This small, poor island economy has become
increasingly dependent on cocoa since independence in 1975. Cocoa
production has substantially declined in recent years because of
drought and mismanagement. Sao Tome has to import all fuels, most
manufactured goods, consumer goods, and a substantial amount of
food. Over the years, it has had difficulty servicing its external
debt and has relied heavily on concessional aid and debt
rescheduling. Sao Tome benefited from $200 million in debt relief in
December 2000 under the Highly Indebted Poor Countries (HIPC)
program, which helped bring down the country's $300 million debt
burden. In August 2005, Sao Tome signed on to a new 3-year IMF
Poverty Reduction and Growth Facility (PRGF) program worth $4.3
million. Considerable potential exists for development of a tourist
industry, and the government has taken steps to expand facilities in
recent years. The government also has attempted to reduce price
controls and subsidies. Potential exists for the development of
petroleum resources in Sao Tome's territorial waters in the oil-rich
Gulf of Guinea, which are being jointly developed in a 60-40 split
with Nigeria, but any actual production is at least several years
off. The first production licenses were sold in 2004, though a
dispute over licensing with Nigeria delayed Sao Tome's receipt of
more than $20 million in signing bonuses for almost a year. Real GDP
growth averaged about 6% in 2006-08, as a result of increases in
public expenditures and oil-related capital investment.
Saudi Arabia
Saudi Arabia has an oil-based economy with strong
government controls over major economic activities. It possesses
more than 20% of the world's proven petroleum reserves, ranks as the
largest exporter of petroleum, and plays a leading role in OPEC. The
petroleum sector accounts for roughly 80% of budget revenues, 45% of
GDP, and 90% of export earnings. About 40% of GDP comes from the
private sector. Roughly 6.4 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors. High oil prices through mid-2008 have boosted
growth, government revenues, and Saudi ownership of foreign assets,
while enabling Riyadh to pay down domestic debt. The government is
encouraging private sector growth - especially in power generation,
telecommunications, natural gas exploration, and petrochemicals - to
lessen the kingdom's dependence on oil exports and to increase
employment opportunities for the swelling Saudi population, nearly
40% of which are youths under 15 years old. Unemployment is high,
and the large youth population generally lacks the education and
technical skills the private sector needs. Riyadh has substantially
boosted spending on job training and education, infrastructure
development, and government salaries. As part of its effort to
attract foreign investment and diversify the economy, Saudi Arabia
acceded to the WTO in December 2005 after many years of
negotiations. The government has announced plans to establish six
"economic cities" in different regions of the country to promote
development and diversification. The last five years of high oil
prices have given the Kingdom ample financial reserves to manage the
impact of the global financial crisis, but tight international
credit, falling oil prices, and the global economic slowdown will
reduce Saudi economic growth in 2009.
Senegal
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which was linked at a fixed rate to the
French franc. Government price controls and subsidies have been
steadily dismantled. After seeing its economy contract by 2.1% in
1993, Senegal made an important turnaround, thanks to the reform
program, with real growth in GDP averaging over 5% annually during
1995-2008. Annual inflation had been pushed down to the single
digits. As a member of the West African Economic and Monetary Union
(WAEMU), Senegal is working toward greater regional integration with
a unified external tariff and a more stable monetary policy. High
unemployment, however, continues to prompt illegal migrants to flee
Senegal in search of better job opportunities in Europe. Senegal was
also beset by an energy crisis that caused widespread blackouts in
2006 and 2007. The phosphate industry has struggled for two years to
secure capital, and reduced output has directly impacted GDP. In
2007, Senegal signed agreements for major new mining concessions for
iron, zircon, and gold with foreign companies. Firms from Dubai have
agreed to manage and modernize Dakar's maritime port, and create a
new special economic zone. Senegal still relies heavily upon outside
donor assistance. Under the IMF's Highly Indebted Poor Countries
(HIPC) debt relief program, Senegal has benefited from eradication
of two-thirds of its bilateral, multilateral, and private-sector
debt. In 2007, Senegal and the IMF agreed to a new, non-disbursing,
Policy Support Initiative program.
