Like many other South Pacific island nations, the Cook
Islands' economic development is hindered by the isolation of the
country from foreign markets, the limited size of domestic markets,
lack of natural resources, periodic devastation from natural
disasters, and inadequate infrastructure. Agriculture, employing
about 70% of the working population, provides the economic base with
major exports made up of copra and citrus fruit. Black pearls are
the Cook Island's leading export. Manufacturing activities are
limited to fruit processing, clothing, and handicrafts. Trade
deficits are offset by remittances from emigrants and by foreign
aid, overwhelmingly from New Zealand. In the 1980s and 1990s, the
country lived beyond its means, maintaining a bloated public service
and accumulating a large foreign debt. Subsequent reforms, including
the sale of state assets, the strengthening of economic management,
the encouragement of tourism, and a debt restructuring agreement,
have rekindled investment and growth.
Coral Sea Islands
no economic activity
Costa Rica
Costa Rica's basically stable economy depends on tourism,
agriculture, and electronics exports. Poverty has been substantially
reduced over the past 15 years, and a strong social safety net has
been put into place. Foreign investors remain attracted by the
country's political stability and high education levels, and tourism
continues to bring in foreign exchange. The government continues to
grapple with its large internal and external deficits and sizable
internal debt. The reduction of inflation remains a difficult
problem because of rising import prices, labor market rigidities,
and fiscal deficits. The country also needs to reform its tax system
and its pattern of public expenditure. The current administration
has made it a priority to pass the necessary reforms to implement
the US-Central American Free Trade Agreement (CAFTA). CAFTA
implementation would result in an improved investment climate.
Cote d'Ivoire
Cote d'Ivoire is among the world's largest producers
and exporters of coffee, cocoa beans, and palm oil. Consequently,
the economy is highly sensitive to fluctuations in international
prices for these products and weather conditions. Despite government
attempts to diversify the economy, it is still heavily dependent on
agriculture and related activities, engaging roughly 68% of the
population. Growth was negative in 2000-03 because of the difficulty
of meeting the conditions of international donors, continued low
prices of key exports, foreign divestment and civil war. Political
turmoil has continued to damage the economy since 2004, with a
rising risk premium associated with doing business in the country,
foreign investment shriveling, transportation costs increasing,
French businesses fleeing, and criminal elements that traffic in
weapons and diamonds gaining ground. The government will continue to
survive financially off of the sale of cocoa, which represents 90%
of foreign exchange earnings, but the government will probably lose
between 10% and 20% of its cocoa harvest to northern rebels who
smuggle the cocoa they control to neighboring countries where cocoa
prices are higher. The government remains hopeful that ongoing
exploration of Cote d'Ivoire's offshore oil reserves will result in
significant production that could boost daily crude output from
roughly 33,000 barrels per day (b/d) to more than 200,000 b/d by the
end of the decade.
Croatia
Before the dissolution of Yugoslavia, the Republic of
Croatia, after Slovenia, was the most prosperous and industrialized
area with a per capita output perhaps one-third above the Yugoslav
average. The economy emerged from a mild recession in 2000 with
tourism, banking, and public investments leading the way.
Unemployment remains high, at about 17%, with structural factors
slowing its decline. While macroeconomic stabilization has largely
been achieved, structural reforms lag because of deep resistance on
the part of the public and lack of strong support from politicians.
Growth, while impressive at about 3% to 4% for the last several
years, has been stimulated, in part, through high fiscal deficits
and rapid credit growth. The EU accession process should accelerate
fiscal and structural reform.
Cuba
The government continues to balance the need for economic
loosening against a desire for firm political control. It has rolled
back limited reforms undertaken in the 1990s to increase enterprise
efficiency and alleviate serious shortages of food, consumer goods,
and services. The average Cuban's standard of living remains at a
lower level than before the downturn of the 1990s, which was caused
by the loss of Soviet aid and domestic inefficiencies. In 2006, high
metals prices continued to boost Cuban earnings from nickel and
cobalt production. Havana continued to invest in the country's
energy sector to mitigate electrical blackouts that have plagued the
country since 2004.
Cyprus
The Republic of Cyprus has a market economy dominated by the
service sector, which accounts for 76% of GDP. Tourism and financial
services are the most important sectors; erratic growth rates over
the past decade reflect the economy's reliance on tourism, which
often fluctuates with political instability in the region and
economic conditions in Western Europe. Nevertheless, the economy
grew a healthy 3.7% per year in 2004 and 2005, well above the EU
average. Cyprus joined the European Exchange Rate Mechanism (ERM2)
in May 2005. The government has initiated an aggressive austerity
program, which has cut the budget deficit to below 3% but continued
fiscal discipline is necessary if Cyprus is to meet its goal of
adopting the euro on 1 January 2008. As in the area administered by
Turkish Cypriots, water shortages are a perennial problem; a few
desalination plants are now on line. After 10 years of drought, the
country received substantial rainfall from 2001-03 alleviating
immediate concerns. The Turkish Cypriot economy has roughly
one-third of the per capita GDP of the south, and economic growth
tends to be volatile, given north Cyprus's relative isolation,
bloated public sector, reliance on the Turkish lira, and small
market size. The Turkish Cypriot economy grew 15.4% in 2004, fueled
by growth in the construction and education sectors, as well as
increased employment of Turkish Cypriots in the Republic of Cyprus.
The Turkish Cypriots are heavily dependent on transfers from the
Turkish Government. Under the 2003-06 economic protocol, Ankara
planned to provide around $700 million to the "TRNC." Agriculture
and services, together, employ more than half of the work force.
Czech Republic
The Czech Republic is one of the most stable and
prosperous of the post-Communist states of Central and Eastern
Europe. Growth in 2000-05 was supported by exports to the EU,
primarily to Germany, and a strong recovery of foreign and domestic
investment. Domestic demand is playing an ever more important role
in underpinning growth as interest rates drop and the availability
of credit cards and mortgages increases. The current account deficit
has declined to around 3% of GDP as demand for Czech products in the
European Union has increased. Inflation is under control. Recent
accession to the EU gives further impetus and direction to
structural reform. In early 2004 the government passed increases in
the Value Added Tax (VAT) and tightened eligibility for social
benefits with the intention to bring the public finance gap down to
4% of GDP by 2006, but more difficult pension and healthcare reforms
will have to wait until after the next elections. Privatization of
the state-owned telecommunications firm Cesky Telecom took place in
2005. Intensified restructuring among large enterprises,
improvements in the financial sector, and effective use of available
EU funds should strengthen output growth.
Denmark
The Danish economy is undergoing strong expansion fueled by
private consumption growth, low unemployment, rising real wages, and
a strong increase in house prices. This thoroughly modern market
economy features high-tech agriculture, up-to-date small-scale and
corporate industry, extensive government welfare measures,
comfortable living standards, a stable currency, and high dependence
on foreign trade. Denmark is a net exporter of food and energy and
enjoys a comfortable balance of payments surplus. Government
objectives include streamlining the bureaucracy and further
privatization of state assets. The government has been successful in
meeting, and even exceeding, the economic convergence criteria for
participating in the third phase (a common European currency) of the
European Economic and Monetary Union (EMU), but Denmark has decided
not to join 12 other EU members in the euro. Nonetheless, the Danish
krone remains pegged to the euro. Economic growth gained momentum in
2004 and the upturn continued through 2006. Because of high GDP per
capita, welfare benefits, a low Gini index, and political stability,
the Danish people enjoy living standards topped by no other nation.
A major long-term issue will be the sharp decline in the ratio of
workers to retirees.
Dhekelia
Economic activity is limited to providing services to the
military and their families located in Dhekelia. All food and
manufactured goods must be imported.
