The islands have the potential for oil and gas
development. Waters around the islands support commercial fishing,
but the islands themselves are not populated on a permanent basis.
China announced plans in 1997 to open the islands for tourism.
Paraguay
Landlocked Paraguay has a market economy marked by a large
informal sector, featuring reexport of imported consumer goods to
neighboring countries, as well as the activities of thousands of
microenterprises and urban street vendors. A large percentage of the
population, especially in rural areas, derives its living from
agricultural activity, often on a subsistence basis. Because of the
importance of the informal sector, accurate economic measures are
difficult to obtain. 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 2008, however, as growing world
demand for commodities combined with high prices and favorable
weather to support Paraguay's commodity-based export expansion.
Paraguay is the sixth largest soy producer in the world.
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. 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 9% per year in 2007 and 2008, driven by
higher world prices for minerals and metals and the government's
aggressive trade liberalization strategies. Peru's rapid expansion
has helped to reduce the national poverty rate by about 15% since
2002, though underemployment and inflation remain high. Despite
Peru's strong macroeconomic performance, overdependence on minerals
and metals subjects the economy to fluctuations in world prices, and
poor infrastructure precludes the spread of growth to Peru's
non-coastal areas. Not all Peruvians therefore have shared in the
benefits of growth. President GARCIA's pursuit of sound trade and
macroeconomic policies has cost him political support since his
election. Nevertheless, he remains committed to Peru's free-trade
path. The United States and Peru completed negotiations on the
implementation of the US-Peru Trade Promotion Agreement (PTPA), and
the agreement entered into force February 1, 2009, opening the way
to greater trade and investment between the two economies.
Philippines
Economic growth has averaged 5% since President
MACAPAGAL-ARROYO took office in 2001. 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, and increased spending on
infrastructure and social services bolstered optimism over
Philippine economic prospects. Although the general macroeconomic
outlook improved significantly in recent years, the economy still
faces several long term challenges. The Philippines must maintain
the reform momentum in order to catch up with regional competitors,
improve employment opportunities, and alleviate poverty. The
Philippines will need still higher, sustained growth to make
progress in alleviating poverty, given its high population growth
and unequal distribution of income. The Philippine economy grew at
its fastest pace in three decades in 2007 with real GDP growth
exceeding 7%, but growth slowed to 3.8% in 2008 as a result of the
world financial crisis. High government spending, a relatively small
trade sector, a resilient service sector, and large remittances from
the four- to five-million Filipinos who work abroad have helped
cushion the economy from the current financial crisis.
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 2008, GDP grew an estimated 4.8%, 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 9.7% in 2008, it remains above the EU average. In 2008
inflation reached 4.3%, more than the upper limit of the National
Bank of Poland's target range, but has been falling due to global
economic slowdown. 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 2007-08. 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 by 2012. The new government has also announced its
intention to enact business-friendly reforms, reduce public sector
spending growth, lower taxes, and accelerate privatization. The
government, however, has moved slowly on major reforms. Pension and
health-care bills passed through the legislature, but the
legislature failed to overturn a presidential veto.
Portugal
Portugal has become a diversified and increasingly
service-based economy since joining the European Community in 1986.
Over the past two decades, successive governments have privatized
many state-controlled firms and liberalized key areas of the
economy, including the financial and telecommunications sectors. The
country qualified for the European Monetary Union (EMU) in 1998 and
began circulating the euro on 1 January 2002 along with 11 other EU
member economies. Economic growth had been above the EU average for
much of the 1990s, but fell back in 2001-08. GDP per capita stands
at roughly two-thirds of the EU-27 average. A poor educational
system, in particular, has been an obstacle to greater productivity
and growth. Portugal has been increasingly overshadowed by
lower-cost producers in Central Europe and Asia as a target for
foreign direct investment. The budget deficit surged to an all-time
high of 6% of GDP in 2005, but the government reduced the deficit to
2.6% in 2007 - a year ahead of Portugal's targeted schedule.
Nonetheless, the government faces tough choices in its attempts to
boost the economy, which declined 0.1% in 2008, while keeping the
budget deficit within the euro-zone 3%-of-GDP ceiling.
