At independence in 1975, Mozambique was one of the
world's poorest countries. Socialist mismanagement and a brutal
civil war from 1977-92 exacerbated the situation. In 1987, the
government embarked on a series of macroeconomic reforms designed to
stabilize the economy. These steps, combined with donor assistance
and with political stability since the multi-party elections in
1994, have led to dramatic improvements in the country's growth
rate. Inflation was reduced to single digits during the late 1990s,
and although it returned to double digits in 2000-06, in 2007
inflation had slowed to 8%, while GDP growth reached 7.5%. Fiscal
reforms, including the introduction of a value-added tax and reform
of the customs service, have improved the government's revenue
collection abilities. In spite of these gains, Mozambique remains
dependent upon foreign assistance for much of its annual budget, and
the majority of the population remains below the poverty line.
Subsistence agriculture continues to employ the vast majority of the
country's work force. A substantial trade imbalance persists
although the opening of the Mozal aluminum smelter, the country's
largest foreign investment project to date, has increased export
earnings. At the end of 2007, and after years of negotiations, the
government took over Portugal's majority share of the Cahora Bassa
Hydroelectricity (HCB) company, a dam that was not transferred to
Mozambique at independence because of the ensuing civil war and
unpaid debts. More power is needed for additional investment
projects in titanium extraction and processing and garment
manufacturing that could further close the import/export gap.
Mozambique's once substantial foreign debt has been reduced through
forgiveness and rescheduling under the IMF's Heavily Indebted Poor
Countries (HIPC) and Enhanced HIPC initiatives, and is now at a
manageable level. In July 2007 the Millennium Challenge Corporation
(MCC) signed a Compact with Mozambique; the Compact entered into
force in September 2008 and will continue for five years. Compact
projects will focus on improving sanitation, roads, agriculture, and
the business regulation environment in an effort to spur economic
growth in the four northern provinces of the country.
Namibia
The economy is heavily dependent on the extraction and
processing of minerals for export. Mining accounts for 8% of GDP,
but provides more than 50% of foreign exchange earnings. Rich
alluvial diamond deposits make Namibia a primary source for
gem-quality diamonds. Namibia is the fourth-largest exporter of
nonfuel minerals in Africa, the world's fifth-largest producer of
uranium, and the producer of large quantities of lead, zinc, tin,
silver, and tungsten. The mining sector employs only about 3% of the
population while about half of the population depends on subsistence
agriculture for its livelihood. Namibia normally imports about 50%
of its cereal requirements; in drought years food shortages are a
major problem in rural areas. A high per capita GDP, relative to the
region, hides one of the world's most unequal income distributions.
The Namibian economy is closely linked to South Africa with the
Namibian dollar pegged one-to-one to the South African rand.
Increased payments from the Southern African Customs Union (SACU)
put Namibia's budget into surplus in 2007 for the first time since
independence, but SACU payments will decline after 2008 as part of a
new revenue sharing formula. Increased fish production and mining of
zinc, copper, uranium, and silver spurred growth in 2003-07, but
growth in recent years was undercut by poor fish catches and high
costs for metal inputs.
Nauru
Revenues of this tiny island have traditionally come from
exports of phosphates now significantly depleted. An Australian
company in 2005 entered into an agreement intended to exploit
remaining supplies. Few other resources exist with most necessities
being imported, mainly from Australia its former occupier and later
major source of support. The rehabilitation of mined land and the
replacement of income from phosphates are serious long-term
problems. Reserves of phosphates may only last until 2010 at current
mining rates. In anticipation of the exhaustion of Nauru's phosphate
deposits, substantial amounts of phosphate income were invested in
trust funds to help cushion the transition and provide for Nauru's
economic future. As a result of heavy spending from the trust funds,
the government faces virtual bankruptcy. To cut costs the government
has frozen wages and reduced overstaffed public service departments.
Nauru lost further revenue in 2008 with the closure of Australia's
refugee processing center, making it almost totally dependent on
food imports and foreign aid. Housing, hospitals, and other capital
plant is deteriorating. The cost to Australia of keeping the
government and economy afloat continues to climb. Few comprehensive
statistics on the Nauru economy exist with estimates of Nauru's GDP
varying widely.
Navassa Island
Subsistence fishing and commercial trawling occur
within refuge waters.
Nepal
Nepal is among the poorest and least developed countries in
the world with almost one-third of its population living below the
poverty line. Agriculture is the mainstay of the economy, providing
a livelihood for three-fourths of the population and accounting for
about one-third of GDP. Industrial activity mainly involves the
processing of agricultural products, including pulses, jute,
sugarcane, tobacco, and grain. Bumper crops, better security,
improved transportation, and increased tourism pushed growth past 5%
in 2008, after growth had hovered around 3% - barely above the rate
of population growth - for the previous three years. The
deteriorating world economy in 2009 will challenge tourism and
remittance growth, a key source of foreign exchange. Nepal has
considerable scope for exploiting its potential in hydropower and
tourism, areas of recent foreign investment interest. Prospects for
foreign trade or investment in other sectors will remain poor,
however, because of the small size of the economy, its technological
backwardness, its remoteness and landlocked geographic location, its
civil strife and labor unrest, and its susceptibility to natural
disaster.