Djibouti
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
northeast Africa. Two-thirds of the inhabitants live in the capital
city; the remainder are mostly nomadic herders. Scanty rainfall
limits crop production to fruits and vegetables, and most food must
be imported. Djibouti provides services as both a transit port for
the region and an international transshipment and refueling center.
Djibouti has few natural resources and little industry. The nation
is, therefore, heavily dependent on foreign assistance to help
support its balance of payments and to finance development projects.
An unemployment rate of at least 50% continues to be a major
problem. While inflation is not a concern, due to the fixed tie of
the Djiboutian franc to the US dollar, the artificially high value
of the Djiboutian franc adversely affects Djibouti's balance of
payments. Per capita consumption dropped an estimated 35% over the
last seven years because of recession, civil war, and a high
population growth rate (including immigrants and refugees). Faced
with a multitude of economic difficulties, the government has fallen
in arrears on long-term external debt and has been struggling to
meet the stipulations of foreign aid donors.
Dominica
The Dominican economy depends on agriculture, primarily
bananas, and remains highly vulnerable to climatic conditions and
international economic developments. Tourism has increased as the
government seeks to promote Dominica as an "ecotourism" destination.
Development of the tourism industry remains difficult, however,
because of the rugged coastline, lack of beaches, and the absence of
an international airport. The government began a comprehensive
restructuring of the economy in 2003 - including elimination of
price controls, privatization of the state banana company, and tax
increases - to address Dominica's economic crisis and to meet IMF
targets. In order to diversify the island's production base, the
government is attempting to develop an offshore financial sector and
is planning to construct an oil refinery on the eastern part of the
island.
Dominican Republic
The Dominican Republic is a Caribbean
representative democracy that enjoyed strong GDP growth until 2003.
Although the country has long been viewed primarily as an exporter
of sugar, coffee, and tobacco, in recent years the service sector
has overtaken agriculture as the economy's largest employer due to
growth in tourism and free trade zones. Growth turned negative in
2003 with reduced tourism, a major bank fraud, and limited growth in
the US economy (the source of about 80% of export revenues), but
recovered in 2004-06. With the help of strict fiscal targets agreed
in the 2004 renegotiation of an IMF standby loan, President
FERNANDEZ has stabilized the country's financial situation. Although
the economy continues to grow at a respectable rate, high
unemployment and inflation remain important challenges. The country
suffers from marked income inequality; the poorest half of the
population receives less than one-fifth of GNP, while the richest
10% enjoys nearly 40% of national income. The Dominican Republic's
development prospects improved with the ratification of the Central
America-Dominican Republic Free Trade Agreement (CAFTA-DR) in
September 2005.
East Timor
In late 1999, about 70% of the economic infrastructure of
East Timor was laid waste by Indonesian troops and anti-independence
militias, and 300,000 people fled westward. Over the next three
years, however, 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, all refugees either returned or resettled in Indonesia. The
country faces great challenges in continuing the rebuilding of
infrastructure, strengthening the infant civil administration, and
generating jobs for young people entering the work force. The
development of oil and gas resources in nearby waters has begun to
supplement government revenues ahead of schedule and above
expectations - the result of high petroleum prices - but the
technology-intensive industry does little to create jobs for the
unemployed, because there are no production facilities in Timor and
the gas is piped to Australia. The parliament in June 2005
unanimously approved the creation of a Petroleum Fund to serve as a
repository for all petroleum revenues and preserve the value of East
Timor's petroleum wealth for future generations.
Ecuador
Ecuador has substantial petroleum resources, which have
accounted for 40% of the country's export earnings and one-third of
central government budget revenues in recent years. Consequently,
fluctuations in world market prices can have a substantial domestic
impact. In the late 1990s, Ecuador suffered its worst economic
crisis, with natural disasters and sharp declines in world petroleum
prices driving Ecuador's economy into free fall in 1999. Real GDP
contracted by more than 6%, with poverty worsening significantly.
The banking system also collapsed, and Ecuador defaulted on its
external debt later that year. The currency depreciated by some 70%
in 1999, and, on the brink of hyperinflation, the MAHAUD government
announced it would dollarize the economy. A coup, however, ousted
MAHAUD from office in January 2000, and after a short-lived junta
failed to garner military support, Vice President Gustavo NOBOA took
over the presidency. In March 2000, Congress approved a series of
structural reforms that also provided the framework for the adoption
of the US dollar as legal tender. Dollarization stabilized the
economy, and growth returned to its pre-crisis levels in the years
that followed. Under the administration of Lucio GUTIERREZ - January
2003 to April 2005 - Ecuador benefited from higher world petroleum
prices. However, the government under Alfredo PALACIO has reversed
economic reforms that reduced Ecuador's vulnerability to petroleum
price swings and financial crises, allowing the central government
greater access to oil windfalls and disbursing surplus retirement
funds.
Egypt
Occupying the northeast corner of the African continent, Egypt
is bisected by the highly fertile Nile valley, where most economic
activity takes place. In the last 30 years, the government has
reformed the highly centralized economy it inherited from President
NASSER. In 2005, Prime Minister Ahmed NAZIF reduced personal and
corporate tax rates, reduced energy subsidies, and privatized
several enterprises. The stock market boomed, and GDP grew about 5%
per year in 2005-06. Despite these achievements, the government has
failed to raise living standards for the average Egyptian, and has
had to continue providing subsidies for basic necessities. The
subsidies have contributed to a growing budget deficit - more than
10% of GDP each year - and represent a significant drain on the
economy. Foreign direct investment remains low. To achieve higher
GDP growth the NAZIF government will need to continue its aggressive
pursuit of reform, especially in the energy sector. Egypt's export
sectors - particularly natural gas - have bright prospects.
El Salvador
The smallest country in Central America, El Salvador has
the third largest economy, but growth has been minimal in recent
years. Hoping to stimulate the sluggish economy, the government is
striving to open new export markets, encourage foreign investment,
and modernize the tax and healthcare systems. Implementation in 2006
of the Central America-Dominican Republic Free Trade Agreement,
which El Salvador was the first to ratify, has strenthened an
already positive export trend. The trade deficit has been offset by
annual remittances from Salvadorans living abroad - equivalent to
more than 15% of GDP - and external aid. With the adoption of the US
dollar as its currency in 2001, El Salvador has lost control over
monetary policy and must concentrate on maintaining a disciplined
fiscal policy. The current government has pursued economic
diversification, with some success in promoting textile production,
international port services, and tourism. It is committed to opening
the economy to trade and investment, and has embarked on a wave of
privatizations extending to telecom, electricity distribution,
banking, and pension funds.
Equatorial Guinea
The discovery and exploitation of large oil
reserves have contributed to dramatic economic growth in recent
years. Forestry, farming, and fishing are also major components of
GDP. Subsistence farming predominates. Although pre-independence
Equatorial Guinea counted on cocoa production for hard currency
earnings, the neglect of the rural economy under successive regimes
has diminished potential for agriculture-led growth (the government
has stated its intention to reinvest some oil revenue into
agriculture). A number of aid programs sponsored by the World Bank
and the IMF have been cut off since 1993, because of corruption and
mismanagement. No longer eligible for concessional financing because
of large oil revenues, the government has been trying to agree on a
"shadow" fiscal management program with the World Bank and IMF.
Businesses, for the most part, are owned by government officials and
their family members. Undeveloped natural resources include
titanium, iron ore, manganese, uranium, and alluvial gold. Growth
remained strong in 2006, led by oil. Equatorial Guinea now has the
third highest per capita income in the world, after Luxembourg and
Bermuda.
