2020 elections may bring power shift
The ruling PLD is headed toward a loss in the May 2020 elections, while presidential challenger Luis Abinader, the PRM and their allies seem well placed to win. These are the findings of two recent unpublished surveys, whose results were leaked to the media. These polls show significant voter preferences for Abinader, over both PLD candidate Gonzalo Castillo, and ex-president Leonel Fernández and his new LFP. The division of the PLD explains this situation, both polls found, as the PLD vote has been split in two. Moreover, Castillo seems to be losing ground, as the current government continues to experience rocky times.
By contrast, the opposition parties seem to be strengthening, and forging alliances to ensure that the PLD is defeated, both in the presidency and in control of Congress. Yet once the PLD electoral machinery kicks into gear, the scenario may change, and the electoral gap separating Castillo and the PLD from Abinader and the PRM may shrink, tightening the electoral race.
Another consequence of the PLD split is that the party has lost its majority in the House of Representatives, as Fernández’s new LFP has formed its own congressional bloc. This will result in more difficult processes for making decisions and approving bills, including the 2020 budget bill. But the PLD has retained its majority in the Senate.
Economic activity continues to expand below the long-term average, with accumulated growth between January and September at 4.8%. Quarterly growth could be about 5.4%, closer to long-term rate. Unemployment has been rising since Q2, and could reach 12.1% in 2020.
Accumulated inflation between Q1 and Q3 reached 2.38%, and at the end of September y/y inflation reached 2.02%, significantly below the target range (of 4% ± 1%). We don’t see significant inflationary pressures on the horizon.
The current account deficit closed at $587.6 million in Q1-Q3, almost $117 million higher than in Q1-Q3 2018. This was mainly due to the shrinking services surplus, partly driven by the fall in tourism income. October marked the fifth consecutive month of decline in tourist arrivals. Still, the deficit is relatively small.
Although imports will grow little due to the slower economic expansion, the CAD will register a slight increase toward the end of 2019 and in 2020. The currency is stable, at around DOP 52.9 per dollar. We don’t expect significant depreciation in December.
The president recently proposed an amendment to the 2019 budget that implicitly increases the deficit cap. This is an acknowledgment that, as in previous years, the 1.7% of GDP deficit goal won’t be met. We expect a markedly higher deficit, of nearly 2.5%.
Now read on...
Register to sample a report