Dominica : Economy


GDP Growth: 
–0.5% p.a. 2009–13
1.4% p.a. 2009–13

Dominica’s economy is vulnerable. Much of the island is mountainous and less than 25 per cent of the country is under cultivation. Its location exposes it to tropical storms and hurricanes, which have caused severe damage to the crops making up the country’s economic base, particularly to bananas. There were three severe hurricanes in the 1980s, and in 1995 Hurricanes Luis and Marilyn caused severe damage. The country is also vulnerable in its dependence on banana exports to the EU.

Since the 1980s, successive governments have therefore introduced measures to diversify the economy, encouraging a shift from traditional crops (such as sugar, coffee and cocoa) to new crops (such as citrus, melons, pineapples and mangoes), and developing export-oriented small industries (notably garments and electronics assembly), taking advantage of such preferences as the Caribbean Basin Initiative (CBI), which allows access to the US market.

They have also encouraged development of tourism and especially eco-tourism. The key to expansion of tourism was seen in the 1990s as the construction of a new airport with a runway long enough for long-haul jets from North America and Europe, but it proved impossible to secure financial backing for the project.

Between 1991 and 1997, Dominica received about US$15 million in investment and acquired some 750 new citizens – mainly non-resident Taiwanese – under its ‘economic citizenship programme’ which allowed people to become citizens in return for a substantial investment in Dominica. In the latter 1990s, 200–300 Russians were granted economic citizenship.

The government also encouraged development of an offshore financial-services sector, including company and bank registration and internet gambling.

From the mid-1990s, there was a period of modest economic growth, but by 1999 the economy had stalled, moving into recession in 2000, and shrank by some nine per cent in 2001–03. The IMF agreed to financial support tied to tax increases and cuts in public expenditure and good growth resumed in 2004–05, driven by tourism, recovery in banana production and a booming construction sector. This growth continued through 2007, when Hurricane Dean caused widespread devastation, until 2009 when the impact of the global recession was keenly felt, causing the economy to stall again in 2010–13, before returning to growth of at least one per cent in 2014.