Global Downturn Adversely Impacting Dominican Economy

Although affected less severely than other Eastern Caribbean Currency Union (ECCU) economies, the global downturn has adversely affected the Dominican economy through lower tourism arrivals, foreign direct investment inflows and remittances.

According to an International Monetary Fund (IMF) 2010 Article IV Consultation with Dominica, Real Gross Domestic Product is estimated to have declined by 0.3 percent during 2009 while total tourism receipts contracted by 16 percent. The decline in tourism receipts reflected falling stayover arrivals after the Reunion 2008 event and greater discounting in 2009 partly offset by growth in cruise arrivals.

FDI and remittances inflows dropped by 51 percent and 18 percent respectively in 2009.

Notwithstanding the slowdown, the near to medium-term economic outlook is modestly positive. Dominica’s economy is expected to grow by 1 ½ percent in 2010 assuming a recovery in the global economy and expected improvements in international trade and tourism activities.

However, a slower than expected recovery in advanced economies, which would adversely affect tourism activity could dampen Dominica’s growth. In addition, a re-balancing of global demand could imply weaker demand for tourism services from Dominica’s main source markets.