Economy of the Dominican Republic

From Wikipedia, the free encyclopedia

Economy of the Dominican Republic
Currency	1 Dominican Peso (RD$) = 100 Centavos
Fiscal year	Calendar year
Trade organisations	WTO
Statistics [1]
GDP ranking	68th by volume (at PPP) (2005);
GDP	$52.71 billion (2003 est.)
GDP growth	-0.7% (2003 est.)
GDP per capita	$6,000 (2003 est.)
GDP by sector	agriculture (10.7%), industry (31.5%), services (57.8%) (2003 est.)
Inflation	3.3% (2004 est.)
Pop below poverty line	19.9% (2003)
Labour force	2.3 million to 2.6 million (2000 est.)
Labour force by occupation	services and government 58.7%, industry 24.3%, agriculture 17% (1998 est.)
Unemployment	16.5% (2003 est.)
Main industries	tourism, sugar processing, ferronickel and gold mining, textiles, cement, tobacco
Trading Partners [2]
Exports	$5.818 billion f.o.b. (2005 est.)
Main partners	U.S. 80%, South Korea 2.1%, Canada 1.9% (2004)
Imports	$9.747 billion f.o.b. (2005 est.)
Main Partners	U.S. 48.1%, Venezuela 13.5%, Colombia 4.8%, Mexico 4.8% (2004)
Public finances [3]
Public debt	13.8% of GDP (2003)
External debt	$6.567 billion (2003)
Revenues	$2.601 billion (2003)
Expenses	$3.353 billion, including capital expenditures of $1.1 billion (2003)
Economic aid	$239.6 million (FY04 est.)
edit

The Dominican Republic is a middle-income developing country primarily dependent on agriculture, trade, and services, especially tourism. Although the service sector has recently overtaken agriculture as the leading employer of Dominicans (due principally to growth in tourism and Free Trade Zones), agriculture remains the most important sector in terms of domestic consumption and is in second place (behind mining) in terms of export earnings. Tourism accounts for more than $1 billion in annual earnings. Free Trade Zone earnings and tourism are the fastest-growing export sectors. According to a 1999 International Monetary Fund report, remittances from Dominican Americans, are estimated to be about $1.5 billion per year. Most of these funds are used to cover basic household needs such as shelter, food, clothing, health care and education. Secondarily, remittances have financed small businesses and other productive activities.^[1]

1 Overview
- 1.1 Statistics
2 Notes
- 2.1 See also

[edit] Overview

Following economic turmoil in the late 1980s and 1990, during which the GDP fell by up to %5 and consumer price inflation reached an unprecedented %100, the Dominican Republic entered a period of moderate growth and declining inflation until 2002 after which the economy entered a recession, after the second commercial bank of the country collapsed, caused by a major fraud. GDP dropped by 1% in 2003 while inflation ballooned by over %27.

Despite a widening merchandise trade deficit, tourism earnings and remittances have helped build foreign exchange reserves. The Dominican Republic is current on foreign private debt, and has agreed to pay arrears of about $130 million to the U.S. Department of Agriculture's Commodity Credit Corporation.

The government faces several economic policy challenges--high real interest rates, fiscal imbalances caused by money-losing public enterprises and poor tax-collection rates, and reducing dependence on taxes on international trade. Years of tariff protection for domestic production have left the economy vulnerable in a rapidly integrating global economy. The deteriorating non-free trade zone merchandise trade balance is in part due to the failure of the exchange rate to reflect inflationary trends in the 1993-1995 period.

In December 1996, incoming President Leonel Fernández presented a bold reform package for this Caribbean economy - including the devaluation of the peso, income tax cuts, a 50% increase in sales taxes, reduced import tariffs, and increased gasoline prices - in an attempt to create a market-oriented economy that can compete internationally. Even though most reforms are stalled in the legislature - including the intellectual property rights bill, social security reform, and a new electricity law first submitted in 1993 - the economy has grown vigorously under Fernandez's administration. Construction, tourism and telecommunications are leading the advance. The government is working to increase electric generating capacity, a key to continued economic growth; the state electricity company was finally privatized following numerous delays. Resumption of a badly needed IMF loan, slowed by government repurchase of electrical power plants, is basic to the restoration of social and economic stability. In mid-2004 re-elected President Fernandez promised belt-tightening reform. His administration has passed tax reform and arranged a $600 million IMF standby arrangement in March 2005 to ease the country's fiscal situation. Although the economy continues to grow at a respectable rate, inflation and unemployment remain the two biggest challenges.^[2]

[edit] Statistics

Household income or consumption by percentage share:

lowest %10: %2.1

highest %10: %37.9 (2003)

Inflation rate (consumer prices): %27.5 (2003), %2.19 (2005)

Electricity - production: 9,186 GWh (2001)

Electricity - production by source:

fossil fuel: %72.04

hydro: %27.62

nuclear: %0

other: %0.34 (1998)

Electricity - consumption: 8,543 GWh (2001)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture - products: sugarcane, sugar, coffee, cotton, cocoa, tobacco, rice, beans, potatoes, corn, bananas; cattle, pigs, dairy products, beef, eggs

Exchange rates: Dominican pesos (RD$) per US$1 - 32.88 (July 2006), 46.151 (February 2004), 18.609 (2002), 16.161 (January 2000), 16.033 (1999), 15.267 (1998), 14.265 (1997), 13.775 (1996), 13.597 (1995)

Fiscal year:

[edit] Notes

^ Meyers, Deborah Waller. Migrant Remittances to Latin America; Reviewing the Literature, Washington DC; Inter-American Dialogue 1998
^ CIA - The World Factbook - Dominican Republic