Serbia
MILOSEVIC-era mismanagement of the economy, an extended
period of international economic sanctions, and the damage to
Yugoslavia's infrastructure and industry during the NATO airstrikes
in 1999 left the economy only half the size it was in 1990. After
the ousting of former Federal Yugoslav President MILOSEVIC in
September 2000, the Democratic Opposition of Serbia (DOS) coalition
government implemented stabilization measures and embarked on a
market reform program. After renewing its membership in the IMF in
December 2000, Yugoslavia continued to reintegrate into the
international community by rejoining the World Bank (IBRD) and the
European Bank for Reconstruction and Development (EBRD). A World
Bank-European Commission sponsored Donors' Conference held in June
2001 raised $1.3 billion for economic restructuring. In November
2001, the Paris Club agreed to reschedule the country's $4.5 billion
public debt and wrote off 66% of the debt. In July 2004, the London
Club of private creditors forgave $1.7 billion of debt just over
half the total owed. Belgrade has made progress in trade
liberalization and enterprise restructuring and privatization,
including telecommunications and small- and medium-size firms. It
has made halting progress towards EU membership despite signing a
Stabilization and Association Agreement with Brussels in May 2008.
Serbia is also pursuing membership in the World Trade Organization.
Unemployment and the large current account deficit remain ongoing
political and economic problems.
Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the
pre-independence, near-subsistence level, moving the island into the
upper-middle income group of countries. Growth has been led by the
tourist sector, which employs about 30% of the labor force and
provides more than 70% of hard currency earnings, and by tuna
fishing. In recent years, the government has encouraged foreign
investment to upgrade hotels and other services. At the same time,
the government has moved to reduce the dependence on tourism by
promoting the development of farming, fishing, and small-scale
manufacturing. GDP grew about 7-8% per year in 2006-07, driven by
tourism and a boom in tourism-related construction. The Seychelles
rupee was allowed to depreciate in 2006 after being overvalued for
years and fell by 10% in the first 9 months of 2007. Despite these
actions, the Seychelles economy has struggled to maintain its gains
and in 2008 suffered from food and oil price shocks, a foreign
exchange shortage, high inflation and large financing gaps, with GDP
growth reduced to about 3% in 2008. In July 2008 the government
defaulted on a Euro amortizing note worth roughly US$80 million,
leading to a downgrading of Seychelles credit rating. Seychelles
requested an IMF Stand-By Agreement in December 2008.
Sierra Leone
Sierra Leone is an extremely poor nation with
tremendous inequality in income distribution. While it possesses
substantial mineral, agricultural, and fishery resources, its
physical and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development.
Nearly half of the working-age population engages in subsistence
agriculture. Manufacturing consists mainly of the processing of raw
materials and of light manufacturing for the domestic market.
Alluvial diamond mining remains the major source of hard currency
earnings accounting for nearly half of Sierra Leone's exports. The
fate of the economy depends upon the maintenance of domestic peace
and the continued receipt of substantial aid from abroad, which is
essential to offset the severe trade imbalance and supplement
government revenues. The IMF has completed a Poverty Reduction and
Growth Facility program that helped stabilize economic growth and
reduce inflation. A recent increase in political stability has led
to a revival of economic activity such as the rehabilitation of
bauxite and rutile mining.
Singapore
Singapore has a highly developed and successful
free-market economy. It enjoys a remarkably open and corruption-free
environment, stable prices, and a per capita GDP higher than that of
most developed countries. The economy depends heavily on exports,
particularly in consumer electronics, information technology
products, pharmaceuticals, and on a growing service sector. Real GDP
growth averaged 7% between 2004 and 2007, but dropped to 1.1% in
2008 as a result of the global financial crisis. The economy
contracted in the last three quarters of 2008. Prime Minister LEE
and other senior officials have dampened expectations for a quick
rebound in 2009. Over the longer term, the government hopes to
establish a new growth path that will be less vulnerable to global
demand cycles especially for information technology products. It has
attracted major investments in pharmaceuticals and medical
technology production and will continue efforts to establish
Singapore as Southeast Asia's financial and high-tech hub.
