Tourism, petroleum refining, and offshore
finance are the mainstays of this small economy, which is closely
tied to the outside world. Although GDP has declined or grown
slightly in each of the past eight years, the islands enjoy a high
per capita income and a well-developed infrastructure compared with
other countries in the region. Most of the oil Netherlands Antilles
imports for its refineries come from Venezuela. Almost all consumer
and capital goods are imported, the US, Italy, and Mexico being the
major suppliers. Poor soils and inadequate water supplies hamper the
development of agriculture. Budgetary problems hamper reform of the
health and pension systems of an aging population. The Netherlands
provides financial aid to support the economy.
New Caledonia
New Caledonia has about 25% of the world's known
nickel resources. Only a small amount of the land is suitable for
cultivation, and food accounts for about 20% of imports. In addition
to nickel, substantial financial support from France - equal to more
than 15% of GDP - and tourism are keys to the health of the economy.
Substantial new investment in the nickel industry, combined with the
recovery of global nickel prices, brightens the economic outlook for
the next several years.
New Zealand
Over the past 20 years the government has transformed
New Zealand from an agrarian economy dependent on concessionary
British market access to a more industrialized, free market economy
that can compete globally. This dynamic growth has boosted real
incomes - but left behind many at the bottom of the ladder - and
broadened and deepened the technological capabilities of the
industrial sector. Per capita income has risen for eight consecutive
years and reached $27,300 in 2007 in purchasing power parity terms.
Consumer and government spending have driven growth in recent years,
and exports picked up in 2006 after struggling for several years.
Exports were equal to about 22% of GDP in 2007, down from 33% of GDP
in 2001. Thus far the economy has been resilient, and the Labor
Government promises that expenditures on health, education, and
pensions will increase proportionately to output. Inflationary
pressures have built in recent years and the central bank raised its
key rate 13 times since January 2004 to finish 2007 at 8.25%. A
large balance of payments deficit poses another challenge in
managing the economy.
Nicaragua
Nicaragua has widespread underemployment, one of the
highest degrees of income inequality in the world, and the third
lowest per capita income in the Western Hemisphere. While the
country has progressed toward macroeconomic stability in the past
few years, annual GDP growth has been far too low to meet the
country's needs, forcing the country to rely on international
economic assistance to meet fiscal and debt financing obligations.
In early 2004, Nicaragua secured some $4.5 billion in foreign debt
reduction under the Heavily Indebted Poor Countries (HIPC)
initiative, and in October 2007, the IMF approved a new poverty
reduction and growth facility (PRGF) program that should create
fiscal space for social spending and investment. The continuity of a
relationship with the IMF reinforces donor confidence, despite
private sector concerns surrounding ORTEGA, which has dampened
investment. The US-Central America Free Trade Agreement (CAFTA) has
been in effect since April 2006 and has expanded export
opportunities for many agricultural and manufactured goods. Energy
shortages fueled by high oil prices, however, are a serious
bottleneck to growth.
Niger
Niger is one of the poorest countries in the world, ranking
near last on the United Nations Development Fund index of human
development. It is a landlocked, Sub-Saharan nation, whose economy
centers on subsistence crops, livestock, and some of the world's
largest uranium deposits. Drought cycles, desertification, and a
2.9% population growth rate, have undercut the economy. Niger shares
a common currency, the CFA franc, and a common central bank, the
Central Bank of West African States (BCEAO), with seven other
members of the West African Monetary Union. In December 2000, Niger
qualified for enhanced debt relief under the International Monetary
Fund program for Highly Indebted Poor Countries (HIPC) and concluded
an agreement with the Fund on a Poverty Reduction and Growth
Facility (PRGF). Debt relief provided under the enhanced HIPC
initiative significantly reduces Niger's annual debt service
obligations, freeing funds for expenditures on basic health care,
primary education, HIV/AIDS prevention, rural infrastructure, and
other programs geared at poverty reduction. In December 2005, Niger
received 100% multilateral debt relief from the IMF, which
translates into the forgiveness of approximately US $86 million in
debts to the IMF, excluding the remaining assistance under HIPC.
