Dominican Economy Skidded 0.4 percent in 2003

The Gross Domestic Product (GDP) of the Dominican Republic slid 0.4 percent in 2003 as a result of the sum of several factors that included higher oil prices, the devaluation of the local currency and a deep banking crisis.

According to the 2003 report on the national economy issued by the Central Bank (CB), "this is the first time that the Dominican economy has endured a decline in terms of annual figures since the economic crisis that hit the nation in the early 1990s."

In line with the information disclosed in the report, the country´s overall economic activities went south in those sectors closely linked to domestic demand, such as trade, building, power generation, water supply, transportation, farming and manufacturing.

However, those economic areas whose output is oriented to the international market -like hotels, bars, restaurants, free trade zones and mining- put good numbers on the board last year.

The report also points out that local farming shrank 2.9 percent from 2002, especially triggered by a strong devaluation of the national currency that eventually tacked higher price tags on most consuming products.

Inflation climbed a staggering 42.7 percent in 2003 and the first two months of 2004 are not looking any better with a 21.5 percent spike so far this year.

Mining, for its part, rose 8.7 percent in 2003 sparked off by higher exploitation levels of nickel, by far the local industry´s most coveted commodity.

Industrial processing activities slumped all through 2003 as the manufacturing sector dropped 2.7 percent compared to the previous year. Building, power generation and water supply dipped 8.5 percent. Trade also plummeted by 12.4 percent, the study states.

On the flip side of the coin, hotels, bars and restaurants combined for a whopping 29.6 percent from 2002 as a consequence of the positive impact of the Dominican currency´s devaluation to the dollar on the travel industry and of the fact that the country played host to the Pan American Games last August.

The inflow of visitors soared 16.8 percent last year with as much as 86.1 percent of tourism´s total revenues, the Central Bank indicated. The greenback has doubled its value to 17.56 Dominican pesos since January 2003, up to 40 times over its original price.

The Dominican government rushed to the International Monetary Fund (IMF) as soon as the local press laid bare a $2.2 billion fraud that swept the Intercontinental Bank (BANINTER).

The BANINTER scandal slashed 11 percent off the nation´s Gross Domestic Product (GDP) and drained two thirds of its budget.

In keeping with the projections contained in the IMF´s Economic Stabilization Program for the Dominican Republic, the nation´s GDP will take another 1 percent slide in 2004, only to plunge in the neighborhood of 4 to 5 percent a year later.