Since the election of Leonel Fernandez in May 2004, the Dominican Republic’s economic situation has improved considerably and investor confidence is returning. Fernandez soundly used the three month period before taking up office in August 2004 to travel abroad with a view to re-establishing international investor confidence in a market whose international credit rating had declined during the Mejía government. In his acceptance speech, Fernandez sent a strong message to the international community that he intended to tackle the country’s debt problems and fight against corruption in the Dominican public andprivate sectors. Since the Fernandez administration took control, the peso has strengthened considerably.
The Central Bank third quarter report on the economic performance of the Dominican Republic from January to September 2004 indicates that the economy grew 1.8% during that period. Third quarter growth alone was 5.5%, offsetting the slow start to the year. The most dynamic sectors were communications (22.7%) and electricity and water (21.1%). Dominican Republic had one of the fast growing economies inthe world in the 1990s, during Fernandez’s first administration, thanks to the adoption of sound macroeconomic policies in the early 1990s and greater opening to foreign investment.
After a decade of little to no growth in the 1980s, the Dominican Republic’s economy boomed, expanding at an average rate of 7.7% per year from 1996 to 2000, when Hipolito Mejia, was elected President, Fernandez being unable to run for re--election at that point. Tourism (now the leading foreign exchange earner), telecommunications, and free-trade-zone manufacturing became increasingly important industries, although agriculture (sugar, coffee and cocoa) is still a major part of the economy.
The Dominican Republic’s most important trading partner is the U.S. (87% of export revenues); other markets include Canada, Western Europe, and Japan. The country exports free-trade-zone manufactured products (garments, footwear, etc.), nickel, sugar, coffee, cacao, and tobacco, and it imports foodstuffs, petroleum, industrial raw materials, and capital goods. On August 5, 2004, the Dominican Republic signed a Free Trade Agreement with the U.S. and five Central American countries to integrate into the U.S.- Central American Free Trade Agreement, in addition to the country’s CARICOM membership. Foreign Direct Investment (FDI) was $309 million in 2003 and will be about $100 million in 2004, much of it directed at the tourism sector, free trade zones and telecommunication sector. Remittances were more than $2 billion in 2003.
The U.S. has a strong interest in a democratic, stable, and economically healthy Dominican Republic and relations between the countries are excellent. The country’s standing as the largest Caribbean economy, second-largest country in terms of population and land mass, large bilateral trade with the United States and its proximity to the United States and other smaller Caribbean nations make the Dominican Republic an important partner in hemispheric affairs.
The embassy estimates that 60,000 U.S. citizens live in the Dominican Republic; many are dual nationals. An important element of the relationship between the two countries is the fact that more than 1 million Dominicans reside in the United States, most of them in the metropolitan Northeast and some in Florida. After extensive lobbying from the British business community and in recognition of the great potential of the market, the UK re--opened its Embassy in the Dominican Republic (Dominican Republic) in November 1995, after a gap of over ten years. In 1998, the Embassy was boosted by a second UK-based member of staff as Deputy Head of Mission in support of our developing relations.
In May 2003 Baroness Amos paid an unofficial visit to the Dominican Republic as FCO Minister for the Caribbean. This was the first Ministerial visit since the British Embassy reopened in Santo Domingo in 1995. President Fernandez made a successful first ever Dominican Republic President /President-elect visit to the UK in July 2004, following his election victory in May, as indication that bilateral relations are going from strength to strength.
Source: Cap Cana Altabella Fishing Lodge |