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North & Central America and Caribbean
Dominica |
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Last reviewed: 04 June 2009 |
Country information
ECONOMY
Basic Economic Facts
GDP (2007): US$337 million
GDP per head (2007): US$4,680
Real GDP annual growth at factor cost: (2007) 1.6% (EIU)
Inflation: 3.1% in 2007 (EIU)
Major industries: bananas, soap, coconut oil, tourism
Major trading partners:
Export partners: EU 27.8%, Jamaica 12.7%, Antigua & Barbuda 11.3%, Trinidad & Tobago 9.0%, Saint Lucia 6.8% (2005)
Import partners: US 36.6%, Trinidad & Tobago 20.5%, EU 13.4%, Japan (4.6%), Barbados 3.4% (2005)
Agriculture: Tropical and citrus fruits are the main crops. Products for export are bananas, fruit juices, lime oil, bay oil, copra and rum. Forestry, fisheries and agro-processing are being encouraged.
Agriculture is Dominica's mainstay and bananas in particular, but less than a third of the island is under cultivation due to the mountainous terrain. However, the sector has been in decline, with its proportion of GDP falling from 25% in 1990 to 18% in 2005. Hurricane Dean, which passed over Dominica in August 2007 destroyed much of what was left of the banana industry. In attempts to boost the economy Dominica is increasingly looking to niche markets in eco-agriculture and eco-tourism. There is also a small offshore financial sector, with an estimated 9000 international businesses. Weak export prices and the gradual phasing out of preferential access to the EU market have affected the banana industry, which has started to decline; along with the downturn in global tourism since 2001 this has caused the economy to struggle in recent years. The unemployment rate is 11%.
In November 2004 Dominica suffered an earthquake which damaged buildings in the north of the island. In addition landslides were caused by heavy rains. Dominica also has several areas of volcanic activity, with an estimated 25% chance of a large eruption occurring in the next 25 years. This increases the uncertainty and risk for potential investors.
IMF
The IMF noted Dominica's vulnerability to external shocks and the measures taken by the government under the country's poverty reduction and growth facility (PRGF), which has resulted in falling debt ratios and improved revenue collection. The IMF pointed out a need to restore growth in a less favourable global environment and to consolidate fiscal stability while maintaining recent reform momentum. Public capital expenditure is largely grant financed (by the EU, Trinidad and Tobago, China and Venezuela), with grants equivalent to 9.5% of GDP, up from 4% in the 1990s. Under the IMF's baseline scenario, with annual growth assumed at 3% over the medium term and current fiscal targets achieved, debt would reach the Eastern Caribbean Central Bank (ECCB) target of 60% of GDP by 2014. However, this is based on the assumption that Dominica will achieve high rates of growth in 2009-11.
