Debt exchange triggers Dominican recovery
With an amazing recovery from the brink of collapse and a comprehensive debt restructuring, everything seems to be going right for the Dominican Republic. But all the old economic weaknesses are still there and they need urgent attention. Felix Salmon reports.
THE DOMINICAN REPUBLIC is enjoying a growth spurt at the moment. Just look at its GDP figures. After four consecutive quarters of negative growth, the economy slowly started growing again in the second quarter of 2004. Since then, each quarter has outperformed the previous one, with the second quarter of 2005 showing year-on-year growth of 7.2%. And the growth isn’t just in export industries: private consumption grew 12.6% in the first half of 2005. Finally, it seems, the Dominican economy is recovering from the crisis of 2003.
“All expectations are being exceeded at the moment,” says Franco Uccelli, a sovereign analyst at Bear Stearns. “Even the government and the central bank are expressing surprise at the rate the economy is growing.”
Credit for the stellar figures can be placed squarely with the newly elected administration of Leonel Fernández, who took control of the presidency for the second time in August 2004. Fernández turned the Dominican Republic into the fastest-growing economy in Latin America during his first term in office, between 1996 and 2000, so he does seem to have something of a magic touch.
In contrast, the administration of Fernández’s predecessor, Hipólito Mejía, proved to be disastrous for the country.