Puerto Rico
Puerto Rico has one of the most dynamic economies in the
Caribbean region. A diverse industrial sector has far surpassed
agriculture as the primary locus of economic activity and income.
Encouraged by duty-free access to the US and by tax incentives, US
firms have invested heavily in Puerto Rico since the 1950s. US
minimum wage laws apply. Sugar production has lost out to dairy
production and other livestock products as the main source of income
in the agricultural sector. Tourism has traditionally been an
important source of income with estimated arrivals of nearly 5
million tourists in 2004. Growth fell off in 2001-03, largely due to
the slowdown in the US economy, recovered in 2004-05, but declined
again in 2006-07.
Qatar
Qatar has experienced rapid economic growth over the last
several years on the back of high oil prices, and in 2008 posted its
eighth consecutive budget surplus. Economic policy is focused on
developing Qatar's nonassociated natural gas reserves and increasing
private and foreign investment in non-energy sectors, but oil and
gas still account for more than 50% of GDP, roughly 85% of export
earnings, and 70% of government revenues. Oil and gas have made
Qatar the second highest per-capita income country - following
Liechtenstein - and one of the world's fastest growing. Proved oil
reserves of 15 billion barrels should enable continued output at
current levels for 37 years. Qatar's proved reserves of natural gas
are nearly 26 trillion cubic meters, about 14% of the world total
and third largest in the world. The drop in oil prices in late 2008
and the global financial crisis will reduce Qatar's budget surplus
and may slow the pace of investment and development projects in 2009.
Romania
Romania, which joined the European Union on 1 January 2007,
began the transition from Communism in 1989 with a largely obsolete
industrial base and a pattern of output unsuited to the country's
needs. The country emerged in 2000 from a punishing three-year
recession thanks to strong demand in EU export markets. Domestic
consumption and investment have fueled strong GDP growth in recent
years, but have led to large current account imbalances. Romania's
macroeconomic gains have only recently started to spur creation of a
middle class and address Romania's widespread poverty. Corruption
and red tape continue to handicap its business environment.
Inflation rose in 2007-08, driven in part by strong consumer demand
and high wage growth, rising energy costs, a nation-wide drought
affecting food prices, and a relaxation of fiscal discipline.
Romania's strong GDP growth moderated markedly in the last quarter
of 2008 as the country began to feel the effects of a global
downturn in financial markets and trade, and growth is expected to
be much weaker in 2009. Romania hopes to adopt the euro by 2014.
Russia
Russia ended 2008 with GDP growth of 5.6%, following 10
straight years of growth averaging 7% annually since the financial
crisis of 1998. Over the last six years, fixed capital investment
growth and personal income growth have averaged above 10%, but both
grew at slower rates in 2008. Growth in 2008 was driven largely by
non-tradable services and domestic manufacturing, rather than
exports. During the past decade, poverty and unemployment declined
steadily and the middle class continued to expand. Russia also
improved its international financial position, running balance of
payments surpluses since 2000. Foreign exchange reserves grew from
$12 billion in 1999 to almost $600 billion by end July 2008, which
include $200 billion in two sovereign wealth funds: a reserve fund
to support budgetary expenditures in case of a fall in the price of
oil and a national welfare fund to help fund pensions and
infrastructure development. Total foreign debt is almost one-third
of GDP. The state component of foreign debt has declined, but
commercial short-term debt to foreigners has risen strongly. These
positive trends began to reverse in the second half of 2008.
Investor concerns over the Russia-Georgia conflict, corporate
governance issues, and the global credit crunch in September caused
the Russian stock market to fall by roughly 70%, primarily due to
margin calls that were difficult for many Russian companies to meet.
