Medina Still Looks Unbeatable

DOMINICAN REPUBLIC - Report 26 Jan 2016 by Pavel Isa and Fabricio Gomez

President Danilo Medina, who is running for reelection on the Partido de la Liberación Dominicana (PLD) slate, holds a 30-point lead over his nearest challenger, Luis Abinader of the Partido Revolucionario Moderno (PRM), according to the latest polling data. Some 57% said they would support Medina if the elections were held today, while 27% said they would vote for Abinader. No other candidate can command more than 5% of voter preference. If these results, by SIN-Mark Penn (formerly Penn Schoen Berland-PSB), are reiterated by the Hoy-Gallup and Diario Libre-Greenberg polls, and particularly if other polls give Medina a comfortable margin over the 50% mark, pressures on public expenditure may not be significant, and fiscal risks could remain stable over H1.

This will be a year of political definition. National elections will be held in May, and all elective offices are up for grabs. Yet, with less than four months to go, many local ballots have not been completed. This has made early 2016 politically turbulent, with a high dose of tension within the political parties. Internal conflicts are linked to the selection of candidates for Congress, as well as for mayoral and council seats. The core of the conflict is related to the fact that, absent a regulatory framework, many nominations are being decided without primaries, or any other democratic mechanism. Although these tensions won’t affect the electoral process, afterward, the healing, and prevention of the crisis from deepening, will be a serious and inescapable challenge for all parties. There is widespread recognition that the party system is seriously ill.

Preliminary official figures for 2015 set GDP growth at a higher-than-expected 7%. For the second consecutive year, the Dominican economy is leading economic growth in Latin America

In December, y/y inflation closed at 2.34%, well below the 4% target. This is the fourth consecutive year during which annualized inflation fell below the Central Bank’s target.

Preliminary 2015 results set the current account deficit at 2% of GDP, its lowest in a decade. This is consistent with a plunge in the oil bill, and with the expansion of proceeds from tourism and remittances. In December 2015, net international reserves were almost $5.2 billion, up $544.6 million from December 2014. The Central Bank is gradually improving its reserve position, though throughout last year oil prices helped sustain this trend.

Data from the October National Labor Force Survey indicate that more than155,000 jobs were created in the last 12 months. Still, open and extended unemployment rates remained virtually unchanged.

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