Netherlands
The Netherlands has a prosperous and open economy, which
depends heavily on foreign trade. The economy is noted for stable
industrial relations, moderate unemployment and inflation, a sizable
current account surplus, and an important role as a European
transportation hub. Industrial activity is predominantly in food
processing, chemicals, petroleum refining, and electrical machinery.
A highly mechanized agricultural sector employs no more than 3% of
the labor force but provides large surpluses for the food-processing
industry and for exports. The Netherlands, along with 11 of its EU
partners, began circulating the euro currency on 1 January 2002. The
country has been one of the leading European nations for attracting
foreign direct investment and is one of the four largest investors
in the US. The pace of job growth reached 10-year highs in 2007, but
economic growth fell sharply in 2008 as fallout from the world
financial crisis constricted demand and raised the specter of a
recession in 2009.
Netherlands Antilles
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 some at the bottom of the ladder - and
broadened and deepened the technological capabilities of the
industrial sector. Per capita income has risen for nine consecutive
years and reached $27,900 in 2008 in purchasing power parity terms.
Debt-driven consumer spending drove robust growth in the first half
of the decade, helping fuel a large balance of payments deficit that
posed a challenge for economic managers. Inflationary pressures
caused the central bank to raise its key rate steadily from January
2004 until it was among the highest in the OECD in 2007-08;
international capital inflows attracted to the high rates further
strengthened the currency and housing market, however, aggravating
the current account deficit. The economy fell into recession in
2008. In line with global peers, the central bank has cut interest
rates aggressively; the new government is responding with plans to
raise productivity growth and develop infrastructure.
Nicaragua
Nicaragua has widespread underemployment and the second
lowest per capita income in the Western Hemisphere. 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. Textiles and apparel account for nearly 60% of
Nicaragua's exports, but recent increases in the minimum wage will
likely erode its comparative advantage in this industry. Nicaragua
relies on international economic assistance to meet internal- and
external-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. However, severe budget shortfalls resulting from the
suspension of large amounts of direct budget support from foreign
donors concerned with recent political developments has caused a
slowdown in PRGF disbursements. Similarly, private sector concerns
surrounding ORTEGA's handling of economic issues have dampened
investment. Economic growth has slowed in 2009, due to decreased
export demand from the US and Central American markets, lower
commodity prices for key agricultural exports, and low remittance
growth - remittances are equivalent to almost 15% of GDP.
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
strong population growth 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, has undertaken several reforms over the past decade.
Nigeria's former military rulers failed to diversify the economy
away from its overdependence on the capital-intensive oil sector,
which provides 95% of foreign exchange earnings and about 80% of
budgetary revenues. 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. Since 2008 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. Based largely on increased oil exports and
high global crude prices, GDP rose strongly in 2007 and 2008.
President YAR'ADUA has pledged to continue the economic reforms of
his predecessor with 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
the petroleum sector, which accounts for nearly half of exports and
over 30% of state revenue. Norway is the world's third-largest gas
exporter; its position as an oil exporter has slipped to
seventh-largest as production has begun to decline. 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. In anticipation of eventual
declines in oil and gas production, Norway saves almost all state
revenue from the petroleum sector in a sovereign wealth fund. After
lackluster growth of less than 1.5% in 2002-03, GDP growth picked up
to 2.5-6.2% in 2004-07, partly due to higher oil prices. Growth fell
to 2.6% in 2008 as a result of the slowing world economy and the
drop in oil prices.
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. 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% by
2020. Some of these projects may be in jeopardy, however, because
Muscat overestimated its ability to produce or secure the natural
gas needed to power them. 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. The drop in oil prices and the
global financial crisis in 2008 will affect Oman's fiscal position
and it may post a deficit in 2009 if oil prices stay low. In
addition, the global credit crisis is slowing the pace of investment
and development projects - a trend that probably will continue into
2009.
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 declining exports of manufactures. Faced
with untenable budgetary deficits, high inflation, and hemorrhaging
foreign exchange reserves, the government agreed to an International
Monetary Fund Standby Arrangement in November 2008. Between 2004-07,
GDP growth in the 6-8% range was spurred by gains in the industrial
and service sectors, despite severe electricity shortfalls. Poverty
levels decreased by 10% since 2001, and Islamabad steadily raised
development spending in recent years. In 2008 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 20.8% in
2008, primarily because of rising world fuel and commodity prices.
In addition, the Pakistani rupee has depreciated significantly as a
result of political and economic instability.
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 85,000 in 2007. 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 80% 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 is scheduled to be completed by 2014
at a cost of $5.3 billion - about 25% 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. Strong economic performance has reduced the
national poverty level to 29% in 2008; however, Panama has the
second most unequal income distribution in Latin America. 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 75% 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, currently the highest rate in all of
East Asia and the Pacific, and chronic law and order and land tenure
issues. Australia supplied more than $300 million in aid in FY07/08,
which accounts for nearly 20% of the national budget. A consortium
led by a major American oil company hopes to begin the
commercialization of the country's estimated 227 billion cubic
meters of natural gas reserves through the construction of a
liquefied natural gas (LNG) production facility by 2010. The project
has the potential to double the GDP of Papua New Guinea.