Sri Lanka is engaging in large-scale reconstruction and
development projects following the end of the 26-year conflict with
the LTTE, including increasing electricity access and rebuilding its
road and rail network. Additionally, Sri Lanka seeks to reduce
poverty by using a combination of state directed policies and
private investment promotion to spur growth in disadvantaged areas,
develop small and medium enterprises, and promote increased
agriculture, High levels of government funding may be difficult, as
the government already is faced with high debt interest payments, a
bloated civil service, and historically high budget deficits. The
2008-09 global financial crisis and recession exposed Sri Lanka's
economic vulnerabilities and nearly caused a balance of payments
crisis, which was alleviated by a $2.6 billion IMF standby agreement
in July 2009. The end of the civil war and the IMF loan, however,
have largely restored investors' confidence, reflected in part by
the Sri Lankan stock market's recognition as one of the best
performing markets in the world. Sri Lankan growth rates averaged
nearly 5% in during the war, but increased government spending on
development and fighting the LTTE in the final years spurred GDP
growth to around 6-7% per year in 2006-08. After experiencing 3.5%
growth in 2009, Sri Lanka's economy is poised to achieve high growth
rates in the postwar period.
Sudan
Since 1997, Sudan has been working with the IMF to implement
macroeconomic reforms including a managed float of the exchange rate
and a large reserve of foreign exchange. A new currency, the
Sudanese Pound, was introduced in January 2007 at an initial
exchange rate of $1.00 equals 2 Sudanese Pounds. Sudan began
exporting crude oil in the last quarter of 1999 and the economy
boomed on the back of increases in oil production, high oil prices,
and significant inflows of foreign direct investment until the
second half of 2008. The Darfur conflict, the aftermath of two
decades of civil war in the south, the lack of basic infrastructure
in large areas, and a reliance by much of the population on
subsistence agriculture ensure much of the population will remain at
or below the poverty line for years to come despite rapid rises in
average per capita income. Sudan's real GDP expanded by 5.2% during
2010, an improvement over 2009's 4.2% growth but significantly below
the more that 10% per year growth experienced prior to the global
financial crisis in 2006 and 2007. While the oil sector continues to
drive growth, services and utilities play an increasingly important
role in the economy with agriculture production remaining important
as it employs 80% of the work force and contributes a third of GDP.
In the lead up to the referendum on southern secession, scheduled in
January 2011, Sudan saw its currency depreciate considerably on the
black market with the Central Bank's official rate also losing value
as the Sudanese people started to hoard foreign currency. The
Central Bank of Sudan intervened heavily in the currency market to
defend the value of the pound and the Sudanese government introduced
a number of measures to restrain excess local demand for hard
currency, but uncertainty ahead of the referendum has meant that
foreign exchange remained in heavy demand as 2010 came to a close.
Suriname
The economy is dominated by the mining industry, with
exports of alumina, gold, and oil accounting for about 85% of
exports and 25% of government revenues, making the economy highly
vulnerable to mineral price volatility. In 2000, the government of
Ronald VENETIAAN, returned to office and inherited an economy with
inflation of over 100% and a growing fiscal deficit. He quickly
implemented an austerity program, raised taxes, attempted to control
spending, and tamed inflation. Economic growth reached about 6% in
2007 and 2008, owing to sizeable foreign investment in mining and
oil. Suriname has received aid for projects in the bauxite and gold
mining sectors from Netherlands, Belgium, and the European
Development Fund. The economy contracted in 2009, however, as
investment waned and the country earned less from its commodity
exports when global prices for most commodities fell. Trade picked
up, boosting Suriname's economic growth in 2010, but the
government's budget remained strained, with increased social
spending during last year's election. Suriname's economic prospects
for the medium term will depend on continued commitment to
responsible monetary and fiscal policies and to the introduction of
structural reforms to liberalize markets and promote competition.
