The Guyanese economy exhibited moderate economic growth in
recent years and is based largely on agriculture and extractive
industries. The economy is heavily dependent upon the export of six
commodities - sugar, gold, bauxite, shrimp, timber, and rice - which
represent nearly 60% of the country's GDP and are highly susceptible
to adverse weather conditions and fluctuations in commodity prices.
Guyana's entrance into the Caricom Single Market and Economy (CSME)
in January 2006 has broadened the country's export market, primarily
in the raw materials sector. Economic recovery since a 2005
flood-related contraction was buoyed by increases in remittances and
foreign direct investment in the sugar and rice industries as well
as the mining sector. Chronic problems include a shortage of skilled
labor and a deficient infrastructure. The government is juggling a
sizable external debt against the urgent need for expanded public
investment. In March 2007, the Inter-American Development Bank,
Guyana's principal donor, canceled Guyana's nearly $470 million
debt, equivalent to nearly 48% of GDP, which along with other Highly
Indebted Poor Country (HIPC) debt forgiveness brought the
debt-to-GDP ratio down from 183% in 2006 to 120% in 2007. Guyana
became heavily indebted as a result of the inward-looking, state-led
development model pursued in the 1970s and 1980s. Growth slowed in
2009-10 as a result of the world recession. The slowdown in the
domestic economy and lower import costs helped to narrow the
country's current account deficit, despite generally lower earnings
from exports.
Haiti
Haiti's economy suffered a severe setback when a 7.1 magnitude
earthquake damaged its capital city, Port-au-Prince, in January
2010. Already the poorest country in the Western Hemisphere with 80%
of the population living under the poverty line and 54% in abject
poverty, the damage to Port-au-Prince caused the country's GDP to
contract an estimated 8% in 2010. Two-thirds of all Haitians depend
on the agricultural sector, mainly small-scale subsistence farming,
and remain vulnerable to damage from frequent natural disasters,
exacerbated by the country's widespread deforestation. US economic
engagement under the Haitian Hemispheric Opportunity through
Partnership Encouragement (HOPE) Act, passed in December 2006, has
boosted apparel exports and investment by providing tariff-free
access to the US. Congress voted in 2010 to extend the legislation
until 2020 under the Haitian Economic Lift Act (HELP); the apparel
sector accounts for three-quarters of Haitian exports and nearly
one-tenth of GDP. Remittances are the primary source of foreign
exchange, equaling nearly a quarter of GDP and more than twice the
earnings from exports. Haiti suffers from a lack of investment
because of insecurity and limited infrastructure, and a severe trade
deficit. In 2005, Haiti paid its arrears to the World Bank, paving
the way for reengagement with the Bank. Haiti received debt
forgiveness for over $1 billion of its debt through the
Highly-Indebted Poor Country (HIPC) initiative in 2009. The
remainder of its outstanding external debt was cancelled by donor
countries in early 2010 but has since climbed back to about $500
million. The government relies on formal international economic
assistance for fiscal sustainability.
Heard Island and McDonald Islands
The islands have no indigenous
economic activity, but the Australian Government allows limited
fishing in the surrounding waters.
Holy See (Vatican City)
The Holy See is supported financially by a
variety of sources, including investments, real estate income, and
donations from Catholic individuals, dioceses, and institutions;
these help fund the Roman Curia (Vatican bureaucracy), diplomatic
missions, and media outlets. The separate Vatican City State budget
includes the Vatican museums and post office and is supported
financially by the sale of stamps, coins, medals, and tourist
mementos; by fees for admission to museums; and by publications
sales. Moreover, an annual collection taken up in dioceses and
direct donations go to a non-budgetary fund known as Peter's Pence,
which is used directly by the Pope for charity, disaster relief, and
aid to churches in developing nations. The incomes and living
standards of lay workers are comparable to those of counterparts who
work in the city of Rome.