Slovakia
Slovakia has made significant economic reforms since its
separation from the Czech Republic in 1993. Reforms to the taxation,
healthcare, pension, and social welfare systems helped Slovakia to
consolidate its budget and get on track to join the EU in 2004 and
to adopt the euro in January 2009. Major privatizations are nearly
complete, the banking sector is almost entirely in foreign hands,
and the government has helped facilitate a foreign investment boom
with business friendly policies such as labor market liberalization
and a 19% flat tax. Foreign investment in the automotive and
electronic sectors has been strong. Slovakia's economic growth
exceeded expectations in 2001-08 despite the general European
slowdown. Unemployment, at an unacceptable 18% in 2003-04, dropped
to 8.4% in 2008 but remains the economy's Achilles heel. Despite its
2006 pre-election promises to loosen fiscal policy and reverse the
previous DZURINDA government's pro-market reforms, FICO's cabinet
has thus far been careful to keep a lid on spending in order to meet
euro adoption criteria and has focused on regulating energy and food
prices instead. The OECD expects Slovakia's GDP growth to be
positive in 2009.
Slovenia
Slovenia, which on 1 January 2007 became the first 2004
European Union entrant to adopt the euro, is a model of economic
success and stability for the region. With the highest per capita
GDP in Central Europe, Slovenia has excellent infrastructure, a
well-educated work force, and a strategic location between the
Balkans and Western Europe. Privatization has lagged since 2002, and
the economy has one of highest levels of state control in the EU.
Structural reforms to improve the business environment have allowed
for somewhat greater foreign participation in Slovenia's economy and
have helped to lower unemployment. In March 2004, Slovenia became
the first transition country to graduate from borrower status to
donor partner at the World Bank. In December 2007, Slovenia was
invited to begin the accession process for joining the OECD. Despite
its economic success, foreign direct investment (FDI) in Slovenia
has lagged behind the region average, and taxes remain relatively
high. Furthermore, the labor market is often seen as inflexible, and
legacy industries are losing sales to more competitive firms in
China, India, and elsewhere.
Solomon Islands
The bulk of the population depends on agriculture,
fishing, and forestry for at least part of its livelihood. Most
manufactured goods and petroleum products must be imported. The
islands are rich in undeveloped mineral resources such as lead,
zinc, nickel, and gold. Prior to the arrival of RAMSI, severe ethnic
violence, the closing of key businesses, and an empty government
treasury culminated in economic collapse. RAMSI's efforts to restore
law and order and economic stability have led to modest growth as
the economy rebuilds.
Somalia
Despite the lack of effective national governance, Somalia
has maintained a healthy informal economy, largely based on
livestock, remittance/money transfer companies, and
telecommunications. Agriculture is the most important sector, with
livestock normally accounting for about 40% of GDP and about 65% of
export earnings. Nomads and semi-pastoralists, who are dependent
upon livestock for their livelihood, make up a large portion of the
population. Livestock, hides, fish, charcoal, and bananas are
Somalia's principal exports, while sugar, sorghum, corn, qat, and
machined goods are the principal imports. Somalia's small industrial
sector, based on the processing of agricultural products, has
largely been looted and sold as scrap metal. Somalia's service
sector also has grown. Telecommunication firms provide wireless
services in most major cities and offer the lowest international
call rates on the continent. In the absence of a formal banking
sector, money transfer/remittance services have sprouted throughout
the country, handling roughly $2 billion in remittances annually.
Mogadishu's main market offers a variety of goods from food to the
newest electronic gadgets. Hotels continue to operate and are
supported with private-security militias. Somalia's arrears to the
IMF continued to grow in 2008. Statistics on Somalia's GDP, growth,
per capita income, and inflation should be viewed skeptically.