Nearly half of the government's budget is derived from foreign donor
resources. Future growth may be sustained by exploitation of oil,
gold, coal, and other mineral resources. Uranium prices have
increased sharply in the last few years. A drought and locust
infestation in 2005 led to food shortages for as many as 2.5 million
Nigeriens.
Nigeria
Oil-rich Nigeria, long hobbled by political instability,
corruption, inadequate infrastructure, and poor macroeconomic
management, is undertaking some reforms under a new reform-minded
administration. Nigeria's former military rulers failed to diversify
the economy away from its overdependence on the capital-intensive
oil sector, which provides 20% of GDP, 95% of foreign exchange
earnings, and about 80% of budgetary revenues. The largely
subsistence agricultural sector has failed to keep up with rapid
population growth - Nigeria is Africa's most populous country - and
the country, once a large net exporter of food, now must import
food. Following the signing of an IMF stand-by agreement in August
2000, Nigeria received a debt-restructuring deal from the Paris Club
and a $1 billion credit from the IMF, both contingent on economic
reforms. Nigeria pulled out of its IMF program in April 2002, after
failing to meet spending and exchange rate targets, making it
ineligible for additional debt forgiveness from the Paris Club. In
the last year the government has begun showing the political will to
implement the market-oriented reforms urged by the IMF, such as to
modernize the banking system, to curb inflation by blocking
excessive wage demands, and to resolve regional disputes over the
distribution of earnings from the oil industry. In 2003, the
government began deregulating fuel prices, announced the
privatization of the country's four oil refineries, and instituted
the National Economic Empowerment Development Strategy, a
domestically designed and run program modeled on the IMF's Poverty
Reduction and Growth Facility for fiscal and monetary management. In
November 2005, Abuja won Paris Club approval for a debt-relief deal
that eliminated $18 billion of debt in exchange for $12 billion in
payments - a total package worth $30 billion of Nigeria's total $37
billion external debt. The deal requires Nigeria to be subject to
stringent IMF reviews. GDP rose strongly in 2007, based largely on
increased oil exports and high global crude prices. Newly-elected
President YAR'ADUA has pledged to continue the economic reforms of
his predecessor and the proposed budget for 2008 reflects the
administrations emphasis on infrastructure improvements.
Infrastructure is the main impediment to growth. The government is
working toward developing stronger public-private partnerships for
electricity and roads.
Niue
The economy suffers from the typical Pacific island problems of
geographic isolation, few resources, and a small population.
Government expenditures regularly exceed revenues, and the shortfall
is made up by critically needed grants from New Zealand that are
used to pay wages to public employees. Niue has cut government
expenditures by reducing the public service by almost half. The
agricultural sector consists mainly of subsistence gardening,
although some cash crops are grown for export. Industry consists
primarily of small factories to process passion fruit, lime oil,
honey, and coconut cream. The sale of postage stamps to foreign
collectors is an important source of revenue. The island in recent
years has suffered a serious loss of population because of
emigration to New Zealand. Efforts to increase GDP include the
promotion of tourism and a financial services industry, although the
International Banking Repeal Act of 2002 resulted in the termination
of all offshore banking licenses. Economic aid from New Zealand in
2002 was US$2.6 million. Niue suffered a devastating typhoon in
January 2004, which decimated nascent economic programs. While in
the process of rebuilding, Niue has been dependent on foreign aid.
Norfolk Island
Tourism, the primary economic activity, has steadily
increased over the years and has brought a level of prosperity
unusual among inhabitants of the Pacific islands. The agricultural
sector has become self-sufficient in the production of beef,
poultry, and eggs.
Northern Mariana Islands
The economy benefits substantially from
financial assistance from the US. The rate of funding has declined
as locally generated government revenues have grown. The key tourist
industry employs about 50% of the work force and accounts for
roughly one-fourth of GDP. Japanese tourists predominate. Annual
tourist entries have exceeded one-half million in recent years, but
financial difficulties in Japan have caused a temporary slowdown.