Honduras
Honduras, the second poorest country in Central America,
suffers from extraordinarily unequal distribution of income, as well
as high underemployment. While historically dependent on the export
of bananas and coffee, Honduras has diversified its export base to
include apparel and automobile wire harnessing. Nearly half of
Honduras's economic activity is directly tied to the US, with
exports to the US equivalent to 30% of GDP and remittances for
another 20%. The US-Central America Free Trade Agreement (CAFTA)
came into force in 2006 and has helped foster foriegn direct
investment, but physical and political insecurity may deter
potential investors; about 70% of FDI is from US firms. The economy
registered marginally positive economic growth in 2010, insufficient
to improve living standards for the nearly 60% of the population in
poverty. The LOBO administration inherited a difficult fiscal
position with off-budget debts accrued in previous administrations
and government salaries nearly equivalent to tax collections. His
government has displayed a commitment to improving tax collection
and cutting expenditures. This enabled Tegucigalpa to secure an IMF
Precautionary Stand-By agreement in October 2010. The IMF agreement
has helped renew multilateral and bilateral donor confidence in
Honduras following the ZELAYA administration's economic
mismanagement and the political coup.
Hong Kong
Hong Kong has a free market economy highly dependent on
international trade and finance - the value of goods and services
trade, including the sizable share of re-exports, is about four
times GDP. Hong Kong's open economy left it exposed to the global
economic slowdown, but its increasing integration with China,
through trade, tourism, and financial links, helped it recover more
quickly than many observers anticipated. The Hong Kong government is
promoting the Special Administrative Region (SAR) as the site for
Chinese renminbi (RMB) internationalization. Hong Kong residents are
allowed to establish RMB-denominated savings accounts;
RMB-denominated corporate and Chinese government bonds have been
issued in Hong Kong; and RMB trade settlement is allowed. The
territory far exceeded the RMB conversion quota set by Beijing for
trade settlements in 2010 due to the growth of earnings from exports
to the mainland. RMB deposits grew to roughly 3.6% of total system
deposits in Hong Kong by October 2010, an increase of over 250%
since the beginning of the year. The government is pursuing efforts
to introduce additional use of RMB in Hong Kong financial markets
and is seeking to expand the RMB quota for 2011. The mainland has
long been Hong Kong's largest trading partner, accounting for about
half of Hong Kong's exports by value. Hong Kong's natural resources
are limited, and food and raw materials must be imported. As a
result of China's easing of travel restrictions, the number of
mainland tourists to the territory has surged from 4.5 million in
2001 to 17.7 million in 2009, outnumbering visitors from all other
countries combined. Hong Kong has also established itself as the
premier stock market for Chinese firms seeking to list abroad. In
2009 mainland Chinese companies constituted about 40% of the firms
listed on the Hong Kong Stock Exchange and accounted for 60% of the
Exchange's market capitalization. During the past decade, as Hong
Kong's manufacturing industry moved to the mainland, its service
industry has grown rapidly and in 2009 accounted for more than 90%
of the territory's GDP. GDP growth averaged a strong 4% from 1989 to
2008. Hong Kong's GDP fell in 2009 as a result of the global
financial crisis, but a recovery began in third quarter 2009, and
the economy grew nearly 6% in 2010. The Hong Kong government adopted
several temporary fiscal policy support measures in response to the
crisis that it may discontinue if strong growth is sustained. Credit
expansion and tight housing supply conditions caused Hong Kong
property prices to rise rapidly in 2010, and some lower income
segments of the population are increasingly unable to afford
adequate housing. Hong Kong continues to link its currency closely
to the US dollar, maintaining an arrangement established in 1983.
Hungary
Hungary has made the transition from a centrally planned to
a market economy, with a per capita income nearly two-thirds that of
the EU-25 average. The private sector accounts for more than 80% of
GDP. Foreign ownership of and investment in Hungarian firms are
widespread, with cumulative foreign direct investment worth more
than $70 billion. The government's austerity measures, imposed since
late 2006, have reduced the budget deficit from over 9% of GDP in
2006 to 3.8% in 2010. Hungary's impending inability to service its
short-term debt - brought on by the global financial crisis in late
2008 - led Budapest to obtain an IMF-arranged financial assistance
package worth over $25 billion. The global economic downturn,
declining exports, and low domestic consumption and fixed asset
accumulation, dampened by government austerity measures, resulted in
an economic contraction of 6.3% in 2009. The economy rebounded in
2010 with a big boost from exports, and growth of more than 2.5% is
expected in 2011. Unemployment remained high, at more than 11%.