Eritrea
Since independence from Ethiopia in 1993, Eritrea has faced
the economic problems of a small, desperately poor country. Like the
economies of many African nations, the economy is largely based on
subsistence agriculture, with 80% of the population involved in
farming and herding. The Ethiopian-Eritrea war in 1998-2000 severely
hurt Eritrea's economy. GDP growth fell to zero in 1999 and to
-12.1% in 2000. The May 2000 Ethiopian offensive into northern
Eritrea caused some $600 million in property damage and loss,
including losses of $225 million in livestock and 55,000 homes. The
attack prevented planting of crops in Eritrea's most productive
region, causing food production to drop by 62%. Even during the war,
Eritrea developed its transportation infrastructure, asphalting new
roads, improving its ports, and repairing war-damaged roads and
bridges. Since the war ended, the government has maintained a firm
grip on the economy, expanding the use of the military and
party-owned businesses to complete Eritrea's development agenda.
Erratic rainfall and the delayed demobilization of agriculturalists
from the military kept cereal production well below normal, holding
down growth in 2002-06. Eritrea's economic future depends upon its
ability to master social problems such as illiteracy, unemployment,
and low skills, as well as the willingness to open its economy to
private enterprise so that the diaspora's money and expertise can
foster economic growth.
Estonia
Estonia, as a new member of the World Trade Organization and
the European Union, has transitioned effectively to a modern market
economy with strong ties to the West, including the pegging of its
currency to the euro. The economy benefits from strong electronics
and telecommunications sectors and is greatly influenced by
developments in Finland, Sweden, and Germany, three major trading
partners. The current account deficit remains high; however, the
state budget is essentially in balance, and public debt is low.
Ethiopia
Ethiopia's poverty-stricken economy is based on
agriculture, accounting for half of GDP, 60% of exports, and 80% of
total employment. The agricultural sector suffers from frequent
drought and poor cultivation practices. Coffee is critical to the
Ethiopian economy with exports of some $156 million in 2002, but
historically low prices have seen many farmers switching to qat to
supplement income. The war with Eritrea in 1998-2000 and recurrent
drought have buffeted the economy, in particular coffee production.
In November 2001, Ethiopia qualified for debt relief from the Highly
Indebted Poor Countries (HIPC) initiative, and in December 2005 the
International Monetary Fund voted to forgive Ethiopia's debt to the
body. Under Ethiopia's land tenure system, the government owns all
land and provides long-term leases to the tenants; the system
continues to hamper growth in the industrial sector as entrepreneurs
are unable to use land as collateral for loans. Drought struck again
late in 2002, leading to a 2% decline in GDP in 2003. Normal weather
patterns helped agricultural and GDP growth recover in 2004-06.
Europa Island
no economic activity
European Union
Internally, the European Union attempts to lower
trade barriers, adopt a common currency, and move toward convergence
of living standards. Internationally, the EU aims to bolster
Europe's trade position and its political and economic power.
Because of the great differences in per capita income among member
states (from $8,000 to $61,000) and historic national animosities,
the European Union faces difficulties in devising and enforcing
common policies. For example, since 2003 Germany and France have
flouted the member states' treaty obligation to prevent their
national budgets from running more than a 3% deficit. In 2004 and
2007, the EU admitted 10 and two countries, respectively, that are,
in general, less advanced technologically and economically than the
other 15. Twelve established EU member states introduced the euro as
their common currency on 1 January 1999, but the UK, Sweden, and
Denmark chose not to participate. Of the 12 most recent member
states, only Slovenia has adopted the euro (1 January 2007); the
remaining eleven are legally required to adopt the currency upon
meeting EU's fiscal and monetary convergence criteria.
Falkland Islands (Islas Malvinas)
The economy was formerly based on
agriculture, mainly sheep farming, but today fishing contributes the
bulk of economic activity. In 1987 the government began selling
fishing licenses to foreign trawlers operating within the Falkland
Islands' exclusive fishing zone. These license fees total more than
$40 million per year, which goes to support the island's health,
education, and welfare system. Squid accounts for 75% of the fish
taken. Dairy farming supports domestic consumption; crops furnish
winter fodder. Exports feature shipments of high-grade wool to the
UK and the sale of postage stamps and coins. The islands are now
self-financing except for defense. The British Geological Survey
announced a 200-mile oil exploration zone around the islands in
1993, and early seismic surveys suggest substantial reserves capable
of producing 500,000 barrels per day; to date, no exploitable site
has been identified. An agreement between Argentina and the UK in
1995 seeks to defuse licensing and sovereignty conflicts that would
dampen foreign interest in exploiting potential oil reserves.
Tourism, especially eco-tourism, is increasing rapidly, with about
30,000 visitors in 2001. Another large source of income is interest
paid on money the government has in the bank. The British military
presence also provides a sizeable economic boost.
Faroe Islands
The Faroese economy has had a strong performance since
1994, mostly as a result of increasing fish landings and high and
stable export prices. Unemployment is minimal and there are signs of
labor shortages in several sectors. The positive economic
development has helped the Faroese Home Rule Government produce
increasing budget surpluses, which in turn have helped reduce the
large public debt, most of it owed to Denmark. However, the total
dependence on fishing makes the Faroese economy extremely
vulnerable, and the present fishing efforts appear in excess of what
is a sustainable level of fishing in the long term. Oil finds close
to the Faroese area give hope for deposits in the immediate Faroese
area, which may eventually lay the basis for a more diversified
economy and thus lessen dependence on Danish economic assistance.
Aided by a substantial annual subsidy (about 15% of GDP) from
Denmark, the Faroese have a standard of living not far below the
Danes and other Scandinavians.
Fiji
Fiji, endowed with forest, mineral, and fish resources, is one
of the most developed of the Pacific island economies, though still
with a large subsistence sector. Sugar exports, remittances from
Fijians working abroad, and a growing tourist industry - with
300,000 to 400,000 tourists annually - are the major sources of
foreign exchange. Fiji's sugar has special access to European Union
markets, but will be harmed by the EU's decision to cut sugar
subsidies. Sugar processing makes up one-third of industrial
activity but is not efficient. Fiji's tourism industry was damaged
by the 2006 coup and is facing an uncertain recovery time. Long-term
problems include low investment, uncertain land ownership rights,
and the government's ability to manage its budget. Overseas
remittances from Fijians working in Kuwait and Iraq have increased
significantly.
Finland
Finland has a highly industrialized, largely free-market
economy with per capita output roughly that of the UK, France,
Germany, and Italy. Its key economic sector is manufacturing -
principally the wood, metals, engineering, telecommunications, and
electronics industries. Trade is important; exports equal two-fifths
of GDP. Finland excels in high-tech exports, e.g., mobile phones.
Except for timber and several minerals, Finland depends on imports
of raw materials, energy, and some components for manufactured
goods. Because of the climate, agricultural development is limited
to maintaining self-sufficiency in basic products. Forestry, an
important export earner, provides a secondary occupation for the
rural population. High unemployment remains a persistent problem.
France
France is in the midst of transition from a well-to-do modern
economy that has featured extensive government ownership and
intervention to one that relies more on market mechanisms. The
government has partially or fully privatized many large companies,
banks, and insurers. It retains controlling stakes in several
leading firms, including Air France, France Telecom, Renault, and
Thales, and is dominant in some sectors, particularly power, public
transport, and defense industries. The telecommunications sector is
gradually being opened to competition. France's leaders remain
committed to a capitalism in which they maintain social equity by
means of laws, tax policies, and social spending that reduce income
disparity and the impact of free markets on public health and
welfare. The government in 2006 focused on introducing measures that
attempt to boost employment through increased labor market
flexibility; however, the population has remained opposed to labor
reforms, hampering the government's ability to revitalize the
economy. The tax burden remains one of the highest in Europe (nearly
50% of GDP in 2005). The lingering economic slowdown and inflexible
budget items probably pushed the budget deficit above the eurozone's
3%-of-GDP limit in 2006; unemployment hovers near 9%.
