respectable rate, high unemployment and underemployment remains an important challenge.

The Dominican Republic suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GNP, while the richest 10% enjoys nearly 40% of national income. The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) came into force in March 2007, which should boost investment and exports and reduce losses to the Asian garment industry.

Source for this information is the CIA World Facts Book for the Dominican Republic