Iceland
Iceland's Scandinavian-type social-market economy combines a
capitalist structure and free-market principles with an extensive
welfare system. Prior to the 2008 crisis, Iceland had achieved high
growth, low unemployment, and a remarkably even distribution of
income. The economy depends heavily on the fishing industry, which
provides 40% of export earnings, more than 12% of GDP, and employs
7% of the work force. It remains sensitive to declining fish stocks
as well as to fluctuations in world prices for its main exports:
fish and fish products, aluminum, and ferrosilicon. Iceland's
economy has been diversifying into manufacturing and service
industries in the last decade, particularly within the fields of
software production, biotechnology, and tourism. Abundant geothermal
and hydropower sources have attracted substantial foreign investment
in the aluminum sector and boosted economic growth, although the
financial crisis has put several investment projects on hold. Much
of Iceland's economic growth in recent years came as the result of a
boom in domestic demand following the rapid expansion of the
country's financial sector. Domestic banks expanded aggressively in
foreign markets, and consumers and businesses borrowed heavily in
foreign currencies, following the privatization of the banking
sector in the early 2000s. Worsening global financial conditions
throughout 2008 resulted in a sharp depreciation of the krona
vis-a-vis other major currencies. The foreign exposure of Icelandic
banks, whose loans and other assets totaled more than 10 times the
country's GDP, became unsustainable. Iceland's three largest banks
collapsed in late 2008. The country secured over $10 billion in
loans from the IMF and other countries to stabilize its currency and
financial sector, and to back government guarantees for foreign
deposits in Icelandic banks. GDP fell 6.8% in 2009, and unemployment
peaked at 9.4% in February 2009. GDP fell 3.4% in 2010. Since the
collapse of Iceland's financial sector, government economic
priorities have included: stabilizing the krona, reducing Iceland's
high budget deficit, containing inflation, restructuring the
financial sector, and diversifying the economy. Three new banks were
established to take over the domestic assets of the collapsed banks.
Two of them have foreign majority ownership, while the State holds a
majority of the shares of the third. British and Dutch authorities
have pressed claims totaling over $5 billion against Iceland to
compensate their citizens for losses suffered on deposits held in
the failed Icelandic bank, Landsbanki Islands. Iceland agreed to new
terms with the UK and the Netherlands to compensate British and
Dutch depositors, but the agreement must first be approved by the
Icelandic President. Iceland began EU accession negotiations with
the EU in July 2010, however, public support has dropped
substantially because of concern about losing control over fishing
resources and in reaction to measures taken by Brussels during the
ongoing Eurozone crisis.
India
India is developing into an open-market economy, yet traces of
its past autarkic policies remain. Economic liberalization,
including industrial deregulation, privatization of state-owned
enterprises, and reduced controls on foreign trade and investment,
began in the early 1990s and has served to accelerate the country's
growth, which has averaged more than 7% per year since 1997. India's
diverse economy encompasses traditional village farming, modern
agriculture, handicrafts, a wide range of modern industries, and a
multitude of services. Slightly more than half of the work force is
in agriculture, but services are the major source of economic
growth, accounting for more than half of India's output, with only
one-third of its labor force. India has capitalized on its large
educated English-speaking population to become a major exporter of
information technology services and software workers. In 2010, the
Indian economy rebounded robustly from the global financial crisis -
in large part because of strong domestic demand - and growth
exceeded 8% year-on-year in real terms. Merchandise exports, which
account for about 15% of GDP, returned to pre-financial crisis
levels. An industrial expansion and high food prices, resulting from
the combined effects of the weak 2009 monsoon and inefficiencies in
the government's food distribution system, fueled inflation which
peaked at about 11% in the first half fo 2010, but has gradually
decreased to single digits following a series of central bank
interest rate hikes. New Delhi in 2010 reduced subsidies in fuel and
fertilizers, sold a small percentage of its shares in some
state-owned enterprises and auctioned off rights to radio bandwidth
for 3G telecommunications in part to lower the government's deficit.
The Indian Government seeks to reduce its deficit to 5.5% of GDP in
FY 2010-11, down from 6.8% in the previous fiscal year. India's long
term challenges include widespread poverty, inadequate physical and
social infrastructure, limited non-agricultural employment
opportunities, insufficient access to quality basic and higher
education, and accommodiating rual-to-urban migration.
