Q: (a) To what extent are the risks associated with the pandemic (global trade and by implication commodity prices, as well as tourism), and other factors influencing your scoring, such as political stability or natural disaster recovery?
R: In the Dominican Republic (DR) I see a business-friendly government that is focused on keeping the economy afloat with some macroeconomic stability and mass vaccination against Covid-19. I also see a private sector responding positively to the economic stimulus, and willing to invest.
The free zone industry is totally recovered while the tourism sector is gradually recovering as mass vaccination in North America is motivating more people to travel abroad again.
Nonetheless, some challenges persist. The pandemic is not over yet, international commodities prices are pushing inflation upward, and natural disasters may occur especially during the hurricane season (although the projected paths for 2021 suggest that the Caribbean basin has a lower probability of getting hit by a major storm compared to last year).
Q: (b) Is the impact of the pandemic on the deteriorating fiscal metrics (the deficit and debt levels) counterbalanced by economic recovery and strong multilateral creditor support?
R: The deterioration of the fiscal accounts for the Dominican Republic is evident as tax revenue dropped and governmental expenditures were forced to go up, thus public debt is on the rise. Nonetheless, as the economy recovers tax collections are growing again while the government has managed to control its expenses due to a notable moderation in public works and some administrative improvements.
Financial multilateral assistance and access to international capital markets have provided an invaluable lifeline in the short term.
Q: (c) Are the US Joe Biden administration's plans to forge closer relations with the Caribbean helping to improve the risk outlook, or not?
R: I believe it is too soon to tell. To a certain degree, the Biden administration has continued some of the America First policies of its predecesor.
Q: (d) Are there any particular aspects of political risk improving, or not, for particular countries you could comment on, e.g. information access/transparency, corruption and transparency, among other factors?
R: I see most countries are being careful in keeping the macroeconomic stability as intact as possible while waiting for better access to vaccines against covid-19, and benefiting from the recovery of its major trade partners.
In my view, it is not easy to see any further improvements as the pandemic and other political issues is capturing most of the attention at the moment.
Q: (e) Are there (briefly) any other relevant factors, e.g. improving structural dynamics such as demographics or infrastructure considerations which may be underlying your risk assessments?
R: Some demographic risks are seen in the USA, Chile and Costa Rica as fertility rates are dropping while its populations are aging. The USA seems to be leaning toward renewing its infrastructure which is good news for its trading partners and the world economy.
The DR seems to be improving in terms of transparency, but still has a way to go for further institutional development.
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