French Polynesia
Since 1962, when France stationed military
personnel in the region, French Polynesia has changed from a
subsistence agricultural economy to one in which a high proportion
of the work force is either employed by the military or supports the
tourist industry. With the halt of French nuclear testing in 1996,
the military contribution to the economy fell sharply. Tourism
accounts for about one-fourth of GDP and is a primary source of hard
currency earnings. Other sources of income are pearl farming and
deep-sea commercial fishing. The small manufacturing sector
primarily processes agricultural products. The territory benefits
substantially from development agreements with France aimed
principally at creating new businesses and strengthening social
services.
French Southern and Antarctic Lands
Economic activity is limited to
servicing meteorological and geophysical research stations and
French and other fishing fleets. The fish catches landed on Iles
Kerguelen by foreign ships are exported to France and Reunion.
Gabon
Gabon enjoys a per capita income four times that of most of
sub-Saharan African nations. This has supported a sharp decline in
extreme poverty; yet, because of high income inequality, a large
proportion of the population remains poor. Gabon depended on timber
and manganese until oil was discovered offshore in the early 1970s.
The oil sector now accounts for 50% of GDP. Gabon continues to face
fluctuating prices for its oil, timber, and manganese exports.
Despite the abundance of natural wealth, poor fiscal management
hobbles the economy. Devaluation of its currency by 50% in January
1994 sparked a one-time inflationary surge, to 35%; the rate dropped
to 6% in 1996. The IMF provided a one-year standby arrangement in
1994-95, a three-year Enhanced Financing Facility (EFF) at near
commercial rates beginning in late 1995, and stand-by credit of $119
million in October 2000. Those agreements mandated progress in
privatization and fiscal discipline. France provided additional
financial support in January 1997 after Gabon met IMF targets for
mid-1996. In 1997, an IMF mission to Gabon criticized the government
for overspending on off-budget items, overborrowing from the central
bank, and slipping on its schedule for privatization and
administrative reform. The rebound of oil prices in 1999-2000 helped
growth, but drops in production hampered Gabon from fully realizing
potential gains. In December 2000, Gabon signed a new agreement with
the Paris Club to reschedule its official debt. A follow-up
bilateral repayment agreement with the US was signed in December
2001. Gabon signed a 14-month Stand-By Arrangement with the IMF in
May 2004, and received Paris Club debt rescheduling later that year.
Short-term progress depends on an upbeat world economy and fiscal
and other adjustments in line with IMF policies.
Gambia, The
The Gambia has no confirmed mineral or natural resource
deposits and has a limited agricultural base. About 75% of the
population depends on crops and livestock for its livelihood.
Small-scale manufacturing activity features the processing of
peanuts, fish, and hides. Reexport trade normally constitutes a
major segment of economic activity, but a 1999 government-imposed
preshipment inspection plan, and instability of the Gambian dalasi
(currency) have drawn some of the reexport trade away from The
Gambia. The Gambia's natural beauty and proximity to Europe has made
it one of the larger markets for tourism in West Africa. The
government's 1998 seizure of the private peanut firm Alimenta
eliminated the largest purchaser of Gambian groundnuts. Despite an
announced program to begin privatizing key parastatals, no plans
have been made public that would indicate that the government
intends to follow through on its promises. Unemployment and
underemployment rates remain extremely high; short-run economic
progress depends on sustained bilateral and multilateral aid, on
responsible government economic management, on continued technical
assistance from the IMF and bilateral donors, and on expected growth
in the construction sector.
Gaza Strip
High population density, limited land access, and strict
internal and external security controls have kept economic
conditions in the Gaza Strip - the smaller of the two areas under
the Palestinian Authority (PA)- even more degraded than in the West
Bank. The beginning of the second intifadah in September 2000
sparked an economic downturn, largely the result of Israeli closure
policies; these policies, which were imposed to address security
concerns in Israel, disrupted labor and trade access to and from the
Gaza Strip. In 2001, and even more severely in 2003, Israeli
military measures in PA areas resulted in the destruction of
capital, the disruption of administrative structures, and widespread
business closures. The Israeli withdrawal from the Gaza Strip in
September 2005 offered some medium-term opportunities for economic
growth, which have not yet been realized due to Israeli military
activities in the Gaza Strip in 2006, continued crossings closures,
and the international community's financial embargo of the PA after
HAMAS took office in March 2006.
Georgia
Georgia's main economic activities include the cultivation
of agricultural products such as grapes, citrus fruits, and
hazelnuts; mining of manganese and copper; and output of a small
industrial sector producing alcoholic and nonalcoholic beverages,
metals, machinery, and chemicals. The country imports the bulk of
its energy needs, including natural gas and oil products. It has
sizeable but underdeveloped hydropower capacity. Despite the severe
damage the economy has suffered due to civil strife, Georgia, with
the help of the IMF and World Bank, has made substantial economic
gains since 2000, achieving positive GDP growth and curtailing
inflation. Georgia had suffered from a chronic failure to collect
tax revenues; however, the new government is making progress and has
reformed the tax code, improved tax administration, increased tax
enforcement, and cracked down on corruption. In addition, the
reinvigorated privatization process has met with success,
supplementing government expenditures on infrastructure, defense,
and poverty reduction. Despite customs and financial (tax)
enforcement improvements, smuggling is a drain on the economy.
Georgia also suffers from energy shortages due to aging and badly
maintained infrastructure, as well as poor management. Due to
concerted reform efforts, collection rates have improved
considerably to roughly 60%, both in T'bilisi and throughout the
regions. Continued reform in the management of state-owned power
entities is essential to successful privatization and onward
sustainability in this sector. The country is pinning its hopes for
long-term growth on its role as a transit state for pipelines and
trade. The construction on the Baku-T'bilisi-Ceyhan oil pipeline and
the Baku-T'bilisi-Erzerum gas pipeline have brought much-needed
investment and job opportunities. Nevertheless, high energy prices
have compounded the pressure on the country's inefficient energy
sector. Restructuring the sector and finding energy supply
alternatives to Russia remain major challenges.
Germany
Germany's affluent and technologically powerful economy -
the fifth largest in the world - has become one of the slowest
growing economies in the euro zone. A quick turnaround is not in the
offing in the foreseeable future; however, stronger growth this year
has improved employment considerably. Growth in 2001-03 fell short
of 1%, rising to 1.7% in 2004, falling back to 0.9% in 2005, and
increasing to 2.2% in 2006. Unemployment fell to 7.1% in October
2006, based on the Internation Labor Organization's measurement. The
modernization and integration of the eastern German economy
continues to be a costly long-term process, with annual transfers
from west to east amounting to roughly $70 billion. Germany's aging
population, combined with high chronic unemployment, has pushed
social security outlays to a level exceeding contributions from
workers. Structural rigidities in the labor market - including
strict regulations on laying off workers and the setting of wages on
a national basis - and a lack of competition in the sevice sectors
have made slow growth a chronic problem. Corporate restructuring and
growing capital markets are setting the foundations that could help
Germany meet the long-term challenges of European economic
integration and globalization; however, the current government has
failed to pass meaningful economic reform that would improve growth
prospects. Higher government revenues from the cyclical upturn in
2006 reduced Germany's budget deficit to within the EU's 3% debt
limit.
Ghana
Well endowed with natural resources, Ghana has roughly twice
the per capita output of the poorest countries in West Africa. Even
so, Ghana remains heavily dependent on international financial and
technical assistance. Gold, timber, and cocoa production are major
sources of foreign exchange. The domestic economy continues to
revolve around subsistence agriculture, which accounts for 34% of
GDP and employs 60% of the work force, mainly small landholders.