Indian Ocean
The Indian Ocean provides major sea routes connecting
the Middle East, Africa, and East Asia with Europe and the Americas.
It carries a particularly heavy traffic of petroleum and petroleum
products from the oilfields of the Persian Gulf and Indonesia. Its
fish are of great and growing importance to the bordering countries
for domestic consumption and export. Fishing fleets from Russia,
Japan, South Korea, and Taiwan also exploit the Indian Ocean, mainly
for shrimp and tuna. Large reserves of hydrocarbons are being tapped
in the offshore areas of Saudi Arabia, Iran, India, and western
Australia. An estimated 40% of the world's offshore oil production
comes from the Indian Ocean. Beach sands rich in heavy minerals and
offshore placer deposits are actively exploited by bordering
countries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.
Indonesia
Indonesia, a vast polyglot nation, has weathered the
global financial crisis relatively smoothly because of its heavy
reliance on domestic consumption as the driver of economic growth.
Although the economy slowed significantly in 2009 from the 6%-plus
growth rate recorded in 2007 and 2008, by 2010 growth returned to a
6% rate. During the recession, Indonesia outperformed its regional
neighbors and joined China and India as the only G20 members posting
growth. The government made economic advances under the first
administration of President YUDHOYONO, introducing significant
reforms in the financial sector, including tax and customs reforms,
the use of Treasury bills, and capital market development and
supervision. Indonesia's debt-to-GDP ratio in recent years has
declined steadily because of increasingly robust GDP growth and
sound fiscal stewardship. Indonesia still struggles with poverty and
unemployment, inadequate infrastructure, corruption, a complex
regulatory environment, and unequal resource distribution among
regions. YUDHOYONO's reelection, with respected economist BOEDIONO
as his vice president, suggests broad continuity of economic policy,
although the start of their term has been marred by corruption
scandals and the departure of an internationally respected finance
minister. The government in 2010 faces the ongoing challenge of
improving Indonesia's insufficient infrastructure to remove
impediments to economic growth, while addressing climate change
mitigation and adaptation needs, particularly with regard to
conserving Indonesia's forests and peatlands, the focus of a
potentially trailblazing $1 billion REDD+ pilot project.
Iran
Iran's economy is marked by an inefficient state sector,
reliance on the oil sector, which provides the majority of
government revenues, and statist policies, which create major
distortions throughout the system. Private sector activity is
typically limited to small-scale workshops, farming, and services.
Price controls, subsidies, and other rigidities weigh down the
economy, undermining the potential for private-sector-led growth.
Significant informal market activity flourishes. The legislature in
late 2009 passed President Mahmud AHMADI-NEJAD's bill to reduce
subsidies, particularly on food and energy. The bill would phase out
subsidies - which benefit Iran's upper and middle classes the most -
over three to five years and replace them with cash payments to
Iran's lower classes. However, the start of the program was delayed
repeatedly throughout 2010 over fears of public reaction to higher
prices. This is the most extensive economic reform since the
government implemented gasoline rationing in 2007. The recovery of
world oil prices in the last year increased Iran's oil export
revenue by at least $10 billion over 2009, easing some of the
financial impact of the newest round of international sanctions.
Although inflation has fallen substantially since the mid-2000s,
Iran continues to suffer from double-digit unemployment and
underemployment. Underemployment among Iran's educated youth has
convinced many to seek jobs overseas, resulting in a significant
"brain drain."
Iraq
An improved security environment and an initial wave of foreign
investment are helping to spur economic activity, particularly in
the energy, construction, and retail sectors. Broader economic
improvement, long-term fiscal health, and sustained increases in the
standard of living still depend on the government passing major
policy reforms and on continued development of Iraq's massive oil
reserves. Although foreign investors viewed Iraq with increasing
interest in 2010, most are still hampered by difficulties in
acquiring land for projects and by other regulatory impediments.
Iraq's economy is dominated by the oil sector, which provides over
90% of government revenue and 80% of foreign exchange earnings.
