Electoral crisis strengthens the opposition
It’s crystal clear that the electoral crisis triggered by the suspension of the February 2020 municipal elections is a resounding stab to the ruling PLD’s efforts to retain power. The PLD and the government are the big losers in this event, especially because many people blame the party for what happened.
The post-suspension week was one of intense youth-led demonstrations in defense of transparent elections, and in protest against the PLD. The PLD appears to have lost significant electoral support. The demonstrations have markedly changed the electoral and political landscape, and appear to be sealing the election results. The question now isn’t whether the opposition PRM and its presidential candidate Luis Abinader might win the May 17th national elections, but whether they’ll win in the first round.
The other big question is whether the Central Electoral Board, now severely discredited and under suspicion of bias, may successfully reorganize the failed municipal elections, reset for March 15th, and announce results all accept as credible.
The demonstrations are about more than the elections, though: they’re also protesting corruption, and evidencing discontent with the enormous concentration of power in the hands of the PLD. And they are the latest expression of a chain of both street and social network demonstrations evidencing consistent social empowerment. The long-term political landscape is changing. Traditionally powerful sectors, political parties and business leaders are no longer operating alone. The citizenry is demonstrating increasing capacity to mobilize, and to influence key public policy decisions.
The president’s mandatory annual address to Congress would normally have been the centerpiece of this report. But this year, the political situation has taken precedence. President Danilo Medina’s February 27th speech to Congress faced competition from the massive demonstration outside. As inside Medina delivered an account of his government’s positive legacy, outside one critic after the next took the mike, to strongly criticize the political and institutional situation -- and to blame the PLD for both.
Real GDP growth recovered in Q4 2019, and inflation increased, bringing it closer to the monetary program target. Real GDP growth was 5.8%, for annual growth of up to 5.1%. Preliminary results suggest a yearend CAD of $1.2 billion, equivalent to -1.4% of GDP, as in 2018. But foreign tourist arrivals remained weak. Preliminary data indicates that central government accounts closed with an operational deficit of DOP 100.2 billion, or 2.2% of GDP.
Despite political uncertainty, we expect strong growth (5.5%) for Q1 and Q2 2020, as domestic spending increases due to the political campaign, followed by a deceleration in Q3 (to 4%). Unemployment could fall 0.5 to 1 ppts, and then increase. DOP depreciation has accelerated, presumably associated with uncertainty. We nonetheless don’t foresee significant inflationary and devaluation pressure soon, except if the electoral crisis isn’t contained.
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