Ghana opted for debt relief under the Heavily Indebted Poor Country
(HIPC) program in 2002, but was included in a G-8 debt relief
program decided upon at the Gleneagles Summit in July 2005.
Priorities under its current $38 million Poverty Reduction and
Growth Facility (PRGF) include tighter monetary and fiscal policies,
accelerated privatization, and improvement of social services.
Receipts from the gold sector helped sustain GDP growth in 2006
along with record high prices for Ghana's largest cocoa crop to
date. Ghana received a Millennium Challenge Corporation (MCC) grant
in 2006, which aims to assist in transforming Ghana's agricultural
export sector.
Gibraltar
Self-sufficient Gibraltar benefits from an extensive
shipping trade, offshore banking, and its position as an
international conference center. The British military presence has
been sharply reduced and now contributes about 7% to the local
economy, compared with 60% in 1984. The financial sector, tourism
(almost 5 million visitors in 1998), shipping services fees, and
duties on consumer goods also generate revenue. The financial
sector, the shipping sector, and tourism each contribute 25%-30% of
GDP. Telecommunications accounts for another 10%. In recent years,
Gibraltar has seen major structural change from a public to a
private sector economy, but changes in government spending still
have a major impact on the level of employment.
Glorioso Islands
no economic activity
Greece
Greece has a capitalist economy with the public sector
accounting for about 40% of GDP and with per capita GDP at least 75%
of the leading euro-zone economies. Tourism provides 15% of GDP.
Immigrants make up nearly one-fifth of the work force, mainly in
menial jobs. Greece is a major beneficiary of EU aid, equal to about
3.3% of annual GDP. The Greek economy grew by nearly 4.0% per year
between 2003 and 2006, largely because of an investment boom and
infrastructure upgrades for the 2004 Athens Olympic Games. Greece
has not met the EU's Growth and Stability Pact budget deficit
criteria of 3% of GDP since 2000. Public debt, inflation, and
unemployment are above the euro-zone average. To overcome these
challenges, the Greek Government is expected to continue cutting
government spending, reducing the size of the public sector, and
reforming the labor and pension systems, despite vocal opposition
from the country's powerful labor unions and the general public.
Greenland
The economy remains critically dependent on exports of
fish and substantial support from the Danish Government, which
supplies about half of government revenues. The public sector,
including publicly-owned enterprises and the municipalities, plays
the dominant role in the economy. Despite several interesting
hydrocarbon and mineral exploration activities, it will take a
number of years before production can materialize. Tourism is the
only sector offering any near-term potential, and even this is
limited due to a short season and high costs.
Grenada
Grenada relies on tourism as its main source of foreign
exchange, especially since the construction of an international
airport in 1985. Strong performances in construction and
manufacturing, together with the development of an offshore
financial industry, have also contributed to growth in national
output.
Guam
The economy depends largely on US military spending and
tourism. Total US grants, wage payments, and procurement outlays
amounted to $1.3 billion in 2004. Over the past 30 years, the
tourist industry has grown to become the largest income source
following national defense. The Guam economy continues to experience
expansion in both its tourism and military sectors.
Guatemala
Guatemala is the largest and most populous of the Central
American countries with a GDP per capita roughly one-half that of
Brazil, Argentina, and Chile. The agricultural sector accounts for
about one-fourth of GDP, two-fifths of exports, and half of the
labor force. Coffee, sugar, and bananas are the main products. The
1996 signing of peace accords, which ended 36 years of civil war,
removed a major obstacle to foreign investment, and Guatemala since
then has pursued important reforms and macroeconomic stabilization.
The distribution of income remains highly unequal with about 75% of
the population below the poverty line. Other ongoing challenges
include increasing government revenues, negotiating further
assistance from international donors, upgrading both government and
private financial operations, curtailing drug trafficking, and
narrowing the trade deficit. Remittances from a large expatriate
community that moved to the United States during the war have become
an important source of foreign exchange.
Guernsey
Financial services - banking, fund management, insurance -
account for about 23% of employment and 32% of total income in this
tiny, prosperous Channel Island economy. Tourism, manufacturing, and
horticulture, mainly tomatoes and cut flowers, have been declining.
Financial services, construction, retail, and the public sector have
been growing. Light tax and death duties make Guernsey a popular tax
haven. The evolving economic integration of the EU nations is
changing the environment under which Guernsey operates.
Guinea
Guinea possesses major mineral, hydropower, and agricultural
resources, yet remains an underdeveloped nation. The country
possesses almost half of the world's bauxite reserves and is the
second-largest bauxite producer. The mining sector accounts for over
70% of exports. Long-run improvements in government fiscal
arrangements, literacy, and the legal framework are needed if the
country is to move out of poverty. Fighting along the Sierra Leonean
and Liberian borders, as well as refugee movements, have caused
major economic disruptions, aggravating a loss in investor
confidence. Panic buying has created food shortages and inflation
and caused riots in local markets. Guinea is trying to reengage with
the IMF and World Bank, which cut off most assistance in 2003.
Growth rose slightly in 2006, primarily due to increases in global
demand and commodity prices on world markets, but the standard of
living fell. The Guinea franc depreciated sharply as the prices for
basic necessities like food and fuel rose beyond the reach of most
Guineans. Dissatisfaction with economic conditions prompted
nationwide strikes in February and June 2006.
Guinea-Bissau
One of the 10 poorest countries in the world,
Guinea-Bissau depends mainly on farming and fishing. Cashew crops
have increased remarkably in recent years, and the country now ranks
sixth in cashew production. Guinea-Bissau exports fish and seafood
along with small amounts of peanuts, palm kernels, and timber. Rice
is the major crop and staple food. However, intermittent fighting
between Senegalese-backed government troops and a military junta
destroyed much of the country's infrastructure and caused widespread
damage to the economy in 1998; the civil war led to a 28% drop in
GDP that year, with partial recovery in 1999-2002. Before the war,
trade reform and price liberalization were the most successful part
of the country's structural adjustment program under IMF
sponsorship. The tightening of monetary policy and the development
of the private sector had also begun to reinvigorate the economy.
Because of high costs, the development of petroleum, phosphate, and
other mineral resources is not a near-term prospect. However,
offshore oil prospecting has begun and could lead to much-needed
revenue in the long run. The inequality of income distribution is
one of the most extreme in the world. The government and
international donors continue to work out plans to forward economic
development from a lamentably low base. In December 2003, the World
Bank, IMF, and UNDP were forced to step in to provide emergency
budgetary support in the amount of $107 million for 2004,
representing over 80% of the total national budget. Government drift
and indecision, however, have resulted in continued low growth in
2002-06.
Guyana
The Guyanese economy exhibited moderate economic growth in
2001-02, based on expansion in the agricultural and mining sectors,
a more favorable atmosphere for business initiatives, a more
realistic exchange rate, fairly low inflation, and the continued
support of international organizations. 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. The InterAmerican Development
Bank in November 2006 canceled Guyana's nearly $400 million debt
with the Bank. The bauxite mining sector should benefit in the near
term from restructuring and partial privatization. Export earnings
from agriculture and mining have fallen sharply, while the import
bill has risen, driven by higher energy prices. Guyana's entrance
into the Caricom Single Market and Economy (CSME) in January 2006
will broaden the country's export market, primarily in the raw
materials sector.
Haiti
Haiti is the poorest country in the Western Hemisphere, with
80% of the population living under the poverty line and 54% in
abject poverty. Two-thirds of all Haitians depend on the agriculture
sector, mainly small-scale subsistence farming, and remain
vulnerable to damage from frequent natural disasters, exacerbated by
the country's widespread deforestation. A macroeconomic program
developed in 2005 with the help of the International Monetary Fund
helped the economy grow 1.8% in 2006, the highest growth rate since
1999. Haiti suffers from higher inflation than similar low-income
countries, a lack of investment, and a severe trade deficit. In
2005, Haiti paid its arrears to the World Bank, paving the way for
reengagement with the Bank. The government relies on formal
international economic assistance for fiscal sustainability. In
2006, Haiti held a successful donors conference in which the total
aid pledged exceeded Haiti's request. Remittances are the primary
source of foreign exchange, equaling nearly a quarter of GDP.