The agricultural sector is made up of cattle ranches and small farms
producing coconuts, breadfruit, tomatoes, and melons. Garment
production is by far the most important industry with the employment
of 17,500 mostly Chinese workers and sizable shipments to the US
under duty and quota exemptions.
Norway
The Norwegian economy is a prosperous bastion of welfare
capitalism, featuring a combination of free market activity and
government intervention. The government controls key areas, such as
the vital petroleum sector, through large-scale state enterprises.
The country is richly endowed with natural resources - petroleum,
hydropower, fish, forests, and minerals - and is highly dependent on
its oil production and international oil prices, with oil and gas
accounting for one-third of exports. Only Saudi Arabia and Russia
export more oil than Norway. Norway opted to stay out of the EU
during a referendum in November 1994; nonetheless, as a member of
the European Economic Area, it contributes sizably to the EU budget.
The government has moved ahead with privatization. Although
Norwegian oil production peaked in 2000, natural gas production is
still rising. Norwegians realize that once their gas production
peaks they will eventually face declining oil and gas revenues;
accordingly, Norway has been saving its oil-and-gas-boosted budget
surpluses in a Government Petroleum Fund, which is invested abroad
and now is valued at more than $250 billion. After lackluster growth
of less than 1% in 2002-03, GDP growth picked up to 3-5% in 2004-07,
partly due to higher oil prices. Norway's economy remains buoyant.
Domestic economic activity is, and will continue to be, the main
driver of growth, supported by high consumer confidence and strong
investment spending in the offshore oil and gas sector. Norway's
record high budget surplus and upswing in the labor market in 2007
highlight the strength of its economic position going into 2008.
Oman
Oman is a middle-income economy that is heavily dependent on
dwindling oil resources, but sustained high oil prices in recent
years have helped build Oman's budget and trade surpluses and
foreign reserves. Oman joined the World Trade Organization in
November 2000 and continues to liberalize its markets. It ratified a
free trade agreement with the US in September 2006, and, through the
Gulf Cooperation Council, seeks similar agreements with the EU,
China and Japan. As a result of its dwindling oil resources, Oman is
actively pursuing a development plan that focuses on
diversification, industrialization, and privatization, with the
objective of reducing the oil sector's contribution to GDP to 9
percent by 2020. Muscat is attempting to "Omanize" the labor force
by replacing foreign expatriate workers with local workers. Oman
actively seeks private foreign investors, especially in the
industrial, information technology, tourism, and higher education
fields. Industrial development plans focus on gas resources, metal
manufacturing, petrochemicals, and international transshipment ports.
Pacific Ocean
The Pacific Ocean is a major contributor to the world
economy and particularly to those nations its waters directly touch.
It provides low-cost sea transportation between East and West,
extensive fishing grounds, offshore oil and gas fields, minerals,
and sand and gravel for the construction industry. In 1996, over 60%
of the world's fish catch came from the Pacific Ocean. Exploitation
of offshore oil and gas reserves is playing an ever-increasing role
in the energy supplies of the US, Australia, NZ, China, and Peru.
The high cost of recovering offshore oil and gas, combined with the
wide swings in world prices for oil since 1985, has led to
fluctuations in new drillings.
Pakistan
Pakistan, an impoverished and underdeveloped country, has
suffered from decades of internal political disputes, low levels of
foreign investment, and a costly, ongoing confrontation with
neighboring India. However, since 2001, IMF-approved reforms - most
notably, privatization of the banking sector - bolstered by generous
foreign assistance and renewed access to global markets, have
generated macroeconomic recovery. Pakistan has experienced GDP
growth in the 6-8% range in 2004-07, spurred by gains in the
industrial and service sectors. Poverty levels have decreased by 10%
since 2001, and Islamabad has steadily raised development spending
in recent years, including a 52% real increase in the budget
allocation for development in FY07. In 2007 the fiscal deficit - a
result of chronically low tax collection and increased spending -
exceeded Islamabad's target of 4% of GDP. Inflation remains the top
concern among the public, jumping from 7.7% in 2007 to more than 11%
during the first few months of 2008, primarily because of rising
world commodity prices. The Pakistani rupee has depreciated since
the proclamation of emergency rule in November 2007.
