The interethnic warfare in Bosnia and
Herzegovina caused production to plummet by 80% from 1992 to 1995
and unemployment to soar. With an uneasy peace in place, output
recovered in 1996-99 at high percentage rates from a low base; but
output growth slowed in 2000-02. Part of the lag in output was made
up in 2003-08 when GDP growth exceeded 5% per year. However, the
country experienced negative GDP growth of almost 3% in 2009 due in
large part to a reduction in exports caused by the global economic
crisis. One of Bosnia's main economic challenges in 2010 has been to
reduce spending on public sector wages and social benefits to meet
the IMF's criteria for obtaining funding for budget shortfalls.
Banking reform accelerated in 2001 as all the Communist-era payments
bureaus were shut down; foreign banks, primarily from Austria and
Italy, now control most of the banking sector. The konvertibilna
marka (convertible mark or BAM)- the national currency introduced in
1998 - is pegged to the euro, and confidence in the currency and the
banking sector has increased. Bosnia's private sector is growing and
foreign investment is slowly increasing, but government spending, at
roughly 50% of GDP, remains high because of redundant government
offices at the state, entity and municipal level. Privatization of
state enterprises, however, has been slow, particularly in the
Federation where political division between ethnically-based
political parties makes agreement on economic policy more difficult.
A sizeable current account deficit and high unemployment rate remain
the two most serious macroeconomic problems. Successful
implementation of a value-added tax in 2006 provided a predictable
source of revenue for the government and helped rein in gray market
activity. National-level statistics have also improved over time but
a large share of economic activity remains unofficial and
unrecorded. Bosnia and Herzegovina became a full member of the
Central European Free Trade Agreement in September 2007.
Botswana
Botswana has maintained one of the world's highest economic
growth rates since independence in 1966, though growth fell below 5%
in 2007-08, and turned sharply negative in 2009, with industry
falling nearly 30%. Through fiscal discipline and sound management,
Botswana transformed itself from one of the poorest countries in the
world to a middle-income country with a per capita GDP of $13,100 in
2010. Two major investment services rank Botswana as the best credit
risk in Africa. Diamond mining has fueled much of the expansion and
currently accounts for more than one-third of GDP, 70-80% of export
earnings, and about half of the government's revenues. Botswana's
heavy reliance on a single luxury export was a critical factor in
the sharp economic contraction of 2009. Tourism, financial services,
subsistence farming, and cattle raising are other key sectors.
Although unemployment was 7.5% in 2007 according to official
reports, unofficial estimates place it closer to 40%. The prevalence
of HIV/AIDS is second highest in the world and threatens Botswana's
impressive economic gains. An expected leveling off in diamond
mining production within the next two decades overshadows long-term
prospects.
Bouvet Island
no economic activity; declared a nature reserve
Brazil
Characterized by large and well-developed agricultural,
mining, manufacturing, and service sectors, Brazil's economy
outweighs that of all other South American countries, and Brazil is
expanding its presence in world markets. Since 2003, Brazil has
steadily improved its macroeconomic stability, building up foreign
reserves, and reducing its debt profile by shifting its debt burden
toward real denominated and domestically held instruments. In 2008,
Brazil became a net external creditor and two ratings agencies
awarded investment grade status to its debt. After record growth in
2007 and 2008, the onset of the global financial crisis hit Brazil
in September 2008. Brazil experienced two quarters of recession, as
global demand for Brazil's commodity-based exports dwindled and
external credit dried up. However, Brazil was one of the first
emerging markets to begin a recovery. Consumer and investor
confidence revived and GDP growth returned to positive in 2010,
boosted by an export recovery. Brazil's strong growth and high
interest rates make it an attractive destination for foreign
investors. Large capital inflows over the past year have contributed
to the rapid appreciation of its currency and led the government to
raise taxes on some foreign investments. President Dilma ROUSSEFF
has pledged to retain the previous administration's commitment to
inflation targeting by the Central Bank, a floating exchange rate,
and fiscal restraint.
