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- GDP (PPP):
- $0.8 billion
- 1.1% growth
- 0.0% 5-year compound annual growth
- $10,800 per capita
- Inflation (CPI):
- FDI Inflow:
Reforms that include simplification of the business start-up process and reduction of the corporate tax rate have helped to improve the overall investment framework. However, momentum remains subdued, and the economy has been largely stagnant for five years.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 67 (up 0.9 point)
- Economic Freedom Status: Moderately Free
- Global Ranking: 53rd
- Regional Ranking: 11th in the South and Central America/Caribbean Region
- Notable Successes: Regulatory Efficiency and Trade Freedom
- Concerns: Financial Freedom and Management of Public Finance
- Overall Score Change Since 2012: +5.4
Despite some progress, inefficient and high public spending still burdens the population and increases the political system’s vulnerability to outside pressure. Efforts to open markets further have not advanced, and the lack of access to long-term financing remains a serious impediment to more dynamic economic expansion.
Dominica has a unicameral parliamentary government with a president and prime minister. Prime Minister Roosevelt Skerrit of the Dominica Labour Party took office in 2004 and has been reelected twice, in 2009 and again in 2014. In 2008, Dominica was among the first Caribbean nations to succumb to financial pressure to join the Bolivarian Alliance for the Peoples of Our America (ALBA), a restrictive trade and political organization led by socialist Venezuela. ALBA’s continuing interference in the Caribbean threatens to undermine progress in promoting free-market democratic institutions and regional integration. Dominica is a member of the Organization of Eastern Caribbean States (OECS). In an effort to diversify the economy, the government encourages investments in non-traditional agricultural exports such as coffee, patchouli, aloe vera, exotic fruits, and cut flowers.
Corruption is not a major problem, but anti-corruption statutes are not always implemented effectively. Dominica has an independent judiciary based on English common law, and private property rights are generally respected. Public trials are considered fair. Pirated copyrighted material is sold openly. Non-bank financial institutions are monitored to combat money laundering and the financing of terrorism.
The top individual income tax rate is 35 percent, and the top corporate tax rate is 30 percent. Other taxes include a value-added tax and an environmental tax. The overall tax burden equals 21.7 percent of GDP. Government spending amounts to 32.4 percent of total domestic output. Expansionary spending continues to undermine fiscal discipline, and public debt equals about 77 percent of GDP.
Launching a business takes only five procedures, and no minimum capital is required. The cost of obtaining necessary permits has been reduced. The non-salary cost of employing a worker is moderate, but the labor market lacks flexibility in other areas. A comprehensive restructuring of the economy to meet IMF requirements, including elimination of price controls, has been underway for more than a decade.
Dominica’s average tariff rate is 8.7 percent. Foreign and domestic investors normally are treated equally under the law. There generally are no caps on foreign investment, although there are some restrictions on land ownership. The financial sector remains underdeveloped. Shallow markets and the lack of a wide variety of financial instruments restrict overall access to credit.