Svalbard
Coal mining, tourism, and international research are the
major revenue sources on Svalbard. Coal mining is the dominant
economic activity and a treaty of 9 February 1920 gave the 41
signatories equal rights to exploit mineral deposits, subject to
Norwegian regulation. Although US, UK, Dutch, and Swedish coal
companies have mined in the past, the only companies still engaging
in this are Norwegian and Russian. The settlements on Svalbard are
essentially company towns. The Norwegian state-owned coal company
employs nearly 60% of the Norwegian population on the island, runs
many of the local services, and provides most of the local
infrastructure. There is also some hunting of seal, reindeer, and
fox.
Swaziland
In this small, landlocked economy, subsistence agriculture
occupies approximately 70% of the population. The manufacturing
sector has diversified since the mid-1980s. Sugar and wood pulp
remain important foreign exchange earners. In 2007, the sugar
industry increased efficiency and diversification efforts, in
response to a 17% decline in EU sugar prices. Mining has declined in
importance in recent years with only coal and quarry stone mines
remaining active. Surrounded by South Africa, except for a short
border with Mozambique, Swaziland is heavily dependent on South
Africa from which it receives more than nine-tenths of its imports
and to which it sends 60% of its exports. Swaziland's currency is
pegged to the South African rand, subsuming Swaziland's monetary
policy to South Africa. Customs duties from the Southern African
Customs Union (SACU) account for two-thirds of Swaziland's
government revenues, and worker remittances from South Africa
substantially supplement domestically earned income. Customs
revenues plummeted during the global economic crisis and Swaziland
has appealed to SACU for assistance. With an estimated 40%
unemployment rate, Swaziland's need to increase the number and size
of small and medium enterprises and attract foreign direct
investment is acute. Overgrazing, soil depletion, drought, and
sometimes floods persist as problems for the future. More than
one-fourth of the population needed emergency food aid in 2006-07
because of drought, and more than one-quarter of the adult
population has been infected by HIV/AIDS.
Sweden
Aided by peace and neutrality for the whole of the 20th
century, Sweden has achieved an enviable standard of living under a
mixed system of high-tech capitalism and extensive welfare benefits.
It has a modern distribution system, excellent internal and external
communications, and a skilled labor force. In September 2003,
Swedish voters turned down entry into the euro system concerned
about the impact on the economy and sovereignty. Timber, hydropower,
and iron ore constitute the resource base of an economy heavily
oriented toward foreign trade. Privately owned firms account for
about 90% of industrial output, of which the engineering sector
accounts for 50% of output and exports. Agriculture accounts for
little more than 1% of GDP and of employment. Until 2008, Sweden was
in the midst of a sustained economic upswing, boosted by increased
domestic demand and strong exports. This and robust finances offered
the center-right government considerable scope to implement its
reform program aimed at increasing employment, reducing welfare
dependence, and streamlining the state's role in the economy.
Despite strong finances and underlying fundamentals, the Swedish
economy slid into recession in the third quarter of 2008 and growth
continued downward in 2009 as deteriorating global conditions
reduced export demand and consumption. Strong exports of commodities
and a return to profitability by Sweden's banking sector drove the
strong rebound in 2010.
Switzerland
Switzerland is a peaceful, prosperous, and modern market
economy with low unemployment, a highly skilled labor force, and a
per capita GDP among the highest in the world. Switzerland's economy
benefits from a highly developed service sector, led by financial
services, and a manufacturing industry that specializes in
high-technology, knowledge-based production. The Swiss have brought
their economic practices largely into conformity with the EU's, in
order to enhance their international competitiveness, but some trade
protectionism remains, particularly for its small agricultural
sector. The global financial crisis and resulting economic downturn
put Switzerland in a recession in 2009 as global export demand
stalled. The Swiss National Bank during this period effectively
implemented a zero-interest rate policy in a bid to boost the
economy and prevent appreciation of the franc. Switzerland's economy
grew 2.8% in 2010, when Bern implemented a third fiscal stimulus
program, but its prized banking sector has recently faced
significant challenges. The country's largest banks suffered sizable
losses in 2008-09, leading its largest bank to accept a government
rescue deal in late 2008. Switzerland has also come under increasing
pressure from individual neighboring countries, the EU, the US, and
international institutions to reform its banking secrecy laws.
