The highly touted Dominican Republic-Central America-U.S. Free Trade Agreement (DR-CAFTA) which was implemented in 2007 is heading towards troubled times. The near recession fears from the nation’s largest trading partner, the US are causing serious concerns to the Dominican Republican government as well as the export businesses of the nation.
Though the country had to bear the brunt of losing 60,000 jobs since the devastating financial crisis five years ago, the nation witnessed a considerable growth in areas of real estate, tourism and healthcare mainly due to the deal. So far DR-CAFTA has been able to increase business opportunities in the country, but disturbing global economic guidance has prompted the government to look elsewhere for business.
The presidential election is due on May 16; public opinion polls show a strong wind in favor of the incumbent President Leonel Fernández. The greatest challenge of the next president would be to stimulate the economy through much anticipated trade deals with Canada and Mexico. The Dominican Republic relies largely on the US and 90 per cent of country’s exports are directed towards those shores.
Owing to severe competition from emerging Asian economies coupled with global slowdown, the textile exports have sharply dropped by about 35 percent in 2007. The competition have caused serious damage to other Caribbean nations too, but Dominican Republic, which is the largest economy in the Caribbean region, is the worst affected.
Even though the country was able to benefit out of the pact, besides the US recession, they have to tackle issues arising out of the price spiral of oil and essential commodities. Any further deterioration on the economic front will jeopardize not only the exports but also the nation’s massive tourism industry.
In spite of making a come back from the financial crisis and registering 8 percent growth last year, the economic benefits have not been able to reach the poorer sections of the society, is another concern of the government. However, their former President Hipólito Mejías blamed that the present situation is further worsened by rampant corruption and mismanagement of the government. Businessmen are of the opinion that the current crisis could be overcome only if there is significant increase in trade with Canada and Mexico.