Heard Island and McDonald Islands
No indigenous economic activity,
but the Australian Government allows limited fishing around the
islands.
Holy See (Vatican City)
This unique, noncommercial economy is
supported financially by an annual contribution from Roman Catholic
dioceses throughout the world (known as Peter's Pence); by the sale
of postage stamps, coins, medals, and tourist mementos; by fees for
admission to museums; and by the sale of publications. Investments
and real estate income also account for a sizable portion of
revenue. 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 and
one of the poorest countries in the Western Hemisphere, with an
extraordinarily unequal distribution of income and massive
unemployment, is banking on expanded trade under the US-Central
America Free Trade Agreement (CAFTA) and on debt relief under the
Heavily Indebted Poor Countries (HIPC) initiative. The country has
met most of its macroeconomic targets, and began a three-year IMF
Poverty Reduction and Growth Facility (PGRF) program in February
2004. The economy relies heavily on a narrow range of exports,
notably bananas and coffee, making it vulnerable to natural
disasters and shifts in commodity prices, but in recent years has
experienced a rapid rise in exports of light manufacturers. Growth
remains dependent on the economy of the US, its largest trading
partner, and on reduction of the high crime rate, as a means of
attracting and maintaining investment.
Hong Kong
Hong Kong has a free market economy highly dependent on
international trade. The territory has become more closely linked to
mainland China over the past few years. Even before Hong Kong
reverted to Chinese administration on 1 July 1997, it had extensive
trade and investment ties with China. Hong Kong's service industry
over the past decade has grown rapidly as its manufacturing industry
has moved to the mainland. Hong Kong also has stepped up its efforts
to gain approval to offer more mainland financial services in a bid
to remain competitive with China's growing financial centers. Hong
Kong's natural resources are limited, and food and raw materials
must be imported. Gross imports and exports (i.e., including
reexports to and from third countries) each exceed GDP in dollar
value. Per capita GDP exceeds that of the four big economies of
Western Europe. GDP growth averaged a strong 5% from 1989 to 2006,
but Hong Kong suffered two recessions in the past eight years
because of the Asian financial crisis in 1997-1998 and the global
downturn in 2001-2002. Although the Severe Acute Respiratory
Syndrome (SARS) outbreak in 2003 also battered Hong Kong's economy,
a solid rise in exports, a boom in tourism from the mainland because
of China's easing of travel restrictions, and a return of consumer
confidence resulted in the resumption of strong growth from late
2003 through 2006. Moreover, several large initial public offerings
of Chinese companies on the Hong Kong stock exchange since late 2005
have helped to boost Hong Kong's status as a financial hub and have
contributed to the improved performance of the market in late 2006.
Howland Island
no economic activity
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. Hungary continues to demonstrate strong economic
growth and acceded to the EU in May 2004. The private sector
accounts for over 80% of GDP. Foreign ownership of and investment in
Hungarian firms are widespread, with cumulative foreign direct
investment totaling more than $60 billion since 1989. Hungarian
sovereign debt was upgraded in 2000 - together with the Czech
Republic, Hungary holds the highest rating among the Central
European transition economies. Rating agencies, however, have
expressed concerns over Hungary's fiscal and current account
deficits. Inflation has declined from 14% in 1998 to 3.7% in 2006.
Unemployment has persisted above 6%. Hungary's labor force
participation rate of 57% is one of the lowest in the Organization
for Economic Cooperation and Development (OECD). Germany is by far
Hungary's largest economic partner. Policy challenges include
cutting the public sector deficit to 3% of GDP by 2008, from about
6.5% in 2006, and orchestrating an orderly interest rate reduction
without sparking capital outflows.
Iceland
Iceland's Scandinavian-type economy is basically
capitalistic, yet with an extensive welfare system (including
generous housing subsidies), low unemployment, and remarkably even
distribution of income. In the absence of other natural resources
(except for abundant geothermal power), the economy depends heavily
on the fishing industry, which provides nearly 60% of export
earnings and employs 6% of the work force. The economy 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. Government policies include reducing the current
account deficit, limiting foreign borrowing, containing inflation,
revising agricultural and fishing policies, and diversifying the
economy. The government remains opposed to EU membership, primarily
because of Icelanders' concern about losing control over their
fishing resources. Iceland's economy has been diversifying into
manufacturing and service industries in the last decade, and new
developments in software production, biotechnology, and financial
services are taking place. The tourism sector is also expanding,
with the recent trends in ecotourism and whale watching. Since 2000
growth has varied from a -1% in 2002 to 8% in 2004.
Iles Eparses
no economic activity
India
India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern
industries, and a multitude of services. Services are the major
source of economic growth, accounting for more than half of India's
output with less than one quarter of its labor force. About
three-fifths of the work force is in agriculture, leading the UPA
government to articulate an economic reform program that includes
developing basic infrastructure to improve the lives of the rural
poor and boost economic performance. The government has reduced
controls on foreign trade and investment. Tariffs averaged 12.5% on
non-agricultural items in 2006. Higher limits on foreign direct
investment were permitted in a few key sectors, such as
telecommunications. However, tariff spikes in sensitive categories,
including agriculture, and incremental progress on economic reforms
still hinder foreign access to India's vast and growing market.
Privatization of government-owned industries remained stalled in
2006, and continues to generate political debate; populist pressure
from within the UPA government and from its Left Front allies
continues to restrain needed initiatives. The economy has posted an
average growth rate of more than 7% in the decade since 1996,
reducing poverty by about 10 percentage points. India achieved 8.5%
GDP growth in 2006, significantly expanding manufacturing. India is
capitalizing on its large numbers of well-educated people skilled in
the English language to become a major exporter of software services
and software workers. Economic expansion has helped New Delhi
continue to make progress in reducing its federal fiscal deficit.
However, strong growth - more than 8 percent growth in each of the
last three years - combined with easy consumer credit and a real
estate boom is fueling inflation concerns. The huge and growing
population is the fundamental social, economic, and environmental
problem.
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 struggled to
overcome the Asian financial crisis, and still grapples with high
poverty and unemployment, inadequate infrastructure, endemic
corruption, a fragile banking sector, a poor investment climate, and
unequal resource distribution among regions. The country continues
the slow work of rebuilding from the devastating December 2004
tsunami and from an earthquake in central Java in May 2006 that
caused over $3 billion in damage and losses. Declining oil
production and lack of new exploration investment turned Indonesia
into a net oil importer in 2004. The cost of subsidizing domestic
fuel placed increasing strain on the budget in 2005, and combined
with indecisive monetary policy, contributed to a run on the
currency in August, prompting the government to enact a 126% average
fuel price hike in October. The resulting inflation and interest
rate hikes dampened growth through mid-2006, while large increases
in rice prices pushed millions more people under the national
poverty line. Economic reformers introduced three policy packages in
2006 to improve the investment climate, infrastructure, and the
financial sector, but translating them into reality has not been
easy. Keys to future growth remain internal reform, building up the
confidence of international and domestic investors, and strong
global economic growth.
Iran
Iran's economy is marked by a bloated, inefficient state
sector, over reliance on the oil sector, and statist policies that
create major distortions throughout. Most economic activity is
controlled by the state. Private sector activity is typically
small-scale - workshops, farming, and services. President Mahmud
AHMADI-NEJAD has continued to follow the market reform plans of
former President RAFSANJANI, with limited progress. Relatively high
oil prices in recent years have enabled Iran to amass nearly $60
billion in foreign exchange reserves, but have not eased economic
hardships such as high unemployment and inflation. The proportion of
the economy devoted to the development of weapons of mass
destruction remains a contentious issue with leading Western nations.