Consequently, the government agreed to conform to OECD regulations
on administrative assistance in tax matters, including tax evasion.
The government has renegotiated its double taxation agreements with
numerous countries, including the US, to incorporate the OECD
standard, and it is working with Germany and the UK to resolve
outsanding issues, particularly the possibility of imposing taxes on
bank deposits held by foreigners. Parliament passed the first five
double-taxation agreements, including that with the US, in March
2010, but the agreements are subject to public referendum. In 2009,
Swiss financial regulators ordered the country's largest bank to
reveal at Washington's behest the names of US account-holders
suspected of using the bank to commit tax fraud. These steps will
have a lasting impact on Switzerland's long history of bank secrecy.
Syria
Syrian economic growth slowed to 1.8% in 2009 as the global
economic crisis affected oil prices and the economies of Syria's key
export partners and sources of investment. Damascus has implemented
modest economic reforms in the past few years, including cutting
lending interest rates, opening private banks, consolidating all of
the multiple exchange rates, raising prices on some subsidized
items, most notably gasoline and cement, and establishing the
Damascus Stock Exchange - which began operations in 2009. In
addition, President ASAD signed legislative decrees to encourage
corporate ownership reform, and to allow the Central Bank to issue
Treasury bills and bonds for government debt. Nevertheless, the
economy remains highly controlled by the government. Long-run
economic constraints include declining oil production, high
unemployment, rising budget deficits, and increasing pressure on
water supplies caused by heavy use in agriculture, rapid population
growth, industrial expansion, and water pollution.
Taiwan
Taiwan has a dynamic capitalist economy with gradually
decreasing government guidance of investment and foreign trade. In
keeping with this trend, some large, state-owned banks and
industrial firms have been privatized. Exports, led by electronics
and machinery, generate about 70% of Taiwan's GDP growth, and have
provided the primary impetus for economic development. This heavy
dependence on exports makes the economy vulnerable to downturns in
world demand. In 2009, Taiwan's GDP fell by 1.9%, due primarily to a
20% year-on-year decline in exports. GDP grew more than 8% in 2010,
as exports returned to the level of previous years. Taiwan's
diplomatic isolation, low birth rate, and rapidly aging population
are major long-term challenges. Free trade agreements have
proliferated in East Asia over the past several years, but so far
Taiwan has been excluded from this greater economic integration,
largely for reasons of diplomacy. Taiwan's birth rate of only 1.2
child per woman is among the lowest in the world, raising the
prospect of future labor shortages, falling domestic demand, and
declining tax revenues. Taiwan's population is aging quickly, with
the number of people over 65 accounting for 10.8% of the island's
total population as of the end of 2009. The island runs a large
trade surplus, and its foreign reserves are the world's fourth
largest, behind China, Japan, and Russia. Since President MA
Ying-jeou took office in May 2008, cross-Strait economic ties have
increased significantly. Since 2005 China has overtaken the US to
become Taiwan's second-largest source of imports after Japan. China
is also the island's number one destination for foreign direct
investment. Taipei has focused much of its economic recovery effort
on improving cross-Strait economic integration. Three financial
memorandums of understanding, covering banking, securities, and
insurance, took effect in mid-January 2010, opening the island to
greater investments from the Mainland's financial firms and
institutional investors, and providing new opportunities for Taiwan
financial firms to operate in China. Taiwan and the mainland in June
2010 signed the landmark Economic Cooperation Framework Agreement
(ECFA), an agreement similar to a free-trade agreement deal that
will increase cross-Strait economic ties by lowering tariffs on a
number of goods. Taiwan's goverment has said that the ECFA will
serve as a stepping stone toward trade pacts with other regional
partners and announced the beginning of negotiations on such an
agreement with Singapore in August.
