After several years of double-digit economic growth, Armenia
faced a severe economic recession with GDP declining more than 14%
in 2009, despite large loans from multilateral institutions. Sharp
declines in the construction sector and workers' remittances,
particularly from Russia, were the main reasons for the downturn.
The economy began to recover in 2010 with nearly 5% growth. Under
the old Soviet central planning system, Armenia developed a modern
industrial sector, supplying machine tools, textiles, and other
manufactured goods to sister republics, in exchange for raw
materials and energy. Armenia has since switched to small-scale
agriculture and away from the large agroindustrial complexes of the
Soviet era. Armenia has managed to reduce poverty, slash inflation,
stabilize its currency, and privatize most small- and medium-sized
enterprises. Since the breakup of the Soviet Union in 1991, Armenia
had made progress in implementing some economic reforms, including
privatization, price reforms, and prudent fiscal policies, but
geographic isolation, a narrow export base, and pervasive monopolies
in important business sectors have made Armenia particularly
vulnerable to the sharp deterioration in the global economy and the
economic downturn in Russia. The conflict with Azerbaijan over the
ethnic Armenian-dominated region of Nagorno-Karabakh contributed to
a severe economic decline in the early 1990s and Armenia's borders
with Turkey remain closed until 2010, when Turkey and Armenia signed
an accord to reestablish diplomatic relations. Armenia is
particularly dependent on Russian commercial and governmental
support and most key Armenian infrastructure is Russian-owned and/or
managed, especially in the energy sector. The electricity
distribution system was privatized in 2002 and bought by Russia's
RAO-UES in 2005. Construction of a pipeline to deliver natural gas
from Iran to Armenia was completed in December 2008, and gas
deliveries are slated to expand due to the April 2010 completion of
the Yerevan Thermal Power Plant. Armenia has some mineral deposits
(copper, gold, bauxite). Pig iron, unwrought copper, and other
nonferrous metals are Armenia's highest valued exports. Armenia's
severe trade imbalance has been offset somewhat by international
aid, remittances from Armenians working abroad, and foreign direct
investment. Armenia joined the WTO in January 2003. The government
made some improvements in tax and customs administration in recent
years, but anti-corruption measures have been ineffective and the
current economic downturn has led to a sharp drop in tax revenue and
forced the government to accept large loan packages from Russia, the
IMF, and other international financial institutions. Armenia will
need to pursue additional economic reforms in order to regain
economic growth and improve economic competitiveness and employment
opportunities, especially given its economic isolation from two of
its nearest neighbors, Turkey and Azerbaijan.
Aruba
Tourism is the mainstay of the small open Aruban economy,
together with offshore banking. Oil refining and storage ended in
2009. The rapid growth of the tourism sector over the last decade
has resulted in a substantial expansion of other activities. Over
1.5 million tourists per year visit Aruba with 75% of those from the
US. Construction continues to boom with hotel capacity five times
the 1985 level. Tourist arrivals rebounded strongly following a dip
after the 11 September 2001 attacks. The government has made cutting
the budget and trade deficits a high priority.
Ashmore and Cartier Islands
no economic activity
Atlantic Ocean
The Atlantic Ocean provides some of the world's most
heavily trafficked sea routes, between and within the Eastern and
Western Hemispheres. Other economic activity includes the
exploitation of natural resources, e.g., fishing, dredging of
aragonite sands (The Bahamas), and production of crude oil and
natural gas (Caribbean Sea, Gulf of Mexico, and North Sea).
Australia
Australia's abundant and diverse natural resources attract
high levels of foreign investment and include extensive reserves of
coal, iron ore, copper, gold, natural gas, uranium, and renewable
energy sources. A series of major investments, such as the US$40
billion Gorgon Liquid Natural Gas project, will significantly expand
the resources sector. Australia also has a large services sector and
is a significant exporter of natural resources, energy, and food.