British Indian Ocean Territory
All economic activity is concentrated
on the largest island of Diego Garcia, where a joint UK-US military
facility is located. Construction projects and various services
needed to support the military installation are performed by
military and contract employees from the UK, Mauritius, the
Philippines, and the US. There are no industrial or agricultural
activities on the islands. The territory earns foreign exchange by
selling fishing licenses and postage stamps.
British Virgin Islands
The economy, one of the most stable and
prosperous in the Caribbean, is highly dependent on tourism
generating an estimated 45% of the national income. More than
934,000 tourists, mainly from the US, visited the islands in 2008.
In the mid-1980s, the government began offering offshore
registration to companies wishing to incorporate in the islands, and
incorporation fees now generate substantial revenues. Roughly
400,000 companies were on the offshore registry by yearend 2000. The
adoption of a comprehensive insurance law in late 1994, which
provides a blanket of confidentiality with regulated statutory
gateways for investigation of criminal offenses, made the British
Virgin Islands even more attractive to international business.
Livestock raising is the most important agricultural activity; poor
soils limit the islands' ability to meet domestic food requirements.
Because of traditionally close links with the US Virgin Islands, the
British Virgin Islands has used the US dollar as its currency since
1959.
Brunei
Brunei has a small well-to-do economy that encompasses a
mixture of foreign and domestic entrepreneurship, government
regulation, welfare measures, and village tradition. Crude oil and
natural gas production account for just over half of GDP and more
than 90% of exports. Per capita GDP is among the highest in Asia,
and substantial income from overseas investment supplements income
from domestic production. The government provides for all medical
services and free education through the university level and
subsidizes rice and housing. A new monetary authority was
established in January 2011 with responsibilities that include
monetary policy, monitoring of financial institutions, and currency
trading activities. Other plans for the future include upgrading the
labor force, reducing unemployment, strengthening the banking and
tourist sectors, increasing agricultural production, and, in
general, further widening the economic base beyond oil and gas.
Bulgaria
Bulgaria, a former Communist country that entered the EU on
1 January 2007, averaged more than 6% growth from 2004 to 2008,
driven by significant amounts of foreign direct investment and
consumption. Successive governments have demonstrated a commitment
to economic reforms and responsible fiscal planning, but the global
downturn sharply reduced domestic demand, exports, capital inflows,
and industrial production. GDP contracted by approximately 5% in
2009, and stagnated in 2010, despite a significant recovery in
exports. The economy is expected to grow modestly in 2011, however.
Corruption in the public administration, a weak judiciary, and the
presence of organized crime remain significant challenges.
Burkina Faso
Burkina Faso is a poor, landlocked country that relies
heavily on cotton and gold exports for revenue. The country has few
natural resources and a weak industrial base. About 90% of the
population is engaged in subsistence agriculture, which is
vulnerable to periodic drought. Cotton is the main cash crop. Since
1998, Burkina Faso has embarked upon a gradual privatization of
state-owned enterprises and in 2004 revised its investment code to
attract foreign investment. As a result of this new code and other
legislation favoring the mining sector, the country has seen an
upswing in gold exploration and production. By 2010, gold had become
the main source of export revenue.
Burma
Burma, a resource-rich country, suffers from pervasive
government controls, inefficient economic policies, corruption, and
rural poverty. Despite Burma's emergence as a natural gas exporter,
socio-economic conditions have deteriorated under the regime's
mismanagement, leaving most of the public in poverty, while military
leaders and their business cronies exploit the country's ample
natural resources. The economy suffers from serious macroeconomic
imbalances - including rising inflation, fiscal deficits, multiple
official exchange rates that overvalue the Burmese kyat, a distorted
interest rate regime, unreliable statistics, and an inability to
reconcile national accounts to determine a realistic GDP figure.