Tajikistan
Tajikistan has one of the lowest per capita GDPs among
the 15 former Soviet republics. Because of a lack of employment
opportunities in Tajikistan, nearly half of the labor force works
abroad, primarily in Russia and Kazakhstan, supporting families in
Tajikistan through remittances. The exact number of labor migrants
is unknown, but estimated at around 1 million. Less than 7% of the
land area is arable. Cotton is the most important crop, but this
sector is burdened with debt and obsolete infrastructure; moreover,
government has encouraged a gradual transition away from cotton and
towards food cultivation due to its concerns about feeding the
population. Mineral resources include silver, gold, uranium, and
tungsten. Industry consists only of a large aluminum plant,
hydropower facilities, and small obsolete factories mostly in light
industry and food processing. The civil war (1992-97) severely
damaged the already weak economic infrastructure and caused a sharp
decline in industrial and agricultural production. Tajikistan's
economic situation remains fragile due to uneven implementation of
structural reforms, corruption, weak governance, seasonal power
shortages, and the external debt burden. A debt restructuring
agreement was reached with Russia in December 2002, including a $250
million write-off of Tajikistan's $300 million debt. Completion of
the Sangtuda I hydropower dam - finished in 2009 with Russian
investment - and the Sangtuda II and Rogun dams will add
substantially to electricity output. If finished according to Tajik
plans, Rogun will be the world's tallest dam. The World Bank, in
2010, agreed to fund safety and feasibility studies for the Rogun
Dam. Favorable reports from these studies could increase investor
interest in the project, which has been stalled due to lack of
funding. Tajikistan has also received substantial infrastructure
development loans from the Chinese government to improve roads and
an electricity transmission network. To help increase north-south
trade, the US funded a $36 million bridge which opened in August
2007 and links Tajikistan and Afghanistan. While Tajikistan has
experienced steady economic growth since 1997, more than half of the
population continues to live in poverty. Economic growth reached
10.6% in 2004, but dropped below 8% in 2005-08, as the effects of
higher oil prices and then the international financial crisis began
to register - mainly in the form of lower prices for key export
commodities and lower remittances from Tajiks working abroad, due to
the global economic downturn. In 2009 GDP growth dropped to 3.4% as
a result of the world recession.
Tanzania
Tanzania is one of the world's poorest economies in terms
of per capita income, however, Tanzania average 7% GDP growth per
year between 2000 and 2008 on strong gold production and tourism.
The economy depends heavily on agriculture, which accounts for more
than one-fourth of GDP, provides 85% of exports, and employs about
60% of the work force. The World Bank, the IMF, and bilateral donors
have provided funds to rehabilitate Tanzania's aging economic
infrastructure, including rail and port infrastructure that are
important trade links for inland countries. Recent banking reforms
have helped increase private-sector growth and investment, and the
government has increased spending on agriculture to 7% of its
budget. Continued donor assistance and solid macroeconomic policies
supported a positive growth rate, despite the world recession. In
2008, Tanzania received the world's largest Millennium Challenge
Compact grant, worth $698 million. Dar es Salaam used fiscal
stimulus and loosened monitary policy to ease the impact of the
global recession. GDP growth in 2009-10 was a respectable 6% per
year due to high gold prices and increased production.
Thailand
With a well-developed infrastructure, a free-enterprise
economy, generally pro-investment policies, and strong export
industries, Thailand enjoyed solid growth from 2000 to 2008 -
averaging more than 4% per year - as it recovered from the Asian
financial crisis of 1997-98. Thai exports - mostly machinery and
electronic components, agricultural commodities, and jewelry -
continue to drive the economy, accounting for more than half of GDP.
The global financial crisis of 2008-09 severely cut Thailand's
exports, with most sectors experiencing double-digit drops. In 2009,
the economy contracted 2.2%. In 2010, Thailand's economy expanded
7.6%, its fastest pace since 1995, as exports rebounded from their
depressed 2009 level. Antigovernment protests during March-May and
the country's polarized political situation had - at most - a
temporary impact on business and consumer confidence. Although
tourism was hit hard during the protests, its quick recovery helped
boost consumer confidence to new highs. Moreover, business and
investor sentiment remained buoyant as Thailand's stock market grew
almost 5% during the three-month period. The economy probably will
continue to experience high grow well into 2011.