Key tenets of Australia's trade policy include support for open
trade and the successful culmination of the Doha Round of
multilateral trade negotiations, particularly for agriculture and
services. The Australian economy grew for 17 consecutive years
before the global financial crisis. Subsequently, the Rudd
government introduced a fiscal stimulus package worth over US$50
billion to offset the effect of the slowing world economy, while the
Reserve Bank of Australia cut interest rates to historic lows. These
policies - and continued demand for commodities, especially from
China - helped the Australian economy rebound after just one quarter
of negative growth. The economy grew by 1.2% during 2009 - the best
performance in the OECD. Unemployment, originally expected to reach
8-10%, peaked at 5.7% in late 2009 and fell to 5.1% in 2010. As a
result of an improved economy, the budget deficit is expected to
peak below 4.2% of GDP and the government could return to budget
surpluses as early as 2015. Australia was one of the first advanced
economies to raise interest rates, with seven rate hikes between
October 2009 and November 2010. The GILLARD government is focused on
raising Australia's economic productivity to ensure the
sustainability of growth, and continues to manage the symbiotic, but
sometimes tense, economic relationship with China. Australia is
engaged in the Trans-Pacific Partnership talks and ongoing free
trade agreement negotiations with China, Japan, and Korea.
Austria
Austria, with its well-developed market economy and high
standard of living, is closely tied to other EU economies,
especially Germany's. Its economy features a large service sector, a
sound industrial sector, and a small, but highly developed
agricultural sector. Following several years of solid foreign demand
for Austrian exports and record employment growth, the international
financial crisis and global economic downturn in 2008 led to a
recession that persisted until the third quarter of 2009. Austrian
GDP contracted 3.8% in 2009 but saw positive growth of about 2% in
2010. Unemployment has not risen as steeply in Austria as elsewhere
in Europe, partly because its government has subsidized reduced
working hour schemes to allow companies to retain employees. Such
stabilization measures, stimulus initiatives, and the government's
income tax reforms pushed the budget deficit to 3.5% of GDP in 2009
and about 5% in 2010, from only about 1.3% in 2008. The
international financial crisis caused difficulties for some of
Austria's largest banks whose extensive operations in central,
eastern, and southeastern Europe faced large losses. The government
provided bank support - including in some instances, nationalization
- to prevent insolvency and possible regional contagion. In the
medium-term all large Austrian banks will need additional capital.
Even after the global economic outlook improves, Austria will need
to continue restructuring, emphasizing knowledge-based sectors of
the economy, and encouraging greater labor flexibility and greater
labor participation to offset growing unemployment and Austria's
aging population and exceedingly low fertility rate.
Azerbaijan
Azerbaijan's high economic growth during 2006-08 was
attributable to large and growing oil exports, but some non-export
sectors also featured double-digit growth, spurred by growth in the
construction, banking, and real estate sectors. In 2009, economic
growth remained above 9% even as oil prices moderated and growth in
the construction sector cooled. In 2010, economic growth slowed to
approximately 3.7%, although the impact of the global financial
crisis was less severe than in many other countries in the region.
The current global economic slowdown presents some challenges for
the Azerbaijani economy as oil prices remain below their mid-2008
highs, highlighting Azerbaijan's reliance on energy exports and
lackluster attempts to diversify its economy. Azerbaijan's oil
production increased dramatically in 1997, when Azerbaijan signed
the first production-sharing arrangement (PSA) with the Azerbaijan
International Operating Company. Oil exports through the
Baku-Tbilisi-Ceyhan Pipeline remain the main economic driver while
efforts to boost Azerbaijan's gas production are underway. However,
Azerbaijan has made only limited progress on instituting
market-based economic reforms. Pervasive public and private sector
corruption and structural economic inefficiencies remain a drag on
long-term growth, particularly in non-energy sectors. Several other
obstacles impede Azerbaijan's economic progress: the need for
stepped up foreign investment in the non-energy sector and the
continuing conflict with Armenia over the Nagorno-Karabakh region.
