Socioeconomic Data

The Human Development Index (HDI), prepared by the United Nations Development Program (UNDP), undertakes an analysis of development levels reached by countries around the world. The HDI measures the following parameters:

Long and healthy life as measured by life expectancy at birth
Educational attainment measured by adult literacy levels and the combined average rate of primary, secondary and higher education matriculation
Decent standard of living as measured by the Gross Domestic Product (GDP) per capita compared to Purchasing Power Parities (PPP) in US dollars

Human development is defined as freedom for people to choose their life styles based on the following:

The possibility of living long, healthy and fulfilling lives
The acquisition of individual and social knowledge
The opportunity to have the necessary resources to enjoy a decent standard of living

In the Human Development Report 2015, the Dominican Republic is classified in the list of countries with high human development, occupying the 101st position of 188 total countries and maintaining a HDI value of .715.

More information about the Human Development Index (HDI): http://hdr.undp.org/es/content/el-%C3%ADndice-de-desarrollo-humano-idh

The Dominican Republic in brief (socioeconomic data according to the UNDP): http://www.do.undp.org/content/dominican_republic/es/home/countryinfo/

Millennium Development Goals and the Sustainable Development Goals

In the year 2000, the Dominican Republic became a signatory of the Millennium Declaration, in which signatory countries agree to engage in achieving the Millennium Development Goals (MDG) in 2015. The United Nations Development Program (PNUD, for its acronym in Spanish) in collaboration with the Dominican Government, through the Presidential Commission for the Millennium Objectives and Sustainable development (COPDES), constantly monitors the progress achieved by the country in relation to these objectives.

The Dominican Republic forms part of seven pilot countries within the United Nations Millennium Project, directed by Prof. Jeffrey Sachs, Director of The Earth Institute, at Columbia University. The Dominican Republic is the only Latin American Country in this pilot project, and has completed an Evaluation of Needs and Cost Analysis for the MDGs.

The United Nations Conference on Sustainable Development, celebrated in Río de Janeiro in 2012, put forth the Sustainable Development Goals (SDG) with the intent of creating a set of global targets relating to the environmental, political and economic challenges of today.

The SDGs replaced the Millennium Development Goals and include 17 goals in new areas such as climate change, innovation or sustainable consumption, among others. The Dominican Republic is one of the countries in this group that follows this commitment.

More information:

Toward a new sustainable development agenda (SDG of 2030):
http://www.do.undp.org/content/dominican_republic/es/home/post-2015.html
Informe de Seguimiento de República Dominicana 2013
Objetivos de Desarrollo del Milenio de la ONU
ODM República Dominicana
Millennium Project
Programa de las Naciones Unidas para el Desarrollo – Objetivos de Desarrollo del Milenio

Economic Indicators

Economic Growth

During the years 1995-2015 the country had an average growth of gross domestic product (GDP) of 5.2%, well above the average growth in the region of Latin America and the Caribbean during the same period (3.2%).

Among the main productive sectors of the Dominican economy are the agricultural sector, manufacturing, mining and quarrying, and construction and trade. If we add up these key sectors, we can appreciate that they represent round 60% of the total GDP of the Dominican Republic.

Agricultural Sector

The farming sector has always been considered significant to the Dominican economy. It is important to emphasize, nevertheless, that its percentage within total GDP has diminished notably since the 1970’s when it represented more than 20% of national production. Today, although this sector continues to be very important to the DR, sectors like tourism, construction and trade have grown to carry a greater weight in the GDP. In 2015 the farming sector represented about 11% of GDP.

Within the farming sector, agricultural production is the most significant line of production and holds greatest weight in the domestic economy. Sugar cane, tobacco, coffee, rice, and cocoa, are the DR’s most significant agricultural products.

Manufacturing Sector

The manufacturing sector is comprised by the production of sugar refineries, non-sugar industries (rum, oil, cigarettes, beer, pasta, cement, paint, and rods, among others), and industrial free trade zones. This sector has undergone significant changes of great economic importance for the country. Since the 1970’s the manufacturing sector represents an average of approximately 20% of total national production.

Sugar and Non-Sugar Industry

Although the production of sugar has traditionally been one of the main economic activities of the DR, its contribution to the GDP has diminished in past decades. Nowadays, the pillar of the manufacturing sector, along with free trade zones, is the local non-sugar industry including rum, beer, pasta, cigarettes, paint, rods, cement, rice, coffee, and pasteurized milk, among others. The growth of these products has been primarily due to growth in the Construction and Tourism sectors, as well as the insertion of foreign products into the Dominican market, which have forced an increase in national competitiveness.

Tariff-Free Zones

Tariff-Free Zones are an important area with significant weight in the economy, representing one of the main sources of employment and reserves for the DR. According to the Dominican Association of Tariff-Free Zones, in 2015 the manufacturing sector employed more than 159,000 people in 64 industrial parks with more than 635 operating businesses. In turn, the National Counsel of Tariff-Free Export Zones affirms that the sector has progressed so significantly and continues to approve new businesses. In 2015 it approved 96 new businesses with projected investments of around $90 million, expecting to generate 7,500 new Jobs and reserves for $50 million.

Mining and Quarrying

The mining sector has been significant in recent years due to high prices of nickel and gold in international markets and the dynamic participation of extractive businesses in the DR. Other minerals obtained from Dominican mines are limestone, silver and copper. It is a sector with a lot of potential that collaborates with the booming exportation of Dominican gold.

