Dominica Country Statistics

LOCATION

Dominica is one of the islands in the Lesser Antilles and lies 59.9 miles south of Guadeloupe and 58.2 miles north of Martinique in the Eastern Caribbean. It is the largest and most northerly of the Windward Islands.

ECONOMY

Dominica is one of several Caribbean countries that were devastated by hurricanes over the last five years. The island was slammed by Hurricane Maria in 2017, which resulted in damages estimated at 226 percent of GDP. Unfortunately for Dominica, this occurred just two years after it was struck by Hurricane Erika, which wiped out 96 percent of GDP. In fact, the country has felt the brunt of severe storms and hurricanes on four occasions in the last decade alone (2010, 2013, 2015 and 2017). In truth, the island has spent much of the last decade engaged in post-hurricane recovery activities. If nothing else, the people of Dominica have proven to be quite resilient, remaining steadfast in their quest to fully restore the island’s operations, notwithstanding the severe challenges. Prior to the passage of Maria, the country had made good progress under the IMF’s Rapid Credit Facility, which sought to generate adequate primary fiscal surpluses to reduce public debt to 60 percent of GDP by 2030. Needless to say, much of these gains were swept away by Maria. However, some of the fiscal slippage was offset by a surge in grant funding and revenue from the Citizenship by Investment (CBI) programme. Having already made substantial progress since the 2017 hurricane, Dominica, like many of its regional peers, is seeking enhance its resilience to natural disasters.

In terms of the structure of the economy, the largest sector, the transport, storage and communications industry, accounted for 17 percent of GDP on average over the last five years. The next largest sector, which comprises agriculture, livestock and forestry contributed an average of 16 percent of the island’s total output during the period, but its performance was impeded by adverse weather conditions. The wholesale and retail trade industry accounted for 12 percent of GDP. Using the output of hotels and restaurants as a proxy for the tourism sector, its share of total GDP was only two percent during the period, significantly smaller than other jurisdictions in the Organisation of Eastern Caribbean States.

According to the Caribbean Development Bank (CDB), economic activity in Dominica accelerated in 2019, expanding by 5.7 percent, compared to 2.3 percent in 2018. The impetus for growth was broad-based, as all sectors recorded positive performances. The construction sector continued to benefit from recovery efforts in the wake of Hurricane Maria, expanding by 6.7 percent. After four consecutive years of decline, the tourism sector experienced a massive 41.9 percent increase in activity, fueled by a 41.8 percent increase in stay-over arrivals and a 70.9 percent increase in the number of cruise visitors. The rise in stay-over arrivals was reflective of an expansion of the country’s room stock, with ongoing reconstruction work and the launch of new properties. Dominica experienced a substantial rise in arrivals from all major markets. The resurgence of tourism and continued upbeat construction sector activity provided considerable stimulus for the wholesale and retail trade sector and the transport, storage and communications sector, which expanded by 8 percent and 8.2 percent, respectively.

In 2019, there was a marked deterioration in Dominica’s fiscal accounts, with the fiscal deficit expanding to 17.7 percent of GDP ($284.1 million). This outturn was the result of a considerable increase in expenditure in the face of a 14.3 percent fall in current revenue. The fall in current revenue during the year was mainly due to the 42.4 percent slide in non-tax revenue, prompted by the fall in Citizenship by Investment Programme (CBI) inflows. On the other hand, current expenditure increased by 30.3 percent, with spending on goods and services up 53.6 percent and expenditure on transfers and subsidies expanding by 40.9 percent. However, capital expenditure decreased by 23.2 percent. At the end of December 2019, public sector debt stood at 78.7 percent of GDP, after ending 2018 at 74.5 percent.

The overall growth momentum is likely to be disrupted in 2020, given the tremendous pressure the COVID-19 virus has placed on both the domestic and global economies. The significant gains experienced by the domestic tourism sector in 2019 are likely to be eroded in 2020, given how deleterious global measures to control the virus have been on international travel and tourism. Economic activity outside of the tourism sector is also expected to suffer, as initiatives adopted by the government to limit the spread of the virus domestically are projected to constrain growth. The country’s response to the COVID-19 virus could cause further deterioration of its fiscal accounts. At the end of April 2020, the IMF approved US$14 million in emergency financial assistance to help Dominica deal with the challenges presented by the virus.