Burma's poor investment climate hampers the inflow of foreign
investment; in recent years, foreign investors have shied away from
nearly every sector except for natural gas, power generation,
timber, and mining. The business climate is widely perceived as
opaque, corrupt, and highly inefficient. Over 60% of the FY 2009-10
budget is allocated to state owned enterprises - most operating at a
deficit. The government has recently privatized a number of state
owned enterprises, but most of the benefits have accrued to regime
insiders and cronies. The most productive sectors will continue to
be in extractive industries - especially oil and gas, mining, and
timber - with the latter two causing significant environmental
degradation. Other areas, such as manufacturing, tourism and
services, struggle in the face of inadequate infrastructure,
unpredictable trade policies, neglected health and education
systems, and endemic corruption. A major banking crisis in 2003
caused 20 private banks to close; private banks still operate under
tight restrictions, limiting the private sector's access to credit.
The United States, the European Union, Canada, and Australia have
imposed financial and economic sanctions on Burma, prohibiting most
financial transactions with Burmese entities, imposing travel bans
on Burmese officials and others connected to the ruling regime, and
banning imports of certain Burmese products. These sanctions
affected the country's fledgling garment industry, isolated the
struggling banking sector, and raised the costs of doing business
with Burmese companies, particularly firms tied to Burmese regime
leaders. The global crisis of 2008-09 caused exports and domestic
consumer demand to drop. Remittances from overseas Burmese workers -
who had provided significant financial support for their families -
slowed or dried up as jobs were lost and migrant workers returned
home. Though the Burmese government has good economic relations with
its neighbors, better investment and business climates and an
improved political situation are needed to promote serious foreign
investment, exports, and tourism.
Burundi
Burundi is a landlocked, resource-poor country with an
underdeveloped manufacturing sector. The economy is predominantly
agricultural which accounts for about 35% of GDP and employs more
than 90% of the population. Burundi's primary exports are coffee and
tea, which account for 90% of foreign exchange earnings, though
exports are a relatively small share of GDP. Burundi's export
earning - and its ability to pay for imports - rests primarily on
weather conditions and international coffee and tea prices. The
Tutsi minority, 14% of the population, dominates the coffee trade.
An ethnic-based war that lasted for over a decade resulted in more
than 200,000 deaths, forced more than 48,000 refugees into Tanzania,
and displaced 140,000 others internally. Only one in two children go
to school, and approximately one in 15 adults has HIV/AIDS. Food,
medicine, and electricity remain in short supply. Burundi's GDP grew
around 4% annually in 2006-09. Political stability and the end of
the civil war have improved aid flows and economic activity has
increased, but underlying weaknesses - a high poverty rate, poor
education rates, a weak legal system, and low administrative
capacity - risk undermining planned economic reforms. Burundi will
continue to remain heavily dependent on aid from bilateral and
multilateral donors; the delay of funds after a corruption scandal
cut off bilateral aid in 2007 reduced government's revenues and its
ability to pay salaries. Burundi joined the East African Community,
which should boost Burundi's regional trade ties, and received $700
million in debt relief in 2009. Instability spilling over from
eastern Congo-Kinshasa and the ban on minerals smuggled across
Burundi's border will be the main challenges to economic growth.
Cambodia
From 2004 to 2007, the economy grew about 10% per year,
driven largely by an expansion in the garment sector, construction,
agriculture, and tourism. GDP contracted 1.5% in 2009 as a result of
the global economic slowdown, but climbed more than 4% in 1010,
driven by renewed exports. With the January 2005 expiration of a WTO
Agreement on Textiles and Clothing, Cambodian textile producers were
forced to compete directly with lower-priced countries such as
China, India, Vietnam, and Bangladesh. The garment industry
currently employs more than 280,000 people - about 5% of the work
force - and contributes more than 70% of Cambodia's exports. In
2005, exploitable oil deposits were found beneath Cambodia's
territorial waters, representing a new revenue stream for the
government if commercial extraction begins. Mining also is
attracting significant investor interest, particularly in the
northern parts of the country. The government has said opportunities
exist for mining bauxite, gold, iron and gems. In 2006, a
US-Cambodia bilateral Trade and Investment Framework Agreement
(TIFA) was signed, and several rounds of discussions have been held
since 2007. Rubber exports increased about 25% in 2009 due to rising
global demand. The tourism industry has continued to grow rapidly,
with foreign arrivals exceeding 2 million per year in 2007-08,
however, economic troubles abroad dampened growth in 2009. The
global financial crisis is weakening demand for Cambodian exports,
and construction is declining due to a shortage of credit. The
long-term development of the economy remains a daunting challenge.