Trade with Russia and the other former Soviet republics is declining
in importance, while trade is building with Turkey and the nations
of Europe. Long-term prospects will depend on world oil prices, the
location of new oil and gas pipelines in the region, and
Azerbaijan's ability to manage its energy wealth to promote
sustainable growth in non-energy sectors of the economy and spur
employment.
Bahamas, The
The Bahamas is one of the wealthiest Caribbean
countries with an economy heavily dependent on tourism and offshore
banking. Tourism together with tourism-driven construction and
manufacturing accounts for approximately 60% of GDP and directly or
indirectly employs half of the archipelago's labor force. Prior to
2006, a steady growth in tourism receipts and a boom in construction
of new hotels, resorts, and residences led to solid GDP growth but
since then tourism receipts have begun to drop off. The global
recession in 2009 took a sizeable toll on the Bahamas, resulting in
a contraction in GDP and a widening budget deficit. The decline
continued in 2010 as tourism from the US and sector investment
lagged. Financial services constitute the second-most important
sector of the Bahamian economy and, when combined with business
services, account for about 36% of GDP. However, the financial
sector currently is smaller than it has been in the past because of
the enactment of new and more strict financial regulations in 2000
that caused many international businesses to relocate elsewhere.
Manufacturing and agriculture combined contribute approximately a
tenth of GDP and show little growth, despite government incentives
aimed at those sectors. Overall growth prospects in the short run
rest heavily on the fortunes of the tourism sector.
Bahrain
Bahrain is one of the most diversified economies in the
Persian Gulf. Highly developed communication and transport
facilities make Bahrain home to numerous multinational firms with
business in the Gulf. As part of its diversification plans, Bahrain
implemented a Free Trade Agreement (FTA) with the US in August 2006,
the first FTA between the US and a Gulf state. Bahrain's economy,
however, continues to depend heavily on oil. Petroleum production
and refining account for more than 60% of Bahrain's export receipts,
70% of government revenues, and 11% of GDP (exclusive of allied
industries). Other major economic activities are production of
aluminum - Bahrain's second biggest export after oil - finance, and
construction. Bahrain competes with Malaysia as a worldwide center
for Islamic banking and continues to seek new natural gas supplies
as feedstock to support its expanding petrochemical and aluminum
industries. Unemployment, especially among the young, is a long-term
economic problem Bahrain struggles to address. In 2009, to help
lower unemployment among Bahraini nationals, Bahrain reduced
sponsorship for expatriate workers, increasing the costs of
employing foreign labor. The global financial crisis caused funding
for many non-oil projects to dry up and resulted in slower economic
growth for Bahrain. Other challenges facing Bahrain include the slow
growth of government debt as a result of a large subsidy program,
the financing of large government projects, and debt restructuring,
such as the bailout of state-owned Gulf Air.
Bangladesh
The economy has grown 5-6% per year since 1996 despite
political instability, poor infrastructure, corruption, insufficient
power supplies, and slow implementation of economic reforms.
Bangladesh remains a poor, overpopulated, and inefficiently-governed
nation. Although more than half of GDP is generated through the
service sector, 45% of Bangladeshis are employed in the agriculture
sector, with rice as the single-most-important product. Bangladesh's
growth was resilient during the 2008-09 global financial crisis and
recession. Garment exports, totaling $12.3 billion in FY09 and
remittances from overseas Bangladeshis totaling $9.7 billion in FY09
accounted for almost 25% of GDP.
Barbados
Historically, the Barbadian economy was dependent on
sugarcane cultivation and related activities. However, in recent
years the economy has diversified into light industry and tourism
with about three-quarters of GDP and 80% of exports being attributed
to services. Growth has rebounded since 2003, bolstered by increases
in construction projects and tourism revenues, reflecting its
success in the higher-end segment, but the sector faced declining
revenues in 2009 with the global economic downturn. The country
enjoys one of the highest per capita incomes in the region. Offshore
finance and information services are important foreign exchange
earners and thrive from having the same time zone as eastern US
financial centers and a relatively highly educated workforce. The
government continues its efforts to reduce unemployment, to
encourage direct foreign investment, and to privatize remaining
state-owned enterprises. The public debt-to-GDP ratio rose to over
100% in 2009, largely because a sharp slowdown in tourism and
financial services led to a wide budget deficit.
