Country Report Dominican Republic July 2009
| Publication Date | July 2009 |
|---|---|
| Publisher | EIU |
| Product Type | Report |
| Pages | 27 |
| ISBN Number | not applicable |
| Product Code | EIU00147 |
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Summary
Outlook for 2009-10
- The government of the president, Leonel? Fernandez, will face growing popular discontent during the outlook period, as a severe economic downturn, alleged corruption and power outages fuel public anger.
- We expect legislation to be centred on the economy, although the political focus will soon turn to campaigning for legislative elections set for May 2010.
- Recent data suggest that the global economy is stabilising; however, growth over the next two years will be marked by a high degree of volatility. A weak US economy will dampen growth prospects for the Dominican Republic.
- Tight financing conditions will mean government spending cuts in 2009, reducing the central government deficit to 2% of GDP, but lifting public debt to 42.7% of GDP. The deficit will remain at 2% of GDP in 2010.
- We expect the weakening of real GDP to continue, but forecast a recovery toward the end of 2009, which will lead to a GDP contraction of 2% (previously 2.5%). Recovery will be slow as GDP grows by just 2% in 2010.
- Annual inflation will continue to fall through most of 2009, turning negative for a few months, but will end the year at 5.6% owing to peso depreciation and higher oil prices. We expect inflation to average 7.3% in 2010.
- We expect an adjustment in the currency, given the magnitude of the external financing requirement, and anticipate a real depreciation of 3.6% in 2009 followed by a slight further depreciation in 2010.
- Weak export earnings and remittances inflows will lead to a current-account deficit of 5.5% of GDP in 2009, despite lower average import prices. This deficit will rise to 6.6% in 2010 as import costs increase.
Monthly review
- A May political pact between Mr Fernandez and Miguel Vargas Maldonado of the opposition PRD has pushed forward the constitutional reform process, although the backroom-style deal could weaken democratic institutions.
- The pact has catapulted Mr Vargas into the presidency of his party, even though party elections have yet to be convened.
- On May 28th the government announced the purchase of the private energy distributor, EdeEste, in order to resolve three separate legal disputes.
- Preliminary supply-side data published by the Central Bank reveal that the economy grew by 1% in the first quarter owing to heavy contractions in construction, mining and free zones.
- FDI reached US$636.8m in the first quarter, stronger than during the same period in 2007, but 40% less than during the first quarter of 2008.
Source: Country Report
This report covers the following industry codes:
SIC Code: 48;70;15;60
NAICS Code: 517;72;23;52
Content
- Highlights
- Outlook for 2009-10: Domestic politics
- Outlook for 2009-10: International relations
- Outlook for 2009-10: Policy trends
- Outlook for 2009-10: Fiscal policy
- Outlook for 2009-10: Monetary policy
- Outlook for 2009-10: International assumptions
- Outlook for 2009-10: Economic growth
- Outlook for 2009-10: Inflation
- Outlook for 2009-10: Exchange rates
- Outlook for 2009-10: External sector
- Outlook for 2009-10: Forecast summary
- The political scene: Political pact strengthens leaders, weakens parties
- The political scene: Mr Vargas ascends to PRD party presidency
- The political scene: Electricity problems could damage PLD
- Economic policy: Government increases role in failing energy sector
- Economic policy: Government revenue down 15% in the first quarter
- Economic performance: GDP growth slows to 1% in first quarter
- Economic performance: Current account improves, despite plummeting inflows
- Economic performance: FDI inflows strong, but down sharply from highs in 2008
- Data and charts: Annual data and forecast
- Data and charts: Quarterly data
- Data and charts: Monthly data
- Data and charts: Annual trends charts
- Data and charts: Monthly trends charts
- Data and charts: Comparative economic indicators
- Basic data
- Political structure
Delivery Details
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