The Cambodian government is working with bilateral and multilateral
donors, including the World Bank and IMF, to address the country's
many pressing needs. The major economic challenge for Cambodia over
the next decade will be fashioning an economic environment in which
the private sector can create enough jobs to handle Cambodia's
demographic imbalance. More than 50% of the population is less than
25 years old. The population lacks education and productive skills,
particularly in the poverty-ridden countryside, which suffers from
an almost total lack of basic infrastructure.
Cameroon
Because of its modest oil resources and favorable
agricultural conditions, Cameroon has one of the best-endowed
primary commodity economies in sub-Saharan Africa. Still, it faces
many of the serious problems facing other underdeveloped countries,
such as stagnate per capita income, a relatively inequitable
distribution of income, a top-heavy civil service, and a generally
unfavorable climate for business enterprise. Since 1990, the
government has embarked on various IMF and World Bank programs
designed to spur business investment, increase efficiency in
agriculture, improve trade, and recapitalize the nation's banks. The
IMF is pressing for more reforms, including increased budget
transparency, privatization, and poverty reduction programs. Weak
prices for oil and cocoa led to the significant slowdown in growth
in 2009. The government is under pressure to reduce its budget
deficit, which by the government's own forecast will hit 2.8% of
GDP, but the presidential election in 2011 may make fiscal austerity
difficult.
Canada
As an affluent, high-tech industrial society in the
trillion-dollar class, Canada resembles the US in its
market-oriented economic system, pattern of production, and affluent
living standards. Since World War II, the impressive growth of the
manufacturing, mining, and service sectors has transformed the
nation from a largely rural economy into one primarily industrial
and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the
1994 North American Free Trade Agreement (NAFTA) (which includes
Mexico) touched off a dramatic increase in trade and economic
integration with the US, its principal trading partner. Canada
enjoys a substantial trade surplus with the US, which absorbs about
three-fourths of Canadian exports each year. Canada is the US's
largest foreign supplier of energy, including oil, gas, uranium, and
electric power. Given its great natural resources, skilled labor
force, and modern capital plant, Canada enjoyed solid economic
growth from 1993 through 2007. Buffeted by the global economic
crisis, the economy dropped into a sharp recession in the final
months of 2008, and Ottawa posted its first fiscal deficit in 2009
after 12 years of surplus. Canada's major banks, however, emerged
from the financial crisis of 2008-09 among the strongest in the
world, owing to the country's tradition of conservative lending
practices and strong capitalization. During 2010, Canada's economy
grew only 3%, because of weak exports.
Cape Verde
This island economy suffers from a poor natural resource
base, including serious water shortages exacerbated by cycles of
long-term drought and poor soil for agriculture on several of the
islands. The economy is service oriented with commerce, transport,
tourism, and public services accounting for about three-fourths of
GDP. Although nearly 70% of the population lives in rural areas, the
share of food production in GDP is low. About 82% of food must be
imported. The fishing potential, mostly lobster and tuna, is not
fully exploited. Cape Verde annually runs a high trade deficit
financed by foreign aid and remittances from its large pool of
emigrants; remittances supplement GDP by more than 20%. Despite the
lack of resources, sound economic management has produced steadily
improving incomes. Continued economic reforms are aimed at
developing the private sector and attracting foreign investment to
diversify the economy. Future prospects depend heavily on the
maintenance of aid flows, the encouragement of tourism, remittances,
and the momentum of the government's development program. Cape Verde
became a member of the WTO in July 2008.
Cayman Islands
With no direct taxation, the islands are a thriving
offshore financial center. More than 93,000 companies were
registered in the Cayman Islands as of 2008, including almost 300
banks, 800 insurers, and 10,000 mutual funds. A stock exchange was
opened in 1997. Tourism is also a mainstay, accounting for about 70%
of GDP and 75% of foreign currency earnings. The tourist industry is
aimed at the luxury market and caters mainly to visitors from North
America. Total tourist arrivals exceeded 1.9 million in 2008, with
about half from the US. About 90% of the islands' food and consumer
goods must be imported. The Caymanians enjoy one of the highest
outputs per capita and one of the highest standards of living in the
world.
