San Marino's economy relies heavily on its tourism and
banking industries, as well as on the manufacture and export of
ceramics, clothing, fabrics, furniture, paints, spirits, tiles, and
wine. The per capita level of output and standard of living are
comparable to those of the most prosperous regions of Italy, which
supplies much of its food. San Marino boasts the world's longest
life expectancy for men with 80 years. The economy benefits from
foreign investment due to its relatively low corporate taxes and low
taxes on interest earnings. San Marino has recently faced increased
international pressure to improve cooperation with foreign tax
authorities and transparency within its own banking sector, which
generates about one-fifth of the country's tax revenues. Italy's
implementation in October 2009 of a tax amnesty to repatriate
untaxed funds held abroad has resulted in financial outflows from
San Marino to Italy worth more than $4.5 billion. Such outflows,
combined with a money-laundering scandal at San Marino's largest
financial institution and the recent global economic downturn, have
contributed to a deep recession and growing budget deficit. However,
San Marino has no national debt, and an unemployment rate half the
size of Italy's. The San Marino government has adopted measures to
counter the downturn, including subsidized credit to businesses. San
Marino also continues to work towards harmonizing its fiscal laws
with EU members and international standards. In September 2009, the
OECD removed San Marino from its list of tax havens that have yet to
fully implement global tax standards.
Sao Tome and Principe
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 and Principe 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 and Principe 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, the government 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 and Principe'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 the country's receipt of more than $20 million in
signing bonuses for almost a year.
Saudi Arabia
Saudi Arabia has an oil-based economy with strong
government controls over major economic activities. It possesses
about 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. Saudi Arabia is encouraging the
growth of the private sector in order to diversify its economy and
to employ more Saudi nationals. Diversification efforts are focusing
on power generation, telecommunications, natural gas exploration,
and petrochemical sectors. Almost 6 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors, while Riyadh is struggling to reduce unemployment
among its own nationals. Saudi officials are particularly focused on
employing its large youth population, which generally lacks the
education and technical skills the private sector needs. Riyadh has
substantially boosted spending on job training and education, most
recently with the opening of the King Abdallah University of Science
and Technology - Saudi Arabia's first co-educational university. As
part of its effort to attract foreign investment, Saudi Arabia
acceded to the WTO in December 2005 after many years of
negotiations. The government has begun establishing six "economic
cities" in different regions of the country to promote foreign
investment and plans to spend $373 billion between 2010 and 2014 on
social development and infrastructure projects to advance Saudi
Arabia's economic development.
Senegal
Senegal relies heavily on donor assistance. The country's
key export industries are phosphate mining, fertilizer production,
and commercial fishing. The country is also working on iron ore and
oil exploration projects. In January 1994, Senegal undertook a bold
and ambitious economic reform program with the support of the
international donor community. 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. The country was adversely affected by the
global economic downturn in 2009 and GDP growth fell below 2%. 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. Under the
IMF's Highly Indebted Poor Countries (HIPC) debt relief program,
Senegal 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
which was completed in 2010. Senegal received its first disbursement
from the $540 million Millennium Challenge Account compact it signed
in September 2009 for infrastructure and agriculture development. In
2010, the Senegalese people protested against frequent power cuts.
The government pledged to expand capacity by 2012 and to promote
renewable energy but until Senegal has more capacity, more protests
are likely and economic activity will be hindered. During the year,
bakers protested government price controls on bread. Foreign
investment in Senegal is constrained by Senegal's business
environment, which has slipped in recent years, and by perceptions
of corruption.
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). Belgrade
has made progress in trade liberalization and enterprise
restructuring and privatization, including telecommunications and
small- and medium-size firms. It has made some progress towards EU
membership, signing a Stabilization and Association Agreement with
Brussels in May 2008, and with full implementation of the Interim
Trade Agreement with the EU in February 2010. Serbia is also
pursuing membership in the World Trade Organization. Reforms needed
to ensure the country's long-term viability have largely stalled
since the onset of the global financial crisis. Serbia is grappling
with fallout from crisis, which has led to a sharp drop in exports
to Western Europe and a decline in manufacturing output.
Unemployment and limited export earnings remain ongoing political
and economic problems. Serbia signed an augmented $4 billion Stand
By Arrangement with the IMF in May 2009. IMF conditions on Serbia
constrain the use of stimulus efforts to revive the economy, while
Serbia's concerns about inflation and exchange rate stability
preclude the use of expansionary monetary policy. Serbia's economy
grew by 1.8% in 2010 after a 3% contraction in 2009 as a recovery in
Western Europe began.
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, large financing gaps, and the
global recession. In July 2008 the government defaulted on a Euro
amortizing note worth roughly US$80 million, leading to a
downgrading of Seychelles credit rating, but in October 2010 the EU
approved a $2.9 million grant as part of a larger four-year program
for Seychelles. In response to Seychelles successful implementation
of tighter monetary and fiscal policies, the IMF upgraded Seychelles
to a three-year exteneded fund facility (EFF) of $31 million in
December 2009. In 2008, GDP fell more than 1% due to declining
tourism, but the economy recovered in 2009-10 with a notable
increase in tourist numbers for 2010.
