Dominican Republic growth to moderate.

The Dominican Republic (DR) likes to characterize itself as the fastest growing economy in the Latin American region. Unquestionably, the country-and its consumers-have done well in recent years.

According to International Monetary Fund (IMF) statistics the DR's GDP grew at 10.7 percent in 2006 following a growth rate of 9.3 percent in 2005. However, in 2004, GDP growth was only 2.0 percent and in 2003, the economy contracted sharply at minus 1.9 percent.

The DR's "fastest growing" claim may or may not be true. If anything, the claim illustrates the deceptive nature of international financial statistics. The DR's spectacular 2006 growth is undoubtedly due to the "small base" phenomenon. In addition, claims of unusually favorable growth mask the reality that the DR still has a long way to go.

Both the Economist (via a June 19, 2007 posting on the TMCnet website) and the IMF in a February 15, 2007 press release, lament the slow pace of progress toward economic reform.

Nonetheless, the Economist posting was positive about consumer spending. "Domestic demand will remain a major driver of growth, with rising workers remittances underpinning private consumption growth."

The Economist also observes that the availability of affordable credit is playing a significant part in not only helping the economy to grow but in improving the status of DR consumers as well.

"In the context of lower interest rates, credit to the private sector rose by 16% in 2006, led by loans for construction and manufacturing in the productive sector and by mortgage finance and consumer loans in the household sector. Credit has grown by a similar rate so far in 2007 and we expect this trend to continue in the remainder of the year, before easing in 2008, but still contributing to consumption and investment growth," says the magazine.

The IMF estimates that GDP growth for 2007 will be down sharply to 6.0 percent. And GDP growth is likely to fall further in 2008 to 4.5 percent.

GAINING CONTROL OVER UNEMPLOYMENT WILL IMPROVE STABILITY AND GROWTH

The population growth rate for the DR is above the regional average, due in part to a birth rate of 23 per thousand inhabitants, which is higher than the average of 20 per thousand for the Caribbean. Job creation has not kept up with growth of the labor force in recent years, and it is not likely that the situation will improve in 2007. Unemployment is running about 16 percent, and this continues to undermine consumer confidence.

The DR's population reached 9-million people mid-2006, which amounted to 23 percent of the Caribbean's 9-million inhabitants. According to data released by the Population Reference Bureau (PRB), the DR's population will reach 12-million by 2025. Also, according to that source, the DR is going to have a population of 14-million people in 2050.

The PRB revealed that a substantial 64 percent of the DR's population lived in urban areas during 2006, and that the country's population density is a 479 people per square mile. The DR is slightly smaller than Costa Rica in land area, but the DR has a population over twice as large. The CIA's World Factbook, indicates that 32 percent of the DR's population was birth to 14 years old in 2006, while 62 percent was 15 to 64 years old, and 6 percent of the populace was 65 years of age and over.

The CIA estimates that the country's population growth rate will be 1.5 percent in 2007. According to the United Nations Population Division, in the year 2050, 21 percent of the DR's population will be birth to 14 years old, while 58 percent will be aged 15 to 59, and 21 percent of the populace will be 60 years of age and over.