Palau
The economy consists primarily of tourism, subsistence
agriculture, and fishing. The government is the major employer of
the work force relying heavily on financial assistance from the US.
The Compact of Free Association with the US, entered into after the
end of the UN trusteeship on 1 October 1994, provided Palau with up
to $700 million in US aid for the following 15 years in return for
furnishing military facilities. Business and tourist arrivals
numbered 63,000 in 2003. The population enjoys a per capita income
roughly 50% higher than that of the Philippines and much of
Micronesia. Long-run prospects for the key tourist sector have been
greatly bolstered by the expansion of air travel in the Pacific, the
rising prosperity of leading East Asian countries, and the
willingness of foreigners to finance infrastructure development.
Panama
Panama's dollarized economy rests primarily on a
well-developed services sector that accounts for two-thirds of GDP.
Services include operating the Panama Canal, banking, the Colon Free
Zone, insurance, container ports, flagship registry, and tourism.
Economic growth will be bolstered by the Panama Canal expansion
project that began in 2007 and should be completed by 2014 at a cost
of $5.3 billion (about 30% of current GDP). The expansion project
will more than double the Canal's capacity, enabling it to
accommodate ships that are now too large to transverse the
transoceanic crossway and should help to reduce the high
unemployment rate. The government has implemented tax reforms, as
well as social security reforms, and backs regional trade agreements
and development of tourism. Not a CAFTA signatory, Panama in
December 2006 independently negotiated a free trade agreement with
the US, which, when implemented, will help promote the country's
economic growth.
Papua New Guinea
Papua New Guinea is richly endowed with natural
resources, but exploitation has been hampered by rugged terrain and
the high cost of developing infrastructure. Agriculture provides a
subsistence livelihood for 85% of the population. Mineral deposits,
including copper, gold, and oil, account for nearly two-thirds of
export earnings. The government of Prime Minister SOMARE has
expended much of its energy remaining in power. He was the first
prime minister ever to serve a full five-year term. The government
also brought stability to the national budget, largely through
expenditure control; however, it relaxed spending constraints in
2006 and 2007 as elections approached. Numerous challenges still
face the government including regaining investor confidence,
restoring integrity to state institutions, promoting economic
efficiency by privatizing moribund state institutions, and balancing
relations with Australia, its former colonial ruler. Other
socio-cultural challenges could upend the economy including a
worsening HIV/AIDS epidemic and chronic law and order and land
tenure issues. Australia will supply more than $300 million in aid
in FY07/08, which accounts for nearly 20% of the national budget.
Paracel Islands
China announced plans in 1997 to open the islands
for tourism.
Paraguay
Landlocked Paraguay has a market economy marked by a large
informal sector. This sector features both reexport of imported
consumer goods to neighboring countries, as well as the activities
of thousands of microenterprises and urban street vendors. Because
of the importance of the informal sector, accurate economic measures
are difficult to obtain. A large percentage of the population,
especially in rural areas, derives its living from agricultural
activity, often on a subsistence basis. On a per capita basis, real
income has stagnated at 1980 levels. Most observers attribute
Paraguay's poor economic performance to political uncertainty,
corruption, limited progress on structural reform, and deficient
infrastructure. The economy rebounded between 2003 and 2007, posting
modest growth each year, as growing world demand for commodities
combined with high prices and favorable weather to support
Paraguay's commodity-based export expansion.
