Caribbean & Central America - January 2015 (ISSN 1741-4458)

The Dominican government led by President Danilo Medina had much to celebrate in this New Year. Last year proved to be a very good one for the Medina government politically, with the President successfully avoiding being dragged into major controversies, allowing him to retain record high approval ratings. As it turns out, the year was also very good in economic terms, with the year-end figures from the central bank (BCRD) showing that real GDP growth in 2014 was 7.1%, reportedly the highest growth rate in Latin America.

BCRD president, Héctor Valdez Albizu, presented the year-end economic results in a press conference on 8 January. Valdez said that 2014 had been a very positive year for the Dominican Republic (DR)’s economy with all sectors closing the year with positive growth figures. According to the BCRD’s preliminary figures presented by Valdez, the construction sector grew by 11.4%; tourism, by 9.6%, while other sectors such as financial services (8.6%); agriculture (5.2%); manufacturing (5%) and retail (4.7%) presented lower but still positive growth rates.

These positive results were further boosted by the significant 20.9% rise in activity in the mining sector, which has experienced a revival after the Medina government renegotiated the terms of the concession of the Pueblo Viejo gold and silver mine in 2013 [RC-13-05]. Pueblo Viejo is the DR’s largest gold mine and now that production there has resumed, the Dominican economy is starting to see the benefits.

Valdez said that based on BCRD calculations, GDP growth in 2014 would easily exceed the 6.2% forecast set by private economists (which was already higher than the 4% average growth reported in the last 5 years), making the DR the region’s fastest growing economy in 2014. Highlighting that the consensus growth forecast for Latin America in 2014 is just 1.1%, Valdez went on to say that the DR’s impressive figures were not only the result of the favourable conditions of the domestic economy but stemmed from deft management by the Medina administration.

Indeed Valdez phoned President Medina during the press conference to share with him the good news. Valdez told Medina that thanks to his government’s efforts to restore fiscal stability and to promote and attract investment, foreign direct investment (FDI) inflows soared by 12.4% in 2014 to US$2.23bn, US$247.1m more than in 2013. Further highlighting the government’s exemplary economic management Valdez pointed out that the fiscal deficit had dropped from 6% of GDP in 2012 to 3.1% in 2014. As regards inflation, the preliminary year-end BCRD figure of 1.58% for 2014 was the lowest for the last 30 years and the second lowest in the region, behind dollarised El Salvador (0.5%).

Valdez also highlighted the impact of these positive indicators on formal job creation, with last year’s unemployment rate dropping a full percentage point to 6%. He added that the BCRD estimates that in the last two years 235,600 new jobs have been created, meaning that the government is set to “comfortably” achieve its goal of creating 400,000 new jobs by the end of Medina’s term in 2016. President Medina was quick to hail these results, as testament to his government’s commitment to promoting economic development. To conclude Valdez said that the economic prospects for 2015 were also very positive with GDP growth projected to come in at 5%-5.5% and further fiscal savings expected thanks to falling oil prices. “If we manage it well...it will be the year in which the economy really takes off!”, Valdez said.

• Strengthening ties with Puerto Rico

On 13 January the Dominican Republic (DR)’s President Danilo Medina paid a State visit to Puerto Rico (PR), marking an historic precedent. While President Medina is not the first Dominican President to visit neighbouring PR, he is set to become the first to sign bilateral cooperation agreements with the US territory government. Last September PR governor, Alejandro García Padilla, visited the DR during which he and Medina agreed to ink multiple bilateral cooperation agreements in the areas of trade, investment promotion, education and security. Since then the two governments have said that the terms of nine accords have been agreed, spanning trade, higher education, security and natural resource management.