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Dominican Republic: General Optimism

Strong fundamentals are helping Dominican GDP growth. The outlook is bright if the current president wins re-election.


Foreign and local companies are bullish on the Dominican Republic, although with a caveat - that President Leonel Fernandez from the PLD party is re-elected in May. "If the PLD is elected and there is an oil and foreign exchange stability, I would say the [business outlook is] good," says Miguel Barletta, president of Grupo Ambar, which distributes popular brands like Nissan and Chevrolet in the country.

Fernando Garcia, vice president for Latin America for U.S.-based American Power Conversion (APC), agrees. "The administration of Leonel Fernandez is definitely betting on technology and aiming to convert the Dominican Republic into a [link] between the United States and Latin America," he says. "The measures it is taking is definitely being felt on the streets."

Garcia is referring to the turnaround of the economy since Fernandez asumed office in August 2004 after inheriting falling GDP and Latin America's highest inflation rate. GDP growth has gone from falling 1.9 percent in 2003 (the last full year before Fernandez took over) to 8.5 percent growth last year. The average GDP growth during Fernandez' administration has been 8.3 percent. By comparison, the average GDP under Fernandez' predecessor, Hipolito Mejia, was a dismal 1.8 percent, according to a Latin Business Chronicle analysis of data for 2001-04 and 2005-08 from the International Monetary Fund (IMF).

Inflation has also improved markedly under Fernandez. Last year it reached 6.1 percent, which compares with 51.4 percent in 2004, the worst in Latin America at the time. The average inflation rate under Fernandez has been 6.0 percent. That compares with 23.3 percent under Mejia from the PRD party. A return to PRD would be ill-fated, Garcia warns.

Meanwhile, foreign direct investment has been growing strongly.  Last year it reached $1.4 billion, an 18.3 percent increase an a new recor. The last one...

Keywords: American Chamber of Commerce of the Dominican Republic, Brugal, CAFTA, Edrington Group, Indescorp, Squire Sanders

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