New president, same challenges
The government of ex-president Danilo Medina was determined to push through major structural reforms that had long been identified, and whose implementation had been constantly delayed, but had become all too urgent. Although Medina succeeded in providing the country with economic stability and even unprecedented growth (on average 6% per year between 2014 and 2019, growth from which the poorer classes did not really benefit), the economy is still too concentrated around a few sectors (tourism, free trade zones and ferronickel) and highly dependent on the United States as well as hydrocarbon imports. What's more, Dominican growth should be taken with a pinch of salt: it remains vulnerable in that increased demand is based less on real productivity gains than on debt and lower savings. The challenges facing the new president, Luis Abinader - the opposition candidate who ended the 16-year uninterrupted reign of the Dominican Liberation Party (PLD) in the summer of 2020 - are numerous.
State tax revenues are low compared to developed countries. After years of decline, these free trade zones occupy a major place in the Dominican economy (just under 60% of exports andnumber 1 employer with 10% of the workforce). In early July, the opening of two new free trade zones was announced: one in Espaillat, the other in La Isabela. These two parks are expected to create more than 2,700 jobs and generate several million dollars a year for the country.
Another priority is to turn around the electricity sector, which is suffering from a serious financial imbalance due to distribution constraints, the high cost of maintaining and modernizing networks, and the difficulty of collecting bills (a third of the - very expensive - electricity is said to be diverted). The electricity sector continues to be a major brake on the rationalization of public spending.
Finally, the fight against corruption and the monitoring of the local banking system, scalded after the Baninter bankruptcy scandal, is another sensitive issue that the new president has had to confront. According to a 2020 report by Transparency International, the Dominican Republic ranks 137th out of 180 countries in terms of corruption. But in October 2021, the president's name came up in the Pandora Papers scandal: the man was suspected of tax evasion...
Economic partners of the Dominican Republic
In 2023, the economy remains highly dependent on the United States (54% of exports and over 50% of imports): it is the Dominican Republic's main trading partner, and every year more so. The Dominican economy is therefore largely dependent on the health of the American market. Next in line are China and, for the first time, Mexico, Canada and Brazil, as well as other Latin American countries, notably Venezuela. Europe, in particular Switzerland, Spain and France, also trades with the Dominican Republic. As a rear base for the reconstruction of Haiti, which is boosting economic growth, the neighbouring country is one of the Dominican Republic's leading customers.
Foreign investment rose sharply from 1990 to 2001, reaching over $1,200 million in that year. Following the economic recession of 2003, capital fled the island en masse, worsening the already critical financial situation. The free trade agreement between the Dominican Republic and Central American countries (CAFTA-DR), implemented in March 2007, has boosted foreign direct investment and exports, as well as improving the country's regional integration and lowering the price of several thousand products (consumer foodstuffs), for which customs duties have been reduced by 20%. Today, the country is the main driver of foreign direct investment received by countries in the Caribbean zone. The main sectors concerned are raw materials extraction, industry and tourism.
Difficult relations with neighbouring Haiti
A member of the Association of Caribbean States (ACS), the Dominican Republic also established diplomatic relations with Cuba in 1998. Determined to expand its diplomatic network, the Dominican Republic has opened new embassies in India, Egypt, Qatar, Russia and South Africa. While the United States remains the Dominican Republic's main partner, it is now seeking to play a role in the region. For several years now, it has been organizing numerous international summits.
Despite its stormy relations with Haiti, resulting in particular from migratory pressure, drug trafficking and clashes between traders and authorities in the border zone, the Dominican Republic demonstrated its solidarity during the earthquake that struck its neighbor in January 2010. Unfortunately, the situation has since seriously deteriorated, particularly after the Dominican justice system declared at the end of 2013 that descendants of immigrants lose their Dominican nationality, depriving of their papers tens of thousands of children and grandchildren of Haitians who left to work on local farms during the 20th century. Following the stormy reactions generated by this law, in May 2014, Congress passed a new law to restore the right of soil to children born in the country without papers and registered with the Dominican Civil Registry. But Amnesty International estimates that very few people have benefited from this law (around 9,000 people) due to the fact that it is very difficult for many to obtain official birth certificates (whether on the Dominican or Haitian side). Since 2015, a large number of Haitians have been deported to their country of origin, and over 70,000 are said to have left the country voluntarily for fear of the poisonous climate against them (demonstrations, lynchings, etc.).
In 2016, ex-president Danilo Medina reaffirmed his determination to continue the same policy of strict regulation of immigration. He declared at the UN that no foreign country could influence the Dominican Republic's migration laws. In 2022, the new Dominican president Luis Abinader went even further, launching the construction of a barrier along the entire length of the Dominican-Haitian border: 160 km of wall posing a host of problems. In September 2023, the President announced the total closure of the border, following a disagreement over the construction of a canal feeding into the Massacre River, a binational river. The President asserts that the borders will not be reopened until Haiti abandons this project.
The place of tourism in the Dominican landscape
Although the Dominican Republic is known as an exporter of sugar, coffee and tobacco, the service sector, particularly tourism, has overtaken agriculture as an employer. The country attracts the most tourists in the entire Caribbean zone, accounting for almost 16% of all tourists traveling in this part of the world, with revenues amounting to 7.6 billion US dollars in 2018 (compared with 7.1 the previous year). 6.5 million foreign tourists visited the Dominican Republic in 2018, up again on 2017, and in the first quarter of 2019, the country had recorded a 4.6% increase in visitor numbers over the same period the previous year, to 1,876,144 travelers. In terms of national breakdowns for this first quarter, 65.1% came from North America (40.9% from the USA), 21.6% from Europe, 10.4% from South America, 2.6% from Central America and the Caribbean, and 0.3% from Asia and the rest of the world. At the start of 2019, the French ranked first in terms of European travelers, followed by the Russians and then the Germans.
Tourism is currently the country's main source of foreign currency. Successive governments have invested heavily in this sector, and numerous measures have been implemented to encourage private investment. As a result, the tourism sector continues to grow and develop new positive prospects, particularly in the field of ecotourism. On the other hand, all-inclusive hotels, for all their appeal, comfort and practicality, have their drawbacks for the country, with an unequal distribution of wealth. There is also the problem of sex tourism: some all-inclusive trips also include a "companionship" service. Independently of this, however, the sector seems to be entering a phase of diversification, with the addition of new cultural and ecological itineraries in the north and south-west.
Also affected by the Covid-19 epidemic, the Dominican Republic reacted swiftly with a whole battery of restrictions that proved effective. As a result, by winter 2020, the borders were once again open to foreign tourists, and restrictive measures were eased, in order to boost the country's vital tourist industry. In addition, all visitors arriving by plane and staying in a hotel will be offered free health coverage for the duration of their stay, ensuring free treatment in the event of contamination. In addition, from May 6 to 9, 2021, at the invitation of the World Tourism Organization (WTO), tourism ministers from some 15 countries in the Americas met in Punta Cana to draw up a harmonized post-Covid tourism recovery plan. On this occasion, the Dominican Republic was congratulated by the UNWTO for its management of the crisis vis-à-vis foreign visitors. At the end of the meeting, the Punta Cana Declaration was signed, stating that tourism is an absolute economic priority for the Americas, calling on governments to show support for businesses in the sector, and stressing the importance of re-establishing a bond of trust with travelers. In 2022, the country recorded a record 8.5 million tourists, a trend that was confirmed in 2023.