Belarus
Belarus has seen limited structural reform since 1995, when
President LUKASHENKO launched the country on the path of "market
socialism." In keeping with this policy, LUKASHENKO reimposed
administrative controls over prices and currency exchange rates and
expanded the state's right to intervene in the management of private
enterprises. Since 2005, the government has re-nationalized a number
of private companies. In addition, businesses have been subjected to
pressure by central and local governments, including arbitrary
changes in regulations, numerous rigorous inspections, retroactive
application of new business regulations, and arrests of "disruptive"
businessmen and factory owners. Continued state control over
economic operations hampers market entry for businesses, both
domestic and foreign. Government statistics indicate GDP growth was
strong, surpassing 10% in 2008, despite the roadblocks of a tough,
centrally directed economy with a high rate of inflation and a low
rate of unemployment. However, the global crisis pushed the country
into recession in 2009, and GDP grew only 0.2% for the year.
Slumping foreign demand hit the industrial sector hard. Minsk has
depended on a standby-agreement with the IMF to assist with balance
of payments shortfalls. In line with IMF conditions, in 2009,
Belarus devalued the ruble more than 40% and tightened some fiscal
and monetary policies. On 1 January 2010, Russia, Kazakhstan and
Belarus launched a customs union, with unified trade regulations and
customs codes still under negotiation. In late January, Russia and
Belarus amended their 2007 oil supply agreement. The new terms
raised prices for above quota purchases, increasing Belarus' current
account deficit. GDP grew 4.8% in 2010, in part, on the strength of
renewed export growth. In December 2010, Belarus, Russia and
Kazakhstan signed an agreement to form a Common Economic Space and
Russia removed all Belarusian oil duties.
Belgium
This modern, private-enterprise economy has capitalized on
its central geographic location, highly developed transport network,
and diversified industrial and commercial base. Industry is
concentrated mainly in the populous Flemish area in the north. With
few natural resources, Belgium imports substantial quantities of raw
materials and exports a large volume of manufactures, making its
economy vulnerable to volatility in world markets. Roughly
three-quarters of Belgium's trade is with other EU countries. In
2009 Belgian GDP contracted by 2.7%, the unemployment rate rose
slightly, and the budget deficit worsened because of large-scale
bail-outs in the financial sector. Belgium's budget deficit widened
to 4.8% of GDP in 2010, while public debt was just over 100% of GDP.
Belgian banks have been severely affected by the international
financial crisis with three major banks receiving capital injections
from the government. An ageing population and rising social
expenditures are also increasing pressure on public finances, making
it likely the government will need to implement unpopular austerity
measures to assuage investor concerns about Belgium's ability to
restore fiscal balance.
Belize
In this small, essentially private-enterprise economy,
tourism is the number one foreign exchange earner followed by
exports of marine products, citrus, cane sugar, bananas, and
garments. The government's expansionary monetary and fiscal
policies, initiated in September 1998, led to sturdy GDP growth
averaging nearly 4% in 1999-2007, though growth slipped to 3.8% in
2008, 0% in 2009, and 1.5% in 2010 as a result of the global
slowdown, natural disasters, and the drop in the price of oil. Oil
discoveries in 2006 bolstered economic growth. Exploration efforts
continue and production increased a small amount in 2009. Major
concerns continue to be the sizable trade deficit and heavy foreign
debt burden. In February 2007, the government restructured nearly
all of its public external commercial debt, which helped reduce
interest payments and relieved some of the country's liquidity
concerns. A key objective remains the reduction of poverty and
inequality with the help of international donors.