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 has yet to recover from the civil
war, 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 and in 2010 approved a new program worth
$45 million over three years. Political stability has led to a
revival of economic activity such as the rehabilitation of bauxite
and rutile mining, which are set to benefit from planned tax
incentives. A number of offshore oil discoveries were announced in
2009 and 2010. The development on these reserves, which could be
significant, is still several years away.
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 financial services
sector. Real GDP growth averaged 6.9% between 2004 and 2008. The
economy contracted 1.3% in 2009 as a result of the global financial
crisis, but rebounded nearly 15% in 2010, on the strength of renewed
exports. Over the longer term, the government hopes to establish a
new growth path that focuses on raising productivity growth, which
has sunk to 1% per year in the last decade. Singapore 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.
Sint Maarten
The economy of Sint Maarten centers around tourism with
nearly four-fifths of the labor force engaged in this sector. Over
one million visitors come to the island each year - 1.3 million in
2008 - with most arriving through the Princess Juliana International
Airport. Cruise ships and yachts also call on Sint Maarten's
numerous ports and harbors. No significant agriculture and limited
local fishing means that almost all food must be imported. Energy
resources and manufactured goods are also imported. Sint Maarten had
the highest per capita income among the five islands that formerly
comprised the Netherlands Antilles.
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 7.7% in 2008 but remains the economy's Achilles heel. FICO's
cabinet was careful to keep a lid on spending in order to meet euro
adoption criteria and has focused on regulating energy and food
prices instead. To maintain a stable operating environment for
investors, the European Bank for Reconstruction and Development
advised the Slovak government to refrain from intervening in
important sectors of the economy. However, Bratislava's approach to
mitigating the economic slowdown has included substantial government
intervention and the option to nationalize strategic companies.
Slovakia was admitted to the euro zone in January 2009. RADICOVA's
government, in power since July 2010, has allowed the budget deficit
to rise slightly, to 8.2% of GDP in 2010. GDP fell nearly 5% in 2009
before gaining back 4% in 2010, and unemployment rose above 12% in
2010, as the global recession impacted many segments of the economy.
Slovenia
Slovenia became the first 2004 European Union entrant to
adopt the euro (on 1 January 2007) and has become 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. In 2009, the world recession caused the
economy to contract - through falling exports and industrial
production - by more than 8%, and unemployment to rise above 9%.
Although growth resumed in 2010, the unemployment rate continued to
rise, topping 10%.
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 more than 50%
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 the machinery 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 up to $1.6 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. Due to
armed attacks on and threats to humanitarian aid workers, the World
Food Programme partially suspended its operations in southern
Somalia in early January 2010 pending improvement in the security
situation. Somalia's arrears to the IMF have continued to grow.
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 the 18th largest in the world; and modern
infrastructure supporting a relatively efficient distribution of
goods to major urban centers throughout the region. At the end of
2007, South Africa began to experience an electricity crisis. State
power supplier Eskom encountered problems with aged plants,
necessitating "load-shedding" cuts to residents and businesses in
the major cities. Growth was robust from 2004 to 2007 as South
Africa reaped the benefits of macroeconomic stability and a global
commodities boom, but began to slow in the second half of 2007 due
to the electricity crisis and the subsequent global financial
crisis' impact on commodity prices and demand. GDP fell nearly 2% in
2009. Unemployment remains high and outdated infrastructure has
constrained growth. 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 Africa's former economic policy was fiscally
conservative, focusing on controlling inflation, and attaining a
budget surplus. The current government largely follows the same
prudent policies, but must contend with the impact of the global
crisis and is facing growing pressure from special interest groups
to use state-owned enterprises to deliver basic services to
low-income areas and to increase job growth. More than one-quarter
of South Africa's population currently receives social grants.
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
Spain's mixed capitalist economy is the 12th largest in the
world, and its per capita income roughly matches that of Germany and
France. However, after almost 15 years of above average GDP growth,
the Spanish economy began to slow in late 2007 and entered into a
recession in the second quarter of 2008. GDP contracted by 3.7% in
2009, ending a 16-year growth trend, and by another 0.4% in 2010,
making Spain the last major economy to emerge from the global
recession. The reversal in Spain's economic growth reflects a
significant decline in the construction sector, an oversupply of
housing, falling consumer spending, and slumping exports. Government
efforts to boost the economy through stimulus spending, extended
unemployment benefits, and loan guarantees did not prevent a sharp
rise in the unemployment rate, which rose from a low of about 8% in
2007 to 20% in 2010. The government budget deficit worsened from
3.8% of GDP in 2008 to about 9.7% of GDP in 2010, more than three
times the euro-zone limit. Spain's large budget deficit and poor
economic growth prospects have made it vulnerable to financial
contagion from other highly-indebted euro zone members despite the
government's efforts to cut spending, privatize industries, and
boost competitiveness through labor market reforms. Spanish banks'
high exposure to the collapsed domestic construction and real estate
market also poses a continued risk for the sector. The government
intervened in one regional savings bank in 2009, and investors
remain concerned that Madrid may need to bail out more troubled
banks. The Bank of Spain, however, is seeking to boost confidence in
the financial sector by pressuring banks to come clean about their
losses and consolidate into stronger groups.
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.