Timor-Leste
In late 1999, about 70% of the economic infrastructure
of Timor-Leste was laid waste by Indonesian troops and
anti-independence militias. Three hundred thousand people fled
westward. Over the next three years a massive international program,
manned by 5,000 peacekeepers (8,000 at peak) and 1,300 police
officers, led to substantial reconstruction in both urban and rural
areas. By the end of 2005, refugees had returned or had settled in
Indonesia. The country continues to face great challenges in
rebuilding its infrastructure, strengthening the civil
administration, and generating jobs for young people entering the
work force. The development of oil and gas resources in offshore
waters has greatly supplemented government revenues. This
technology-intensive industry, however, has done little to create
jobs for the unemployed because there are no production facilities
in Timor. Gas is piped to Australia. In June 2005, the National
Parliament unanimously approved the creation of a Petroleum Fund to
serve as a repository for all petroleum revenues and to preserve the
value of Timor-Leste's petroleum wealth for future generations. The
Fund held assets of US$5.3 billion as of October 2009. The economy
has been little impacted by the global financial crisis and
continues to recover strongly from the mid-2006 outbreak of violence
and civil unrest, which disrupted both private and public sector
economic activity. The government in 2008 resettled tens of
thousands of an estimated 100,000 internally displaced persons
(IDPs); most IDPs returned home by early 2009. The underlying
economic policy challenge the country faces remains how best to use
oil-and-gas wealth to lift the non-oil economy onto a higher growth
path and to reduce poverty.
Togo
This small, sub-Saharan economy suffers from anemic economic
growth and depends heavily on both commercial and subsistence
agriculture, which provides employment for 65% of the labor force.
Some basic foodstuffs must still be imported. Cocoa, coffee, and
cotton generate about 40% of export earnings with cotton being the
most important cash crop. Togo is the world's fourth-largest
producer of phosphate. The government's decade-long effort,
supported by the World Bank and the IMF, to implement economic
reform measures, encourage foreign investment, and bring revenues in
line with expenditures has moved slowly. Progress depends on follow
through on privatization, increased openness in government financial
operations, progress toward legislative elections, and continued
support from foreign donors. Togo is on track with its IMF Extended
Credit Facility and reached a HIPC debt relief completion point in
2010 at which 95% of the country's debt was forgiven. Economic
growth prospects remain marginal due to declining cotton production
and underinvestment in phosphate mining.
Tokelau
Tokelau's small size (three villages), isolation, and lack
of resources greatly restrain economic development and confine
agriculture to the subsistence level. The people rely heavily on aid
from New Zealand - about $10 million annually in 2008 and 2009 - to
maintain public services. New Zealand's support amounts to 80% of
Tokelau's recurrent government budget. An international trust fund,
currently worth nearly US$32 million, was established in 2004 to
provide Tokelau an independent source of revenue. The principal
sources of revenue come from sales of copra, postage stamps,
souvenir coins, and handicrafts. Money is also remitted to families
from relatives in New Zealand.
Tonga
Tonga has a small, open, South Pacific island economy. It has
a narrow export base in agricultural goods. Squash, vanilla beans,
and yams are the main crops. Agricultural exports, including fish,
make up two-thirds of total exports. The country must import a high
proportion of its food, mainly from New Zealand. The country remains
dependent on external aid and remittances from Tongan communities
overseas to offset its trade deficit. Tourism is the second-largest
source of hard currency earnings following remittances. Tonga had
39,000 visitors in 2006. The government is emphasizing the
development of the private sector, especially the encouragement of
investment, and is committing increased funds for health and
education. Tonga has a reasonably sound basic infrastructure and
well developed social services. High unemployment among the young, a
continuing upturn in inflation, pressures for democratic reform, and
rising civil service expenditures are major issues facing the
government.