South Africa
South Africa is a middle-income, emerging market with
an abundant supply of natural resources; well-developed financial,
legal, communications, energy, and transport sectors; a stock
exchange that is 17th largest in the world; and modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. Growth was robust from
2004 to 2008 as South Africa reaped the benefits of macroeconomic
stability and a global commodities boom, but began to slow in the
second half of 2008 due to the global financial crisis' impact on
commodity prices and demand. However, unemployment remains high and
outdated infrastructure has constrained growth. At the end of 2007,
South Africa began to experience an electricity crisis because state
power supplier Eskom suffered supply problems with aged plants,
necessitating "load-shedding" cuts to residents and businesses in
the major cities. Daunting economic problems remain from the
apartheid era - especially poverty, lack of economic empowerment
among the disadvantaged groups, and a shortage of public
transportation. South African economic policy is fiscally
conservative but pragmatic, focusing on controlling inflation,
maintaining a budget surplus, and using state-owned enterprises to
deliver basic services to low-income areas as a means to increase
job growth and household income.
South Georgia and South Sandwich Islands
Some fishing takes place in
adjacent waters. There is a potential source of income from
harvesting finfish and krill. The islands receive income from
postage stamps produced in the UK, sale of fishing licenses, and
harbor and landing fees from tourist vessels. Tourism from
specialized cruise ships is increasing rapidly.
Southern Ocean
Fisheries in 2006-07 landed 126,976 metric tons, of
which 82% (104,586 tons) was krill (Euphausia superba) and 9.5%
(12,027 tons) Patagonian toothfish (Dissostichus eleginoides - also
known as Chilean sea bass), compared to 127,910 tons in 2005-06 of
which 83% (106,591 tons) was krill and 9.7% (12,396 tons) Patagonian
toothfish (estimated fishing from the area covered by the Convention
of the Conservation of Antarctic Marine Living Resources (CCAMLR),
which extends slightly beyond the Southern Ocean area).
International agreements were adopted in late 1999 to reduce
illegal, unreported, and unregulated fishing, which in the 2000-01
season landed, by one estimate, 8,376 metric tons of Patagonian and
Antarctic toothfish. In the 2007-08 Antarctic summer, 45,213
tourists visited the Southern Ocean, compared to 35,552 in
2006-2007, and 29,799 in 2005-2006 (estimates provided to the
Antarctic Treaty by the International Association of Antarctica Tour
Operators (IAATO), and does not include passengers on overflights
and those flying directly in and out of Antarctica).
Spain
The Spanish economy grew every year from 1994 through 2008
before entering a recession that started in the third quarter of
2008. Spain's mixed capitalist economy supports a GDP that on a per
capita basis is approaching that of the largest West European
economies. The Socialist president, Jose Luis Rodriguez ZAPATERO, in
office since 2004, has made mixed progress in carrying out key
structural reforms. The economy was greatly affected, especially
after Zapatero's second term began in April 2008, by the bursting of
the housing bubble and construction boom that had fueled much of the
economic growth between 2001 and 2007. The global financial crisis
exacerbated the economic downturn. GDP growth in 2008 was 1.2%, well
below the 3% or higher growth the country enjoyed from 1997 through
2007. The Spanish banking system is considered solid, thanks in part
to conservative oversight by the European Central Bank, and
government intervention to rescue banks on the scale seen elsewhere
in Europe in 2008 was not necessary. After considerable success
since the mid-1990s in reducing unemployment to a 2007 low of 8%,
Spain suffered a major spike in unemployment in the last few months
of 2008, finishing the year with an unemployment rate over 13%.
Spratly Islands
Economic activity is limited to commercial fishing.
The proximity to nearby oil- and gas-producing sedimentary basins
suggests the potential for oil and gas deposits, but the region is
largely unexplored. There are no reliable estimates of potential
reserves. Commercial exploitation has yet to be developed.
Sri Lanka
In 1977, Colombo abandoned statist economic policies and
its import substitution trade policy for more market-oriented
policies, export-oriented trade, and encouragement of foreign
investment. Recent changes in government, however, have brought some
policy reversals. Currently, the ruling Sri Lanka Freedom Party has
a more statist economic approach, which seeks to reduce poverty by
steering investment to disadvantaged areas, developing small and
medium enterprises, promoting agriculture, and expanding the already
enormous civil service. The government has halted privatizations.
