Economy of the Dominican Republic
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. Remittances from Dominicans living in the United States, are estimated to be about $1.5 billion per year.
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 balooned 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 Fernandez 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. The continuation of this vigorous growth in 2000 will depend on the policies adopted by the new administration.
GDP: purchasing power parity - $52.71 billion (2003 est.)
GDP - real growth rate: -0.7% (2003 est.)
GDP - per capita: purchasing power parity - $6,000 (2003 est.)
GDP - composition by sector:
services: 57.8% (2003)
Population below poverty line: 19.9% (2003)
Household income or consumption by percentage share:
lowest 10%: 2.1%
highest 10%: 37.9% (2003)
Inflation rate (consumer prices): 27.5% (2003)
Labor force: 2.3 million to 2.6 million (2000 est.)
Labor force - by occupation: services and government 58.7%, industry 24.3%, agriculture 17% (1998 est.)
Unemployment rate: 16.5% (2003 est.)
revenues: $2.601 billion
expenditures: $3.353 billion, including capital expenditures of $1.1 billion (2003 est.)
Industries: tourism, sugar processing, ferronickel and gold mining, textiles, cement, tobacco
Industrial production growth rate: 2% (2001 est.)
Electricity - production: 9,186 GWh (2001)
Electricity - production by source:
fossil fuel: 72.04%
other: 0.34% (1998)
Electricity - consumption: 8,543 GWh (2001)
Electricity - exports: 0 kWh (1998)
Electricity - imports: 0 kWh (1998)
Agriculture - products: sugarcane, coffee, cotton, cocoa, tobacco, rice, beans, potatoes, corn, bananas; cattle, pigs, dairy products, beef, eggs
Exports: $5.524 billion (f.o.b., 2003 est.)
Exports - commodities: ferronickel, sugar, gold, silver, coffee, cocoa, tobacco, meats
Exports - partners: US 84.4%, Canada 1.7%, Haiti 1.5% (2003 est.)
Imports: $7.911 billion (f.o.b., 2003)
Imports - commodities: foodstuffs, petroleum, cotton and fabrics, chemicals and pharmaceuticals
Imports - partners: US 49.5%, Venezuela 11.3%, Mexico 4.4%, Colombia 4% (2003 est.)
Debt - external: $6.567 billion (2003 est.)
Economic aid - recipient: $239.6 million (1995)
Currency: 1 Dominican peso (RD$) = 100 centavos
Fiscal year: calendar year