Since mid-2009, oil export earnings have returned to levels seen
before Operation Iraqi Freedom and government revenues have
rebounded, along with global oil prices. In 2011 Baghdad probably
will increase oil exports above the current level of 1.9 million
barrels per day (bbl/day) as a result of new contracts with
international oil companies, but is likely to fall short of the 2.4
million bbl/day it is forecasting in its budget. Iraq is making
modest progress in building the institutions needed to implement
economic policy. In 2010, Bagdad signed a new agreement with both
the IMF and World Bank for conditional aid programs that will help
strengthen Iraq's economic institutions. Some reform-minded leaders
within the Iraqi government are seeking to pass laws to strengthen
the economy. This legislation includes a package of laws to
establish a modern legal framework for the oil sector and a
mechanism to equitably divide oil revenues within the nation,
although these and other important reforms are still under
contentious and sporadic negotiation. Iraq's recent contracts with
major oil companies have the potential to greatly expand oil
revenues, but Iraq will need to upgrade its oil processing,
pipeling, and export infrastructure to enable these deals to reach
their potential. The Government of Iraq is pursuing a strategy to
gain additional foreign investment in Iraq's economy. This includes
an amendment to the National Investment Law, multiple international
trade and investment events, as well as potential participation in
joint ventures with state-owned enterprises. Provincial Councils
also are using their own budgets to promote and facilitate
investment at the local level. However, widespread corruption,
inadequate infrastructure, insufficient essential services, and
antiquated commercial laws and regulations stifle investment and
continue to constrain the growth of private, non-energy sectors. The
Central Bank has successfully held the exchange rate at
approximately 1,170 Iraqi dinar/US dollar since January 2009.
Inflation has decreased consistently since 2006 as the security
situation has improved. However, Iraqi leaders remain hard pressed
to translate macroeconomic gains into improved lives for ordinary
Iraqis. Unemployment remains a problem throughout the country.
Reducing corruption and implementing reforms - such as bank
restructuring and developing the private sector - would be important
steps in this direction.
Ireland
Ireland is a small, modern, trade-dependent economy. Ireland
joined 11 other EU nations in circulating the euro on 1 January
2002. GDP growth averaged 6% in 1995-2007, but economic activity has
dropped sharply since 2008 with GDP falling by over 3% in 2008,
nearly 8% in 2009, and 1% in 2010, and further contraction is
expectd in 2011. Ireland entered into a recession for the first time
in more than a decade with the onset of the world financial crisis
and subsequent severe slowdown in its domestic property and
construction markets. Agriculture, once the most important sector,
is now dwarfed by industry and services. Although the export sector,
dominated by foreign multinationals, remains a key component of
Ireland's economy, construction most recently fueled economic growth
along with strong consumer spending and business investment.
Property prices rose more rapidly in Ireland in the decade up to
2007 than in any other developed economy. However, average home
prices have fallen 50% from the 2007 peak. In 2008 the COWEN
government moved to guarantee all bank deposits, recapitalize the
banking system, and establish partly-public venture capital funds in
response to the country's economic downturn. In 2009, in an effort
to stabilize the banking sector, the Irish Government established
the National Asset Management Agency (NAMA) to acquire problem
commercial property and development loans from Irish banks. Faced
with sharply reduced revenues and a burgeoning budget deficit, the
Irish Government introduced the first in a series of draconian
budgets in 2009. In addition to across-the-board cuts in spending,
the 2009 budget included wage reductions for all public servants.
These measures were not sufficient. The budget deficit reached
nearly 38% of GDP in 2010 because of additional government support
for the banking sector. In late 2010, the COWEN Government agreed to
a $112 billion loan package from the EU and IMF to help Dublin
recapitalize its banking sector and avoid defaulting on its
sovereign debt, and initiated a four-year austerity plan to cut an
additional $20 billion from its budget.
Isle of Man
Offshore banking, manufacturing, and tourism are key
sectors of the economy. The government offers low taxes and other
incentives to high-technology companies and financial institutions
to locate on the island; this has paid off in expanding employment
opportunities in high-income industries. As a result, agriculture
and fishing, once the mainstays of the economy, have declined in
their contributions to GDP. The Isle of Man also attracts online
gambling sites and the film industry. Trade is mostly with the UK.
The Isle of Man enjoys free access to EU markets.