Dominican Republic Politics May 2016

Dominican Republic

Dominican Republic: With Medina set for another presidential term, no major economic policy changes are expected

June 9, 2016

On 15 May, the Dominican Republic went to the polls to elect not only the president, but also the members of the National Congress as well as municipal authorities. The election was the first of its kind since 1994 in which positions in the three governmental bodies were up for grabs. This form of election was made possible by a constitutional reform that was passed in 2010. The general elections resulted in a large victory for incumbent President Danilo Medina of the ruling center-left Dominican Liberation Party (PLD) over his closest competitor, Luis Abinader, of the social-democratic Modern Revolutionary Party (PRM).

The PLD secured a solid majority of seats in both Houses. With this resounding triumph, the PLD has accumulated four consecutive presidential victories and 12 uninterrupted years in power. Danilo Medina’s campaign was focused on his promise to increase the country’s development as well as to fight against corruption and insecurity.

The election results represent clear support for President Medina’s policies. Thus he is unlikely to make any major changes and will remain focused on making the Dominican Republic, especially its tourist and mining sectors, attractive for international investors. He will likely also follow the path of fiscal responsibility and cut subsidies to the highly inefficient electricity sector, as well as gradually introduce market-oriented reforms in this sector. As for the current and likely future economic developments, Franco A. Uccelli, economist at J.P.Morgan, states:

“The country’s impressive growth momentum and the reelection of President Medina in early May support our view that the Dominican economy will continue to fire on all cylinders amid broad fiscal and monetary stability.”

Regarding the specific election results, President Danilo Medina was reelected with 61.74% of the vote and his party, the PLD, won 28 of the 32 Senate seats, 125 of the 190 seats in the Lower House and 108 of the 158 Mayoralties. In the previous presidential elections, held in 2012, Danilo Medina also won at first round, but with just 51.21% of the vote. Danilo Medina's reelection takes place after a constitutional change was approved last year that allows a president to be elected for two consecutive terms. In a press conference held on 7 June, six ex-candidates for the presidency, including Luis Abinader, questioned the fairness of the election process. The Plenum of the Electoral Council established that allegations of irregularities do not affect election results.

The Government expects GDP to expand 5.0% in both 2016 and 2017. FocusEconomics Consensus Forecast panelists expect that the economy will expand 5.4% in 2016, which is up 0.1 percentage points from last month’s forecast. For 2017, panelists foresee the economy growing 4.5%.

Author: Massimo Bassetti, Economist

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