Latin Finance - March/April 2009 - 72

Caribbean dominican republic DR Challenged by Larry Luxner he Dominican Republic, which for years enjoyed one of Latin America’s fastest growth rates, will see flat or even negative growth this year, a consequence of strong dependence on the US. Government officials remain optimistic, along with some in the private sector who are Orange just announced it would encouraged by the policies of president spend $110 million this year in Fernández, who last May easily won a the Dominican Republic. And the third four-year term. demand for IT services is Overall, said Darys Estrella, general related.” manager of the Dominican Stock Yet others are not quite so Exchange, 2008 was a good year for optimistic. The Economist the bolsa, despite the global crisis. Intelligence Unit (EIU) recently Companies that accessed capital revised its projections downward, markets included Cervecería Nacional predicting GDP will shrink by Dominicana, Inca, La Fabril, BHD 0.8% this year, compared to 4.5% Valores, Motor Credito, Franquicias growth in 2008. As late as Dominicanas and Metro Country Club. January, it was still predicting There was 8 billion pesos (around $270 1.8% expansion. The rapid US deterioration million) in new issues, and total 2008 affects demand for exports, volume including public sector of 42.9 tourism and FDI. EIU senior billion pesos – a 179% increase over analyst Anna Szterenfeld says 2007. remittances – which account for Meanwhile, the Dominican Republic New record for FDI, says Martínez 9.3% of the country’s GDP – expects to receive foreign direct should drop by 10% this year as investment of about $2.4 billion in 2009, just $100 million less than in 2008, according to Eddy sectors of the US economy that traditionally employ large numbers of Dominicans, such as restaurants, hotels and Martínez, director of the Dominican Republic’s Export and factories, undergo layoffs. Investment Center. Of that total, some $1.4 billion will be “Because of financing problems, there will be a decrease in invested in tourism projects, including $879 million in the FDI. We’re thinking that even if companies have committed Punta Cana area alone. Martínez also said he hopes to investments, they might have trouble raising funds to position his country as a world-class supplier of goods and services, while boosting exports of apparel, medical devices, complete those investments,” says Szterenfeld. Alejandro Fernández, director of Santo Domingo-based rum, cigars, cosmetics and other products from $7 billion BetaMetrix meanwhile predicts GDP will rise by 2% in 2009. last year to $12 billion by 2013. But he notes diminished demand for luxury second homes in “In each of the past four years, we have set new records the Caribbean, adding that investment in tourism and realof FDI flows into the country. In 2008 – for the first time in estate was $750 million less in 2008 than the year before. history – we surpassed the $2 billion mark in FDI. And for Another badly affected industry is the garment sector. Grupo 2009 and 2010, we’re expecting a similar level of new M, the country’s largest free-zone consortium, alone let 4,000 investment,” he says. “One of the biggest factors is the of its employees go as US-based companies suspend contracts Barrick Gold operation, which is about to start. Our and slash production orders. LF telecommunications industry also continues to invest; T The Dominican Republic expects more FDI and remains optimistic. External analysts are less bullish, anticipating GDP shrinkage. 72 LATINFINANCE March/April 2009
Latin Finance - March/April 2009

Table of Contents for the Digital Edition of Latin Finance - March/April 2009
