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I have always lived in the Dominican Republic, and since I was a little girl I´ve heard people talking about economic crisis. Dominicans think of this word as a passive-aggressive term, or something in the middle. It feels like we’re in crisis most of the time, so we just think of the word as a common thing to say , not something really serious. Very different than what an American or an European would think right? I remember that when I turned 16, I thought I understood what the real definition of crisis was. I was talking to a friend who went to live to the United States, at that time it was almost her 15thbirth day, and I asked her if she was going to do her 15th party in a hotel or a club , something we’re used to do in DR when we turn 15. Her answer was no. I couldn’t understand , 15th parties is something you plan even a year before. “Here the situation is complicated, the company that my dad works for is in bankrupt.” She said. I told her that may be he could get a loan from the bank. Here in DR we are always in crisis, but we can find the way. “You don’t understand,” she said, “banks are collapsing, most of my friends lost their homes because they couldn’t even pay for It.” I was overwhelmed.
Five years later I completely understand what my friend was saying, and its only because I now know the magnitude of the crisis, how it has spread all over the world, and more specifically how it affected the Dominican Republic badly but also in convenient way somehow.
The diminishing effects of the global crisis in the Dominican Republic are: a moderate economic slowdown from our pre-crisis growth levels, a free trade agreement with the U.S. and five Central American countries, and a relatively moderate rise in GDP.
The financial system of the Dominican Republic has escaped in a certain way the direct effects of the crisis, but the same cannot be said for other sectors of the economy. Given the close economic bond with the United States, it was thought that the market crash will affect the country in two
fundamental areas: commerce and direct foreign investment, which did affect the internal market and the economic growth rate of the country.
Pelin Berkmen from the International Monetary Fund (IMF) - Research Department prognosticated that as a result of the crisis, the GDP economic growth for 2008 from 8.5%to 5.5%, along with 3% and 4.5% for 2009 and 2010,respectively. Inflation was expected to between 13% and
14% for 2008, due to the rise in prices of imports and assuming a deterioration of exchange rates. In spite of this, the investment risk grade of the Dominican Republic has remained stable, as Fitch Rating demonstrated in September 2008, the Inflation was only a 10.6% instead of 14% as they expected, this maintain the country at B rating.
I can only think of one thing that truly helped us throughout this situation, the DR-Cafta Trade, even though it was approved in 2005 it started in late 2007. The world crisis was expected to affect badly specifically the commerce area, but with a free trade agreement as our wildcard , global
crisis couldn’t affect us in the same way as it affected other countries.
In conclusion, I particularly don’t say that we didn’t felt the crisis, as a matter of fact we did. We actually got in a big external debt to keep our country flouting, but we also created some strategies so that at the time we could save the economy. Some things got out of our hands, like the gas prices that kept rising until now days, or the dollar an euro exchange rate
References
· Pelin Berkmen from the International Monetary Fund (IMF) - Research Department
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