NewsWhore
02-20-2012, 12:00 PM
Strong exports helped the Dominican Republic's economy to grow by 4.5% last year and the country's exports rose 29%, while imports increased 13.6%. Latin Business Chronicle asked several experts for their opinions on how this has happened and which sectors of the economy are especially ripe for growth.
According to Bernardo Vega, president of the Dominican Cultural Foundation and former ambassador to the United States, the outlook for the Dominican economy is positive, despite the recent decision of the government not to continue with the IMF agreement until after the May presidential elections. However, the two major political candidates have committed themselves publicly to an IMF agreement after the elections. Exports increased in 2011 and the Barrick Gold mine will start exporting at the end of this year, although the taxes that it will pay will be low until investors recover their investment, which will take three or four years. The ferronickel plant, which was closed, is back in operation and should reach capacity this year. Despite the international situation, the government has maintained macroeconomic stability with a devaluation of only 3% to 4% and inflation at less than 8%. However income distribution keeps worsening and drug-related violence keeps increasing. Flows from tourism, assembly plants and remittances have increased, despite the external limitations.
Mary Fernandez Rodriguez, founding partner at Headrick Rizik Alvarez & Fernandez in Santo Domingo states that there has been a significant increase in the export of processed agricultural products such as beer, rum, tobacco, cocoa and coffee. As the Dominican Republic seeks to move up the value chain, success stories such as these should continue to be the focus of government policies as well as focusing on streamlining the processes to start new companies (although it is important to recognize that a new business organizations law has represented a significant advance in this respect).
Christopher Mitchell, professor emeritus of politics at New York University believes that high commodity prices help explain revived mining for ferronickel and gold; sugar, coffee and cacao also attract limited new investment. A relaxed exchange-rate policy probably assisted 2011's 5% growth in tourism; hoteliers had complained for years of an overvalued peso. Tourism and other services, plus mining, seem the segments most likely to grow strongly in the next few years. However the nation needs to remedy its persistent electric-power shortage; both influential businesses and some urban neighborhoods are 'free riders' on the electricity grid, and yearly electricity subsidies cost the state approximately US$1 billion. Greater commitment to ecological protection is urgently needed, for example, to address the inherited (and potential future) pollution from gold refining, and to safeguard Dominican mountains, beaches and national parks for the nation's future-including well-planned eco-tourism development. Most importantly, major new support is required to educate Dominican workers and professionals.
Olga Kalinina, sovereign ratings director at Standard & Poor's, states that relatively high growth trend reflects the country's resilient economy, its diversified export base, robust domestic demand and the expectation of relatively stable macroeconomic fundamentals. Although the government's withdrawal of its countercyclical fiscal and monetary stimulus curbed consumption and investment in 2011, exports performed well. This was because ferronickel exports resumed following the reopening of the Falconbridge mine. In addition, nontraditional exports benefited from weaker competition from Asia and stronger US demand. Increasing diversification by both market (exports to Central America expanded significantly) and subsector (exports of footwear, textiles, jewelry and medical products have increased) has made the export sector more resilient. The tourism sector has also benefited from diversification. Non-resident foreign arrivals grew more than five % last year, reflecting gains from South America. Unfavorable perceptions of corruption (a low 129th among 183 countries in corruption perception index) and poor global competitiveness index (110th out of 142 nations) reflect major qualitative weaknesses that we believe the Dominican Republic needs to address to ensure sustainable investment and growth.
www.latinbusinesschronicle.com/app/article.aspx?id=5479 (http://www.latinbusinesschronicle.com/app/article.aspx?id=5479)
More... (http://www.dr1.com/index.html#6)
According to Bernardo Vega, president of the Dominican Cultural Foundation and former ambassador to the United States, the outlook for the Dominican economy is positive, despite the recent decision of the government not to continue with the IMF agreement until after the May presidential elections. However, the two major political candidates have committed themselves publicly to an IMF agreement after the elections. Exports increased in 2011 and the Barrick Gold mine will start exporting at the end of this year, although the taxes that it will pay will be low until investors recover their investment, which will take three or four years. The ferronickel plant, which was closed, is back in operation and should reach capacity this year. Despite the international situation, the government has maintained macroeconomic stability with a devaluation of only 3% to 4% and inflation at less than 8%. However income distribution keeps worsening and drug-related violence keeps increasing. Flows from tourism, assembly plants and remittances have increased, despite the external limitations.
Mary Fernandez Rodriguez, founding partner at Headrick Rizik Alvarez & Fernandez in Santo Domingo states that there has been a significant increase in the export of processed agricultural products such as beer, rum, tobacco, cocoa and coffee. As the Dominican Republic seeks to move up the value chain, success stories such as these should continue to be the focus of government policies as well as focusing on streamlining the processes to start new companies (although it is important to recognize that a new business organizations law has represented a significant advance in this respect).
Christopher Mitchell, professor emeritus of politics at New York University believes that high commodity prices help explain revived mining for ferronickel and gold; sugar, coffee and cacao also attract limited new investment. A relaxed exchange-rate policy probably assisted 2011's 5% growth in tourism; hoteliers had complained for years of an overvalued peso. Tourism and other services, plus mining, seem the segments most likely to grow strongly in the next few years. However the nation needs to remedy its persistent electric-power shortage; both influential businesses and some urban neighborhoods are 'free riders' on the electricity grid, and yearly electricity subsidies cost the state approximately US$1 billion. Greater commitment to ecological protection is urgently needed, for example, to address the inherited (and potential future) pollution from gold refining, and to safeguard Dominican mountains, beaches and national parks for the nation's future-including well-planned eco-tourism development. Most importantly, major new support is required to educate Dominican workers and professionals.
Olga Kalinina, sovereign ratings director at Standard & Poor's, states that relatively high growth trend reflects the country's resilient economy, its diversified export base, robust domestic demand and the expectation of relatively stable macroeconomic fundamentals. Although the government's withdrawal of its countercyclical fiscal and monetary stimulus curbed consumption and investment in 2011, exports performed well. This was because ferronickel exports resumed following the reopening of the Falconbridge mine. In addition, nontraditional exports benefited from weaker competition from Asia and stronger US demand. Increasing diversification by both market (exports to Central America expanded significantly) and subsector (exports of footwear, textiles, jewelry and medical products have increased) has made the export sector more resilient. The tourism sector has also benefited from diversification. Non-resident foreign arrivals grew more than five % last year, reflecting gains from South America. Unfavorable perceptions of corruption (a low 129th among 183 countries in corruption perception index) and poor global competitiveness index (110th out of 142 nations) reflect major qualitative weaknesses that we believe the Dominican Republic needs to address to ensure sustainable investment and growth.
www.latinbusinesschronicle.com/app/article.aspx?id=5479 (http://www.latinbusinesschronicle.com/app/article.aspx?id=5479)
More... (http://www.dr1.com/index.html#6)