The Dominican Republic is a middle-income developing country primarily dependent on agriculture, trade, and services, especially tourism. Although the service sector has recently overtaken agriculture as the leading employer of Dominicans (due principally to growth in tourism and Free Trade Zones), agriculture remains the most important sector in terms of domestic consumption and is in second place (behind mining) in terms of export earnings. Tourism accounts for more than $3 billion in annual earnings. Free Trade Zone earnings and tourism are the fastest-growing export sectors. Remittances (remesas) from Dominicans living abroad are estimated to be about $3 billion per year.

Following economic turmoil in the late 1980s and 1990, during which the GDP fell by up to 5% and consumer price inflation reached an unprecedented 100%, the Dominican Republic entered a period of moderate growth and declining inflation until 2002 after which the economy entered a recession, after the second commercial bank of the country ( Baninter ) collapsed, caused by a major fraud of 3.5 billion of dollars during the administration of President Hipolito Mejia (2000-2004). The Baninter fraud had a devastating effect on the Dominican economy, with GDP dropped by 1% in 2003 while inflation ballooned by over 27%. With the election of former president Leonel Fernandez in 2004 and implementation of economic reforms, the economy has re-stabilized and strong GDP growth has resumed. The growth of the Dominican economy remains significantly hampered by an ongoing energy shortage, which causes frequent blackouts and high prices.

Despite a widening merchandise trade deficit, tourism earnings and remittances have helped build foreign exchange reserves. The Dominican Republic is current on foreign private debt, and has agreed to pay arrears of about $130 million to the U.S. Department of Agriculture's Commodity Credit Corporation.

According to the 2005 Annual Report of the United Nations Subcommittee on Human Development in the Dominican Republic, the country is ranked #71 in the world for resource availability, #94 for human development, and #14 in the world for resource mismanagement. These statistics emphasize the national government corruption, the foreign economic interference in the country, and the rift between the rich and poor.

Currency
The Dominican Peso (RD$) is the national currency of the country although the U.S. dollar is often acceptable in some places, especially tourist oriented shops and hotels. Initially, the peso was worth the same as a U.S. dollar. In more recent years, however, the value has decreased relative to the US dollar. The exchange rate to the U.S. dollar was about RD$14.00 in 1993 and RD$16.00 in 2000, but in early 2004 reached RD$54.00 per U.S. dollar. It ended the year 2005 at about RD$34.00 per dollar.

The exchange rate between the two currencies fluctuates on a daily basis, and is usually between $33.50-35.00 pesos as of February 2006. The International Monetary Fund revealed a growth of 7.6% over inflation index for 2006, which implies that the national currency of the Dominican Republic could naturally finish the year with an average basis between 35.70 and touching 38 per dollar roof. Another factor which would have a certain impact over the currency exchange market of the Dominican Republic is the fluctuations of the American Dollar at international currency market. The U.S. dollar is implicated over almost all commercial actions of the Dominican Republic, supporting the theory that explains the devaluation of the peso in front of the dollar in 2005 is the result of the international currency market; On Feb 2005 1.32 USD = one € = 29 DR pesos, later on Oct 2005 1.19 USD = one € = 32 DR pesos.

Multiple local economists (Andres Dahjalhe Jr. and Magda Azer, principally) and well-recognized commercial analyst firms and institutions estimated an over-evaluation of the Dominican Peso suggesting that the daily basis of the Dominican currency is artificially controlled by the government, considerably bordering a free market's policies.

Dominican Republic Information: Inside
[ History ] [ Politics ] [ Administrative Divisions ] [ Geography ]
[ Climate ] [ Economy ] [ Demographics ] [ Culture ] [ Music ]