The global crisis also affected Russia's banking system, which faced
liquidity problems. Moscow responded quickly in early October 2008,
initiating a rescue plan of over $200 billion that was designed to
increase liquidity in the financial sector, to help firms refinance
foreign debt, and to support the stock market. The government also
unveiled a $20 billion tax cut plan and other safety nets for
society and industry. Meanwhile, a 70% drop in the price of oil
since mid-July further exacerbated imbalances in external accounts
and the federal budget. In mid-November, mini-devaluations of the
currency by the Central Bank caused increased capital flight and
froze domestic credit markets, resulting in growing unemployment,
wage arrears, and a severe drop in production. Foreign exchange
reserves dropped to around $435 billion by end 2008, as the Central
Bank defended an overvalued ruble. In the first year of his term,
President MEDVEDEV outlined a number of economic priorities for
Russia including improving infrastructure, innovation, investment,
and institutions; reducing the state's role in the economy;
reforming the tax system and banking sector; developing one of the
biggest financial centers in the world, combating corruption, and
improving the judiciary. The Russian government needs to diversify
the economy further, as energy and other raw materials still
dominate Russian export earnings and federal budget receipts.
Russia's infrastructure requires large investments and must be
replaced or modernized if the country is to achieve broad-based
economic growth. Corruption, lack of trust in institutions, and more
recently, exchange rate uncertainty and the global economic crisis
continue to dampen domestic and foreign investor sentiment. Russia
has made some progress in building the rule of law, the bedrock of a
modern market economy, but much work remains on judicial reform.
Moscow continues to seek accession to the WTO and has made some
progress, but its timeline for entry into the organization continues
to slip, and the negotiating atmosphere has soured in the wake of
the Georgia and global economic crises.
Rwanda
Rwanda is a poor rural country with about 90% of the
population engaged in (mainly subsistence) agriculture. It is the
most densely populated country in Africa and is landlocked with few
natural resources and minimal industry. Primary foreign exchange
earners are coffee and tea. The 1994 genocide decimated Rwanda's
fragile economic base, severely impoverished the population,
particularly women, and eroded the country's ability to attract
private and external investment. However, Rwanda has made
substantial progress in stabilizing and rehabilitating its economy
to pre-1994 levels, although poverty levels are higher now. GDP has
rebounded and inflation has been curbed. Despite Rwanda's fertile
ecosystem, food production often does not keep pace with population
growth, requiring food imports. Rwanda continues to receive
substantial aid money and obtained IMF-World Bank Heavily Indebted
Poor Country (HIPC) initiative debt relief in 2005-06. Rwanda also
received Millennium Challenge Account Threshold status in 2006. The
government has embraced an expansionary fiscal policy to reduce
poverty by improving education, infrastructure, and foreign and
domestic investment and pursuing market-oriented reforms, although
energy shortages, instability in neighboring states, and lack of
adequate transportation linkages to other countries continue to
handicap growth.
Saint Barthelemy
The economy of Saint Barthelemy is based upon
high-end tourism and duty-free luxury commerce, serving visitors
primarily from North America. The luxury hotels and villas host
70,000 visitors each year with another 130,000 arriving by boat. The
relative isolation and high cost of living inhibits mass tourism.
The construction and public sectors also enjoy significant
investment in support of tourism. With limited fresh water
resources, all food must be imported, as must all energy resources
and most manufactured goods. Employment is strong and attracts labor
from Brazil and Portugal.
Saint Helena
The economy depends largely on financial assistance
from the UK, which amounted to about $27 million in FY06/07 or more
than twice the level of annual budgetary revenues. The local
population earns income from fishing, raising livestock, and sales
of handicrafts. Because there are few jobs, 25% of the work force
has left to seek employment on Ascension Island, on the Falklands,
and in the UK.
Saint Kitts and Nevis
The economy of Saint Kitts and Nevis is
heavily dependent upon tourism revenues, which has replaced sugar,
the traditional mainstay of the economy until the 1970s. Following
the 2005 harvest, the government closed the sugar industry after
decades of losses of 3-4% of GDP annually. To compensate for
employment losses, the government has embarked on a program to
diversify the agricultural sector and to stimulate other sectors of
the economy, such as tourism, export-oriented manufacturing, and
offshore banking. Economic growth was above average for Latin
America from 2004 to 2006, but has since slowed. Like other tourist
destinations in the Caribbean, the St. Kitts and Nevis is vulnerable
to damage from natural disasters and shifts in tourism demand. The
current government is constrained by a high public debt burden
equivalent to nearly 185% of GDP by the end of 2006, largely
attributable to public enterprise losses.