Although suffering a brutal civil war that began in 1983, Sri Lanka
saw GDP growth average 4.5% in the last 10 years with the exception
of a recession in 2001. In late December 2004, a major tsunami took
about 31,000 lives, left more than 6,300 missing and 443,000
displaced, and destroyed an estimated $1.5 billion worth of
property. Government spending on development and fighting the LTTE
drove GDP growth to about 7% per year in 2006-07 before the global
recession slow growth in 2008, but high government spending and high
oil and commodity prices also raised inflation to around 15% in
2008. Sri Lanka's most dynamic sectors now are food processing,
textiles and apparel, food and beverages, port construction,
telecommunications, and insurance and banking. In 2008, plantation
crops made up only about 20% of exports (compared with more than 90%
in 1970), while textiles and garments accounted for more than 40%.
About 1.5 million Sri Lankans work abroad, 90% of them in the Middle
East. They send home more than $2.5 billion a year. The 25-year
civil conflict between LTTE and the government of Sri Lanka has been
a serious impediment to economic activities. By mid February 2009,
the LTTE remained in control of small and shrinking area in the
North. The conflict continues to cast a shadow over the economy.
Sudan
Until the second half of 2008, Sudan's economy boomed on the
back of increases in oil production, high oil prices, and large
inflows of foreign direct investment. GDP growth registered more
than 10% per year in 2006 and 2007. From 1997 to date, Sudan has
been working with the IMF to implement macroeconomic reforms,
including a managed float of the exchange rate. Sudan began
exporting crude oil in the last quarter of 1999. Agricultural
production remains important, because it employs 80% of the work
force and contributes a third of GDP. The Darfur conflict, the
aftermath of two decades of civil war in the south, the lack of
basic infrastructure in large areas, and a reliance by much of the
population on subsistence agriculture ensure much of the population
will remain at or below the poverty line for years despite rapid
rises in average per capita income. In January 2007, the government
introduced a new currency, the Sudanese Pound, at an initial
exchange rate of $1.00 equals 2 Sudanese Pounds.
Suriname
The economy is dominated by the mining industry, with
exports of alumina, gold, and oil accounting for about 85% of
exports and 25% of government revenues, making the economy highly
vulnerable to mineral price volatility. Prospects for local onshore
oil production are good, and a drilling program is underway.
Offshore oil drilling was given a boost in 2004 when the State Oil
Company (Staatsolie) signed exploration agreements with several
Western oil companies. Bidding on these new offshore blocks was
completed in July 2006. The short-term economic outlook depends on
the government's ability to control inflation and on the development
of projects in the bauxite and gold mining sectors, though
investment in these projects may slow with the tightening of global
credit markets. Suriname has received aid for these projects from
Netherlands, Belgium, and the European Development Fund. Suriname's
economic prospects for the medium term will depend on continued
commitment to responsible monetary and fiscal policies and to the
introduction of structural reforms to liberalize markets and promote
competition. In 2000, the government of Ronald VENETIAAN, returned
to office and inherited an economy with inflation of over 100% and a
growing fiscal deficit. He quickly implemented an austerity program,
raised taxes, attempted to control spending, and tamed inflation.
The VENETIAAN administration also has created a stabilization fund
to insulate future revenue from commodity shocks. These economic
policies are likely to remain in effect during VENETIAAN's third
term.
Svalbard
Coal mining is the major economic activity on Svalbard. The
treaty of 9 February 1920 gave the 41 signatories equal rights to
exploit mineral deposits, subject to Norwegian regulation. Although
US, UK, Dutch, and Swedish coal companies have mined in the past,
the only companies still mining are Norwegian and Russian. The
settlements on Svalbard are essentially company towns. The Norwegian
state-owned coal company employs nearly 60% of the Norwegian
population on the island, runs many of the local services, and
provides most of the local infrastructure. There is also some
hunting of seal, reindeer, and fox.