Central African Republic
Subsistence agriculture, together with
forestry, remains the backbone of the economy of the Central African
Republic (CAR), with about 60% of the population living in outlying
areas. The agricultural sector generates more than half of GDP.
Timber has accounted for about 16% of export earnings and the
diamond industry, for 40%. Important constraints to economic
development include the CAR's landlocked position, a poor
transportation system, a largely unskilled work force, and a legacy
of misdirected macroeconomic policies. Factional fighting between
the government and its opponents remains a drag on economic
revitalization. Distribution of income is extraordinarily unequal.
Grants from France and the international community can only
partially meet humanitarian needs.
Chad
Chad's primarily agricultural economy will continue to be
boosted by major foreign direct investment projects in the oil
sector that began in 2000. At least 80% of Chad's population relies
on subsistence farming and livestock raising for its livelihood.
Chad's economy has long been handicapped by its landlocked position,
high energy costs, and a history of instability. Chad relies on
foreign assistance and foreign capital for most public and private
sector investment projects. A consortium led by two US companies has
been investing $3.7 billion to develop oil reserves - estimated at 1
billion barrels - in southern Chad. Chinese companies are also
expanding exploration efforts and are currently building a 300-km
pipleline and the country's first refinery. The nation's total oil
reserves are estimated at 1.5 billion barrels. Oil production came
on stream in late 2003. Chad began to export oil in 2004. Cotton,
cattle, and gum arabic provide the bulk of Chad's non-oil export
earnings.
Chile
Chile has a market-oriented economy characterized by a high
level of foreign trade and a reputation for strong financial
institutions and sound policy that have given it the strongest
sovereign bond rating in South America. Exports account for more
than one-fourth of GDP, with commodities making up some
three-quarters of total exports. Copper alone provides one-third of
government revenue. During the early 1990s, Chile's reputation as a
role model for economic reform was strengthened when the democratic
government of Patricio AYLWIN - which took over from the military in
1990 - deepened the economic reform initiated by the military
government. Growth in real GDP averaged 8% during 1991-97, but fell
to half that level in 1998 because of tight monetary policies
implemented to keep the current account deficit in check and because
of lower export earnings - the latter a product of the global
financial crisis. A severe drought exacerbated the situation in
1999, reducing crop yields and causing hydroelectric shortfalls and
electricity rationing, and Chile experienced negative economic
growth for the first time in more than 15 years. In the years since
then, growth has averaged 4% per year. Chile deepened its
longstanding commitment to trade liberalization with the signing of
a free trade agreement with the US, which took effect on 1 January
2004. Chile claims to have more bilateral or regional trade
agreements than any other country. It has 57 such agreements (not
all of them full free trade agreements), including with the European
Union, Mercosur, China, India, South Korea, and Mexico. Over the
past seven years, foreign direct investment inflows have quadrupled
to some $15 billion in 2010, but FDI had dropped to about $7 billion
in 2009 in the face of diminished investment throughout the world.
The Chilean government conducts a rule-based countercyclical fiscal
policy, accumulating surpluses in sovereign wealth funds during
periods of high copper prices and economic growth, and allowing
deficit spending only during periods of low copper prices and
growth. As of September 2008, those sovereign wealth funds - kept
mostly outside the country and separate from Central Bank reserves -
amounted to more than $20 billion. Chile used $4 billion from this
fund to finance a fiscal stimulus package to fend off recession. In
December 2009, the OECD invited Chile to become a full member, after
a two year period of compliance with organization mandates. The
economy started to show signs of a rebound in the fourth quarter,
2009, and GDP grew more than 5% in 2010. The magnitude 8.8
earthquake that struck Chile in February 2010 was one of the top ten
strongest earthquakes on record. It caused considerable damage near
the epicenter, located about 70 miles from Concepcion - and about
200 miles southwest of Santiago.