Saint Lucia
The island nation has been able to attract foreign
business and investment, especially in its offshore banking and
tourism industries, with a surge in foreign direct investment in
2006, attributed to the construction of several tourism projects.
Although crops such as bananas, mangos, and avocados continue to be
grown for export, tourism provides Saint Lucia's main source of
income and the industry is the island's biggest employer. The
tourism sector is likely to face declining revenues with the global
economic downturn as US and European travel declines. The
manufacturing sector is the most diverse in the Eastern Caribbean
area, and the government is trying to revitalize the banana
industry, although recent hurricanes have caused exports to
contract. Saint Lucia is vulnerable to a variety of external shocks
including volatile tourism receipts, natural disasters, and
dependence on foreign oil. The public debt-to-GDP ratio is about 70%
and high debt servicing obligations constrain the KING
administration's ability to respond to adverse external shocks.
Economic fundamentals remain solid, even though unemployment needs
to be reduced.
Saint Martin
The economy of Saint Martin centers around tourism with
85% of the labor force engaged in this sector. Over one million
visitors come to the island each year with most arriving through the
Princess Juliana International Airport in Sint Maarten. No
significant agriculture and limited local fishing means that almost
all food must be imported. Energy resources and manufactured goods
are also imported, primarily from Mexico and the United States.
Saint Martin is reported to have the highest per capita income in
the Caribbean.
Saint Pierre and Miquelon
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. France heavily subsidizes the islands to the
great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Fish farming,
crab fishing, and agriculture are being developed to diversify the
local economy. Recent test drilling for oil may pave the way for
development of the energy sector.
Saint Vincent and the Grenadines
Economic growth slowed in 2008
after reaching a 10-year high of nearly 7% in 2006, and will likely
slow in 2009 with the global economic downturn, though it will be
above average for Latin America. Success of the economy hinges upon
seasonal variations in agriculture, tourism, and construction
activity as well as remittance inflows. Much of the workforce is
employed in banana production and tourism, but persistent high
unemployment has prompted many to leave the islands. This
lower-middle-income country is vulnerable to natural disasters -
tropical storms wiped out substantial portions of crops in 1994,
1995, and 2002. In 2007, the islands had more than 200,000 tourist
arrivals, mostly to the Grenadines. Saint Vincent is home to a small
offshore banking sector and has moved to adopt international
regulatory standards. The government's ability to invest in social
programs and respond to external shocks is constrained by its high
debt burden - 25% of current revenues are directed towards debt
servicing. An agreement with Italy to write-off debt reduced the
public debt-to-GDP ratio to about 70%. The GONSALVES administration
is directing government resources to infrastructure projects,
including a new international airport that is expected to be
completed in 2011.
Samoa
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, agriculture, and
fishing. The country is vulnerable to devastating storms.
Agriculture employs two-thirds of the labor force and furnishes 90%
of exports, featuring coconut cream, coconut oil, and copra. The
fish catch declined during the El Nino of 2002-03 but returned to
normal by mid-2005. The manufacturing sector mainly processes
agricultural products. One factory in the Foreign Trade Zone employs
3,000 people to make automobile electrical harnesses for an assembly
plant in Australia. Tourism is an expanding sector accounting for
25% of GDP; 122,000 tourists visited the islands in 2007. The Samoan
Government has called for deregulation of the financial sector,
encouragement of investment, and continued fiscal discipline, while
at the same time protecting the environment. Observers point to the
flexibility of the labor market as a basic strength for future
economic advances. Foreign reserves are in a relatively healthy
state, the external debt is stable, and inflation is low.
San Marino
San Marino's economy relies heavily on its tourism and
banking industries, as well as from the manufacture and export of
ceramics, clothing, fabrics, furniture, paints, spirits, tiles, and
wine. The economy also benefits from foreign investment due to its
relatively low corporate taxes and low taxes on interest earnings.
The San Marino government, sworn in on 3 December 2008, will
continue to work towards an economic cooperation agreement with
Italy - a longstanding priority - as well as harmonizing its fiscal
laws with EU members. The per capita level of output and standard of
living are comparable to those of the most prosperous regions of
Italy, which supplies much of its food.