Construction Sector

The construction sector in the DR has growth significantly over the past 30 years. The availability of loans for private construction and mortgages from private banks has increased, which has been key to maintaining the dynamism of this sector. Likewise, interest rates for these loans have been maintained at relatively stable low levels.

These favorable financial circumstances have allowed for a marked increase in both public and private construction. The effects of this increase are palpable in the cities of the DR, where every day more buildings, highways, urban developments, and other projects are visible.

In 2015, the construction sector had become the biggest contributor to GDP growth, which was made possible by large public and private investments.

Trade Sector

The trade sector is a dynamic part of the Dominican economy. Its performance has been highly linked to general economic cycles experienced by the country. During the macroeconomic crisis of 2003-2004, the trade commerce was significantly affected. The stability enjoyed by the domestic economy after recovering from the crisis has allowed merchants to recover as well.

This sector is linked to the country’s imports, trade loans, consumption and supermarket sales, among other areas. In 2015, the trade sector represented about 8% of total national production.

Inflation

Inflation in the Dominican Republic, in general terms, has maintained a downward trend over the last two decades (see graphics). The period between 1995-2001 is the period that recorded the lowest prices since the 1980s, thanks to microeconomic programs that were implemented by the government at that time to stabilize the national economy.

The high level of inflation recorded in 2002 to 2004 (an annual average of 27%), was in part due to the crisis which faced the country as a result of the fraudulent bankruptcy of one of the main commercial banks (Baninter), which in turn resulted in strong uncertainty among economic agents and the population in general, and then in the late implementation of a series of financial measures which were ill-advised. The national economy became caught up in an inflationary spiral that was only stopped by the intervention of international organizations and the wave of confidence generated by the new government of Dr. Leonel Fernández.

Currently, price levels have recovered the stability that was enjoyed in the second half of the nineties, and it has annual average figures of less than 10%, situating itself once again at normal levels for a developing country in Latin America and the Caribbean.

At the end of 2015, inflation was 2.34%.

Related links: Banco Central – Precios

Exchange Market

Since 1947 in the Dominican Republic, the type of currency was on a par with the dollar, that is to say, the official exchange rate was RD$1 for US$1. This equality remained until 1983, when a flexible currency exchange system was established allowing the free conversion of the peso into other foreign currencies.

From that moment, the relationship between the peso and the dollar stabilized to a point of equilibrium taking into account the need to buffer shocks between supply and demand in the economy. Since 1983 the peso started to adjust to the variations in the market and was devalued until in 1995 it reached RD$12.87 for US$1 (See GRAPHIC 1). Then after a decade of relative stability, in August 2002, the exchange rate went from RD$18 to RD$35 for one dollar until it reached, in 2004, around RD$42 for 1 dollar.

In agreement with economic authorities this sharp devaluation in the Dominican currency was due to rumors and news about a local commercial bank, BANINTER, and its previous fraudulent bankruptcy that provoked the intervention of the Central Bank of the Dominican Republic (BCRD), in April 2003.

This intervention and the financial crisis that followed caused a lack of confidence from economic agents, then, the announcement of the possibility of an agreement with the International Monetary Fund (IMF) which transformed a lack of trust into panic, stemming from the official exchange rate by the BCRD, rounding up to RD$42 per dollar in mid-2004 (See GRAPH 2). At the end of the same year, and thanks to the confidence awarded to the new authorities by economic agents, coming to the power on the 16th of August, headed by President Dr. Leonel Fernández, the type of exchange went through a period of downwards adjustment that is to say, an appreciation of the Dominican peso in respect of the American dollar, managing around RD$33 per dollar in June 2006.

Currently and during the last 10 years, the peso-to-dollar exchange rate has been relatively stable, depreciating at an average of 4%. At the end of 2015, the yearly average for the exchange rate was RD$45.05 per dollar.

For more information about the peso/dollar exchange rate visit: http://www.bancentral.gov.do/estadisticas_economicas/mercado_cambiario/

Job Market

Since April 1991, the job market has been measured by the Central Bank through the National Work Force Survey during April and October of each year. The survey displays the main indicators of the labor market by geographic regions, work sector, occupational group, among others.

In agreement with the results of the survey carried out October 2015, the total Dominican population was 10,436,159 people and among that 8,699,672 people were of working age.

Thus, of those eligible to work, 57.6% are active participants in the economy and the remaining 42.4% are inactive (homemakers, students and pensioners, among others) At the national level, the rate of employment is only 49.5% and the rate of unemployment or amplified unemployment (those people that, although they are not looking for work in the relevant time period, are able to work) was 14%.

Unemployment and the informal economy are two areas of the job market that influence the performance of the Dominican economy year to year. Unemployment has been constantly falling since its rate of 19.6% in 1991 to its historic minimum of 13.8% in 1999.

Meanwhile, the informal economy maintains high relevance due to its increasing size. In 2000, 50.8% of employed people operated in the informal sector and in 2015 that percentage increased to around 54.4%. These figures, provided by the National Work Force Survey, displays that for every 100 employed people that participated in economic activities in 2015, more than half worked in the informal sector. If we lower these percentages, we will observe significant increases in other sectors, such as agriculture, construction, trade and the transportation sector.

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