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Market Overview

With a population of over 10.6 million consumers and a nominal GDP of $62.5 billion, the Dominican Republic (DR) is the ninth largest economy in Latin America and the second largest in the Caribbean region, after Cuba. The Dominican Republic is a middle income country, with per capita income over $9,700 per year (on a purchasing power parity basis).

The government of President Danilo Medina, who was elected in May 2012, has introduced a stable macroeconomic environment. The Medina administration has made good on its promise to lower the fiscal deficit from 6.6 percent of GDP in 2012, to an estimated 2.6 percent in 2014, through tax increases and reduced capital expenditures. The unemployment rate dropped to 14.1 percent in 2014, and inflation eased to just 1.6 percent at the end of the year. The U.S. economic recovery has had a positive impact on the DR economy as well.

In 2014, the Dominican economy grew by a robust 7.3 percent according to the Central Bank, up from 4.1 percent in 2013, and is one of highest growth rates in Latin America. Growth was led by the mining sector (particularly gold), with 20.3 percent growth, the construction sector, with 13.8 percent growth, and by local manufacturing, agriculture, and free trade zone production, as well as the tourism sector.

The Dominican Republic is currently the United States’ 43rd largest goods trading partner with $12.5 billion in total (two-way) trade during 2014. U.S. exports to the DR were $8.5 billion and imports from the DR were $4.5 billion - with a U.S. trade surplus of $3.4 billion. The United States is, by far, the DR’s largest trading partner and export market. The U.S. is the destination for 49 percent of the DR’s exports, and 44 percent of imports into the DR are of U.S. origin. The U.S.’s share of the consumer goods imported into the DR is estimated at 70 percent of the total. There is extremely high receptivity to U.S. goods and services, and U.S. product standards are generally accepted.

The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) has been an unmitigated win-win for both countries. Bilateral trade has grown from U.S. $9.9 billion the year before CAFTA-DR implementation to $12.5 billion in 2014, an increase of 25%. Since implementation in 2007, both countries have increased bilateral exports, benefitting both Dominican and American businesses. The true winners of CAFTA-DR are the consumers in both countries.

CAFTA-DR has increased competition and played a major role in expanding the range of choices and access to quality products at lower prices.

The strength of the trade relationship stems from close geographic proximity and the historic cultural and personal ties that many Dominicans have with the United States. This is reinforced by a Dominican diaspora in the U.S. of approximately 1.6 million persons, clustered primarily in the northeastern states and Florida, whose remittance payments total approximately 10% of Dominican GDP and help support the home-country economy. Dominican businesspersons are frequent visitors to the United States and are very familiar with U.S. business practices. In addition, Americans comprised the majority of the five million tourists who flocked to DR hotels and resorts in 2014, a figure that the government of the Dominican Republic (GoDR) has vowed to double within 10 years.

The Dominican Republic continues to offer many opportunities for U.S. exporters, but companies should familiarize themselves with the known challenges and market attributes covered in the Country Commercial Guide. Reasons for considering the DR as a potential market are:

1. U.S. is the Dominican Republic’s #1 trading partner

2. Dominicans are extremely familiar with U.S. products and services

3. Close geographical proximity

4. DR’s economy is growing

5. CAFTA-DR facilitates exports and protects U.S. businesses

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