Benin
The economy of Benin remains underdeveloped and dependent on
subsistence agriculture, cotton production, and regional trade.
Growth in real output had averaged about 4% before the global
recession, but fell to 2.5% in 2009 and 3% in 2010. Inflation has
subsided over the past several years. In order to raise growth,
Benin plans to attract more foreign investment, place more emphasis
on tourism, facilitate the development of new food processing
systems and agricultural products, and encourage new information and
communication technology. Specific projects to improve the business
climate by reforms to the land tenure system, the commercial justice
system, and the financial sector were included in Benin's $307
million Millennium Challenge Account grant signed in February 2006.
The 2001 privatization policy continues in telecommunications,
water, electricity, and agriculture. As result of these reforms,
Benin has become the most competitive country in the West African
Economic and Monetary Union, according to the World Economic Forum.
The Paris Club and bilateral creditors have eased the external debt
situation, with Benin benefiting from a G-8 debt reduction announced
in July 2005, while pressing for more rapid structural reforms. An
insufficient electrical supply continues to adversely affect Benin's
economic growth though the government recently has taken steps to
increase domestic power production.
Bermuda
Bermuda enjoys the third highest per capita income in the
world, more than 50% higher than that of the US; the average cost of
a house by the mid-2000s exceeded $1,000,000. Its economy is
primarily based on providing financial services for international
business and luxury facilities for tourists. A number of reinsurance
companies relocated to the island following the 11 September 2001
attacks and again after Hurricane Katrina in August 2005
contributing to the expansion of an already robust international
business sector. Bermuda's tourism industry - which derives over 80%
of its visitors from the US - continues to struggle but remains the
island's number two industry. Most capital equipment and food must
be imported. Bermuda's industrial sector is largely focused on
construction and agriculture is limited, with only 20% of the land
being arable.
Bhutan
The economy, one of the world's smallest and least developed,
is based on agriculture and forestry, which provide the main
livelihood for more than 60% of the population. Agriculture consists
largely of subsistence farming and animal husbandry. Rugged
mountains dominate the terrain and make the building of roads and
other infrastructure difficult and expensive. The economy is closely
aligned with India's through strong trade and monetary links and
dependence on India's financial assistance. The industrial sector is
technologically backward, with most production of the cottage
industry type. Most development projects, such as road construction,
rely on Indian migrant labor. Model education, social, and
environment programs are underway with support from multilateral
development organizations. Each economic program takes into account
the government's desire to protect the country's environment and
cultural traditions. For example, the government, in its cautious
expansion of the tourist sector, encourages visits by upscale,
environmentally conscientious tourists. Complicated controls and
uncertain policies in areas such as industrial licensing, trade,
labor, and finance continue to hamper foreign investment. Hydropower
exports to India have boosted Bhutan's overall growth. New
hydropower projects will be the driving force behind Bhutan's
ability to create employment and sustain growth in the coming years.
Bolivia
Bolivia is one of the poorest and least developed countries
in Latin America. Following a disastrous economic crisis during the
early 1980s, reforms spurred private investment, stimulated economic
growth, and cut poverty rates in the 1990s. The period 2003-05 was
characterized by political instability, racial tensions, and violent
protests against plans - subsequently abandoned - to export
Bolivia's newly discovered natural gas reserves to large northern
hemisphere markets. In 2005, the government passed a controversial
hydrocarbons law that imposed significantly higher royalties and
required foreign firms then operating under risk-sharing contracts
to surrender all production to the state energy company in exchange
for a predetermined service fee. After higher prices for mining and
hydrocarbons exports produced a fiscal surplus in 2008, the global
recession in 2009 slowed growth. A decline in commodity prices that
began in late 2008, a lack of foreign investment in the mining and
hydrocarbon sectors, a poor infrastructure, and the suspension of
trade benefits with the United States will pose challenges for the
Bolivian economy.