Iraq
Iraq's economy is dominated by the oil sector, which has
traditionally provided about 95% of foreign exchange earnings.
Iraq's seizure of Kuwait in August 1990, subsequent international
economic sanctions, and damage from military action by an
international coalition beginning in January 1991 drastically
reduced economic activity. Although government policies supporting
large military and internal security forces and allocating resources
to key supporters of the regime hurt the economy, implementation of
the UN's oil-for-food program, which began in December 1996, helped
improve conditions for the average Iraqi citizen. Iraq was allowed
to export limited amounts of oil in exchange for food, medicine, and
some infrastructure spare parts. In December 1999, the UN Security
Council authorized Iraq to export under the program as much oil as
required to meet humanitarian needs. The military victory of the
US-led coalition in March-April 2003 resulted in the shutdown of
much of the central economic administrative structure. Although a
comparatively small amount of capital plant was damaged during the
hostilities, looting, insurgent attacks, and sabotage have
undermined efforts to rebuild the economy. Attacks on key economic
facilities - especially oil pipelines and infrastructure - have
prevented Iraq from reaching projected export volumes, but total
government revenues have been higher than anticipated due to high
oil prices. Despite political uncertainty, Iraq is making some
progress in building the institutions needed to implement economic
policy and has concluded a debt reduction agreement with the Paris
Club and a Standby Arrangement with the IMF. Iraq's economic
prospects will depend on the government's ability to control
inflation, to implement structural reforms such as bank
restructuring, and to develop the private sector.
Ireland
Ireland is a small, modern, trade-dependent economy with
growth averaging 6% in 1995-2006. Agriculture, once the most
important sector, is now dwarfed by industry and services. Industry
accounts for 46% of GDP, about 80% of exports, and 29% of the labor
force. Although exports remain the primary engine for Ireland's
growth, the economy has also benefited from a rise in consumer
spending, construction, and business investment. Per capita GDP is
10% above that of the four big European economies and the second
highest in the EU behind Luxembourg. Over the past decade, the Irish
Government has implemented a series of national economic programs
designed to curb price and wage inflation, reduce government
spending, increase labor force skills, and promote foreign
investment. Ireland joined in circulating the euro on 1 January 2002
along with 11 other EU nations.
Isle of Man
Offshore banking, manufacturing, and tourism are key
sectors of the economy. The government offers 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 shares of
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.
Israel
Israel has a technologically advanced market economy with
substantial, though diminishing, government participation. It
depends on imports of crude oil, grains, raw materials, and military
equipment. Despite limited natural resources, Israel has intensively
developed its agricultural and industrial sectors over the past 20
years. Israel imports substantial quantities of grain, but is
largely self-sufficient in other agricultural products. Cut
diamonds, high-technology equipment, and agricultural products
(fruits and vegetables) are the leading exports. Israel usually
posts sizable trade deficits, which are covered by large transfer
payments from abroad and by foreign loans. Roughly half of the
government's external debt is owed to the US, which is its major
source of economic and military aid. The bitter Israeli-Palestinian
conflict; difficulties in the high-technology, construction, and
tourist sectors; and fiscal austerity in the face of growing
inflation led to small declines in GDP in 2001 and 2002. The economy
rebounded in 2003-05, growing at a 4% rate each year, as the
government tightened fiscal policy and implemented structural
reforms to boost competition and efficiency in the markets. The
conflict with Lebanon in summer 2006 dampened slightly GDP growth
estimates for the year, but continuing strong foreign investment,
tax revenue, and private consumption levels helped the economy
recover quickly.
Italy
Italy has a diversified industrial economy with roughly the
same total and per capita output as France and the UK. This
capitalistic economy remains divided into a developed industrial
north, dominated by private companies, and a less-developed,
welfare-dependent, agricultural south, with 20% unemployment. Most
raw materials needed by industry and more than 75% of energy
requirements are imported. Over the past decade, Italy has pursued a
tight fiscal policy in order to meet the requirements of the
Economic and Monetary Unions and has benefited from lower interest
and inflation rates. The current government has enacted numerous
short-term reforms aimed at improving competitiveness and long-term
growth. Italy has moved slowly, however, on implementing needed
structural reforms, such as lightening the high tax burden and
overhauling Italy's rigid labor market and over-generous pension
system, because of the current economic slowdown and opposition from
labor unions. But the leadership faces a severe economic constraint:
the budget deficit has breached the 3% EU ceiling. The economy
experienced low growth in 2006, and unemployment remained at a high
level.
Jamaica
The Jamaican economy is heavily dependent on services, which
now account for 60% of GDP. The country continues to derive most of
its foreign exchange from remittances, tourism, and bauxite/alumina.
Jamaica's economy, already saddled with a record of relatively low
growth, was hit hard by Hurricane Ivan in late 2004, and is making a
gradual recovery. But the economy faces serious long-term problems:
high interest rates, increased foreign competition, exchange rate
instability, a sizable merchandise trade deficit, large-scale
unemployment and underemployment, and a high debt burden - the
result of government bailouts to ailing sectors of the economy, most
notably the financial sector in the mid-1990s. Following a strategy
begun in 2004, Jamaica has reduced its public debt to 130% of GDP.
Inflation has declined to 9%. Uncertain economic conditions have led
to increased civil unrest, including gang violence fueled by the
drug trade. The government faces the difficult prospect of having to
achieve fiscal discipline in order to maintain debt payments while
simultaneously attacking a serious and growing crime problem that is
hampering economic growth.
Jan Mayen
Jan Mayen is a volcanic island with no exploitable natural
resources. Economic activity is limited to providing services for
employees of Norway's radio and meteorological stations on the
island.
Japan
Government-industry cooperation, a strong work ethic, mastery
of high technology, and a comparatively small defense allocation (1%
of GDP) helped Japan advance with extraordinary rapidity to the rank
of second most technologically powerful economy in the world after
the US and the third-largest economy in the world after the US and
China, measured on a purchasing power parity (PPP) basis. One
notable characteristic of the economy is how manufacturers,
suppliers, and distributors work together in closely-knit groups
called keiretsu. A second basic feature has been the guarantee of
lifetime employment for a substantial portion of the urban labor
force. Both features are now eroding. Japan's industrial sector is
heavily dependent on imported raw materials and fuels. The tiny
agricultural sector is highly subsidized and protected, with crop
yields among the highest in the world. Usually self sufficient in
rice, Japan must import about 60% of its food on a caloric basis.
Japan maintains one of the world's largest fishing fleets and
accounts for nearly 15% of the global catch. For three decades,
overall real economic growth had been spectacular - a 10% average in
the 1960s, a 5% average in the 1970s, and a 4% average in the 1980s.
Growth slowed markedly in the 1990s, averaging just 1.7%, largely
because of the after effects of overinvestment during the late 1980s
and contractionary domestic policies intended to wring speculative
excesses from the stock and real estate markets and to force a
restructuring of the economy. From 2000 to 2003, government efforts
to revive economic growth met with little success and were further
hampered by the slowing of the US, European, and Asian economies. In
2004-06, growth improved and the lingering fears of deflation in
prices and economic activity lessened. Japan's huge government debt,
which totals 175% of GDP, and the aging of the population are two
major long-run problems. Some fear that a rise in taxes could
endanger the current economic recovery. Internal conflict over the
proper way to reform the financial system will continue as Japan
Post's banking, insurance, and delivery services undergo
privatization between 2007 and 2017.
