Dominica

Country risk rating

C3

SENSITIVE RISK

  • Economic risk

  • Business environment risk

  • Political risk

  • Commercial risk

  • Financing risk

GDP USD0.563bn (World ranking 192, World Bank 2017)
Population 10.528mn (World ranking 86, World Bank 2015)
Form of state Parliamentary Democracy
Head of government Roosevelt SKERRIT (Prime Minister)
Next elections 2019, presidential
  • Resilient economic growth
  • Robust tourism sector
  • Good infrastructure network
  • Sound banking sector indicators
  • Free Trade Agreement with the US (CAFTA-DR)
  • Political stability
  • Weak rule of law
  • High levels of red tape and corruption
  • Persistent income inequality is a breeding ground for social unrest

Growth moderates but keeps on breaking the waves

Once again, the Dominican Republic outperformed the region in terms of real GDP growth. The negative impact of low gold and silver prices on mining activity and the poor performance of tobacco and coffee exports have somewhat been offset by construction, retail, and services. 

On the demand side, private consumption, investment in the energy network (aimed at providing adequate capacity), and the tourism sector, are set to remain the main engines of growth. 

The improved economic performance of crucial trading partners will also support activity. However, headwinds arise as the United States is redefining its trade policy. The US foreign direct investment position has been contracting in recent years although trade dependence remains high. In addition, the anticipated Fed hikes could tighten global financial conditions. The considerable export and import concentration also exposes the Caribbean nation to external shocks. 

FDI inflows are abundant and together with lower oil prices, generous remittances, and tourism revenues have enabled the country to keep under control its current account deficit under control. In addition, foreign reserves are on the rise and the import coverage has increased due to rising imports. 

Growth moderates but keeps on breaking the waves

Once again, the Dominican Republic outperformed the region in terms of real GDP growth. The negative impact of low gold and silver prices on mining activity and the poor performance of tobacco and coffee exports have somewhat been offset by construction, retail, and services. 

On the demand side, private consumption, investment in the energy network (aimed at providing adequate capacity), and the tourism sector, are set to remain the main engines of growth. 

The improved economic performance of crucial trading partners will also support activity. However, headwinds arise as the United States is redefining its trade policy. The US foreign direct investment position has been contracting in recent years although trade dependence remains high. In addition, the anticipated Fed hikes could tighten global financial conditions. The considerable export and import concentration also exposes the Caribbean nation to external shocks. 

FDI inflows are abundant and together with lower oil prices, generous remittances, and tourism revenues have enabled the country to keep under control its current account deficit under control. In addition, foreign reserves are on the rise and the import coverage has increased due to rising imports. 

Trade structure by destination/origin

(% of total)

Exports Rank Imports
United States 54%
1
41% United States
Haiti 12%
2
13% China
Canada 8%
3
5% Mexico
India 7%
4
3% Brazil
Netherlands 2%
5
3% Spain

Trade structure by product

(% of total)

Exports Rank Imports
Gemstones & precious metals 20%
1
16% Mineral fuels
Optical and apparatus thereof 12%
2
8% Industrial machinery
Tobacco 9%
3
8% Electrical machinery
Electrical machinery 7%
4
7% Vehicles
Clothing 6%
5
7% Plastics

  • Low

  • Medium

  • Sensitive

  • High

  • Payments

  • Court proceedings

  • Insolvency proceedings

Contact

Contact Euler Hermes

Economic Research Team

research@eulerhermes.com

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