New Alliance Reconfigures the Election Scenario
The electoral scenario keeps shifting, sometimes in surprising ways. Last week, the social democratic PRM and the conservative PRSC – the latter a traditional ally of the ruling PLD -- announced an electoral alliance, after negotiations between the PRSC and the PLD failed to generate a satisfactory result.
According to media reports, the deal implies that a large number of elective seats will be assigned to the PRSC. An alliance with PRM allows the PRSC to increase its chance of legal survival, and increases its share of power. The downside for the PRSC is that a presidential victory still seems difficult. As for the PRM, it wins in several ways. First, it gains access to public resources for campaigning.Second, the named of challenger Luis Abinader will now appear in box #3. Without the alliance, he would have appeared in box #15. However, the PRM will see its support from progressives, liberals and leftists diminished. The alliance with conservatives is dissonant, and so will run into serious difficulties with its anti-corruption campaign, due to its association with a party that, as an ally of PLD, benefited from corruption for 12 years.
President Danilo Medina seems to be retaining his lead in the voter preferences. But his image and acceptance level have both deteriorated significantly. Two little-known polling firms gave him less than 50% of voter intentions, down from 60%-70% just a few months ago. A survey among entrepreneurs showed that Medina’s approval rating has fallen, from 72% to 43%, over the past six months.
In early December, the PLD held partial primaries, to choose candidates for congressional and municipal posts. The process was difficult, and violent in some places, and left two people dead, several wounded and the PLD image tarnished.
Nonetheless, our baseline scenario remains victory for Medina in the first round, though he’s unlikely to win significantly more than 50% of the vote.
Official projections call for 2015 GDP growth at 6.5%. This puts the Dominican Republic in the leading economic performance position in Latin America. Inflation in November rose 0.17%, m/m. Accumulated inflation for the first 11 months of the year was 2.25%, and y/y inflation reached 1.54%.
Monetary policy hasn’t changed significantly this year. While several monetary aggregates continue to expand at a relatively stable rate, the Central Bank continues to conduct aggressive market operations, which have kept liquidity under control.
Tourism has been very dynamic for the past two years, and has made an important contribution to overall growth. As of November, visitors arriving by air reached a record 5.02 million, up more than 409,000 from November 2014.FX earnings from tourism will also reach a peak, at above $6.1 billion. This is more than $476 million (8.5%) above 2014 earnings.
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