Peru
Peru's economy reflects its varied geography - an arid coastal
region, the Andes further inland, and tropical lands bordering
Colombia and Brazil. Abundant mineral resources are found in the
mountainous areas, and Peru's coastal waters provide excellent
fishing grounds. However, overdependence on minerals and metals
subjects the economy to fluctuations in world prices, and a lack of
infrastructure deters trade and investment. After several years of
inconsistent economic performance, the Peruvian economy grew by more
than 4% per year during the period 2002-06, with a stable exchange
rate and low inflation. Growth jumped to 7.5% in 2007, driven by
higher world prices for minerals and metals. Risk premiums on
Peruvian bonds on secondary markets reached historically low levels
in late 2004, reflecting investor optimism regarding the
government's prudent fiscal policies and openness to trade and
investment. Despite the strong macroeconomic performance,
underemployment and poverty have stayed persistently high. Growth
prospects depend on exports of minerals, textiles, and agricultural
products, and by expectations for the Camisea natural gas
megaproject and for other promising energy projects. Upon taking
office, President GARCIA announced Sierra Exportadora, a program
aimed at promoting economic growth in Peru's southern and central
highlands.
Philippines
The Philippine economy grew at its fastest pace in three
decades with real GDP growth exceeding 7% in 2007. Higher government
spending contributed to the growth, but a resilient service sector
and large remittances from the millions of Filipinos who work abroad
have played an increasingly important role. Economic growth has
averaged 5% since President MACAPAGAL-ARROYO took office in 2001.
Nevertheless, the Philippines will need still higher, sustained
growth to make progress in alleviating poverty, given its high
population growth and unequal distribution of income.
MACAPAGAL-ARROYO averted a fiscal crisis by pushing for new revenue
measures and, until recently, tightening expenditures. Declining
fiscal deficits, tapering debt and debt service ratios, as well as
recent efforts to increase spending on infrastructure and social
services have heightened optimism over Philippine economic
prospects. Although the general macroeconomic outlook has improved
significantly, the Philippines continues to face important
challenges and must maintain the reform momentum in order to catch
up with regional competitors, improve employment opportunities, and
alleviate poverty. Longer-term fiscal stability will require more
sustainable revenue sources, rather than non-recurring revenues from
privatization.
Pitcairn Islands
The inhabitants of this tiny isolated economy exist
on fishing, subsistence farming, handicrafts, and postage stamps.
The fertile soil of the valleys produces a wide variety of fruits
and vegetables, including citrus, sugarcane, watermelons, bananas,
yams, and beans. Bartering is an important part of the economy. The
major sources of revenue are the sale of postage stamps to
collectors and the sale of handicrafts to passing ships. In October
2004, more than one-quarter of Pitcairn's small labor force was
arrested, putting the economy in a bind, since their services were
required as lighter crew to load or unload passing ships.
Poland
Poland has pursued a policy of economic liberalization since
1990 and today stands out as a success story among transition
economies. In 2007, GDP grew an estimated 6.5%, based on rising
private consumption, a jump in corporate investment, and EU funds
inflows. GDP per capita is still much below the EU average, but is
similar to that of the three Baltic states. Since 2004, EU
membership and access to EU structural funds have provided a major
boost to the economy. Unemployment is falling rapidly, though at
roughly 12.8% in 2007, it remains well above the EU average.
Tightening labor markets, and rising global energy and food prices,
pose a risk to consumer price stability. In December 2007 inflation
reached 4.1% on a year-over-year basis, or higher than the upper
limit of the National Bank of Poland's target range. Poland's
economic performance could improve further if the country addresses
some of the remaining deficiencies in its business environment. An
inefficient commercial court system, a rigid labor code,
bureaucratic red tape, and persistent low-level corruption keep the
private sector from performing up to its full potential. Rising
demands to fund health care, education, and the state pension system
present a challenge to the Polish government's effort to hold the
consolidated public sector budget deficit under 3.0% of GDP, a
target which was achieved in 2007. The PO/PSL coalition government
which came to power in November 2007 plans to further reduce the
budget deficit with the aim of eventually adopting the euro. The new
government has also announced its intention to enact
business-friendly reforms, reduce public sector spending growth,
lower taxes, and accelerate privatization. However, the government
does not have the necessary three-fifths majority needed to override
a presidential veto, and thus may have to water down initiatives in
order to garner enough support to pass its pro-business policies.