Jarvis Island
no economic activity
Jersey
Jersey's economy is based on international financial
services, agriculture, and tourism. In 2005 the finance sector
accounted for about 50% of the island's output. Potatoes,
cauliflower, tomatoes, and especially flowers are important export
crops, shipped mostly to the UK. The Jersey breed of dairy cattle is
known worldwide and represents an important export income earner.
Milk products go to the UK and other EU countries. Tourism accounts
for one-quarter of GDP. In recent years, the government has
encouraged light industry to locate in Jersey, with the result that
an electronics industry has developed alongside the traditional
manufacturing of knitwear. All raw material and energy requirements
are imported, as well as a large share of Jersey's food needs. Light
taxes and death duties make the island a popular tax haven. Living
standards come close to those of the UK.
Johnston Atoll
no economic activity
Jordan
Jordan is a small Arab country with insufficient supplies of
water, oil, and other natural resources. Debt, poverty, and
unemployment are fundamental problems, but King ABDALLAH, since
assuming the throne in 1999, has undertaken some broad economic
reforms in a long-term effort to improve living standards. Since
Jordan's graduation from its most recent IMF program in 2002, Amman
has continued to follow IMF guidelines, practicing careful monetary
policy, and making substantial headway with privatization. The
government also has liberalized the trade regime sufficiently to
secure Jordan's membership in the WTO (2000), a free trade accord
with the US (2001), and an association agreement with the EU (2001).
These measures have helped improve productivity and have put Jordan
on the foreign investment map. Jordan imported most of its oil from
Iraq, but the US-led war in Iraq in 2003 made Jordan more dependent
on oil from other Gulf nations, and has forced the Jordanian
Government to raise retail petroleum product prices and the sales
tax base. Jordan's export market, which is heavily dependent on
exports to Iraq, was also affected by the war but recovered quickly
while contributing to the Iraq recovery effort. The main challenges
facing Jordan are reducing dependence on foreign grants, reducing
the budget deficit, and creating investment incentives to promote
job creation.
Juan de Nova Island
Up to 12,000 tons of guano are mined per year.
Kazakhstan
Kazakhstan, the largest of the former Soviet republics in
territory, excluding Russia, possesses enormous fossil fuel reserves
and plentiful supplies of other minerals and metals. It also has a
large agricultural sector featuring livestock and grain.
Kazakhstan's industrial sector rests on the extraction and
processing of these natural resources and also on a growing
machine-building sector specializing in construction equipment,
tractors, agricultural machinery, and some defense items. The
breakup of the USSR in December 1991 and the collapse in demand for
Kazakhstan's traditional heavy industry products resulted in a
short-term contraction of the economy, with the steepest annual
decline occurring in 1994. In 1995-97, the pace of the government
program of economic reform and privatization quickened, resulting in
a substantial shifting of assets into the private sector. Kazakhstan
enjoyed double-digit growth in 2000-01 - 8% or more per year in
2002-06 - thanks largely to its booming energy sector, but also to
economic reform, good harvests, and foreign investment. The opening
of the Caspian Consortium pipeline in 2001, from western
Kazakhstan's Tengiz oilfield to the Black Sea, substantially raised
export capacity. Kazakhstan in 2006 completed the Atasu-Alashankou
portion of an oil pipeline to China that is planned to extend from
the country's Caspian coast eastward to the Chinese border in future
construction. The country has embarked upon an industrial policy
designed to diversify the economy away from overdependence on the
oil sector by developing light industry. The policy aims to reduce
the influence of foreign investment and foreign personnel. The
government has engaged in several disputes with foreign oil
companies over the terms of production agreements; tensions
continue. Upward pressure on the local currency continued in 2006
due to massive oil-related foreign-exchange inflows.
Kenya
The regional hub for trade and finance in East Africa, Kenya
has been hampered by corruption and by reliance upon several primary
goods whose prices have remained low. In 1997, the IMF suspended
Kenya's Enhanced Structural Adjustment Program due to the
government's failure to maintain reforms and curb corruption. A
severe drought from 1999 to 2000 compounded Kenya's problems,
causing water and energy rationing and reducing agricultural output.
As a result, GDP contracted by 0.2% in 2000. The IMF, which had
resumed loans in 2000 to help Kenya through the drought, again
halted lending in 2001 when the government failed to institute
several anticorruption measures. Despite the return of strong rains
in 2001, weak commodity prices, endemic corruption, and low
investment limited Kenya's economic growth to 1.2%. Growth lagged at
1.1% in 2002 because of erratic rains, low investor confidence,
meager donor support, and political infighting up to the elections.
In the key December 2002 elections, Daniel Arap MOI's 24-year-old
reign ended, and a new opposition government took on the formidable
economic problems facing the nation. In 2003, progress was made in
rooting out corruption and encouraging donor support. Since then,
however, the KIBAKI government has been rocked by high-level graft
scandals. The World Bank suspended aid for most of 2006, and the IMF
has delayed loans pending further action by the government on
corruption. The scandals have not seemed to affect growth, with GDP
growing more than 5% in 2006.
Kingman Reef
no economic activity
Kiribati
A remote country of 33 scattered coral atolls, Kiribati has
few natural resources. Commercially viable phosphate deposits were
exhausted at the time of independence from the UK in 1979. Copra and
fish now represent the bulk of production and exports. The economy
has fluctuated widely in recent years. Economic development is
constrained by a shortage of skilled workers, weak infrastructure,
and remoteness from international markets. Tourism provides more
than one-fifth of GDP. The financial sector is at an early stage of
development as is the expansion of private sector initiatives.
Foreign financial aid from UK, Japan, Australia, New Zealand, and
China equals more than 10% of GDP. Remittances from seamen on
merchant ships abroad account for more than $5 million each year.
Kiribati receives around $15 million annually for the government
budget from an Australian trust fund.
Korea, North
North Korea, one of the world's most centrally planned
and isolated economies, faces desperate economic conditions.
Industrial capital stock is nearly beyond repair as a result of
years of underinvestment and shortages of spare parts. Industrial
and power output have declined in parallel. Due in part to severe
summer flooding followed by dry weather conditions in the fall of
2006, the nation has suffered its 12th year of food shortages
because of on-going systemic problems, including a lack of arable
land, collective farming practices, and chronic shortages of
tractors and fuel. Massive international food aid deliveries have
allowed the people of North Korea to escape mass starvation since
famine threatened in 1995, but the population continues to suffer
from prolonged malnutrition and poor living conditions. Large-scale
military spending eats up resources needed for investment and
civilian consumption. In 2004, the regime formalized an arrangement
whereby private "farmers markets" were allowed to begin selling a
wider range of goods. It also permitted some private farming on an
experimental basis in an effort to boost agricultural output. In
October 2005, the regime reversed some of these policies by
forbidding private sales of grains and reinstituting a centralized
food rationing system. By December 2005, the regime terminated most
international humanitarian assistance operations in the DPRK
(calling instead for developmental assistance only) and restricted
the activities of remaining international and non-governmental aid
organizations such as the World Food Program. Firm political control
remains the Communist government's overriding concern, which will
likely inhibit the loosening of economic regulations.
Korea, South
Since the 1960s, South Korea has achieved an incredible
record of growth and integration into the high-tech modern world
economy. Four decades ago, GDP per capita was comparable with levels
in the poorer countries of Africa and Asia. In 2004, South Korea
joined the trillion dollar club of world economies. Today its GDP
per capita is equal to the lesser economies of the EU. This success
was achieved by a system of close government/business ties,
including directed credit, import restrictions, sponsorship of
specific industries, and a strong labor effort. The government
promoted the import of raw materials and technology at the expense
of consumer goods and encouraged savings and investment over
consumption. The Asian financial crisis of 1997-99 exposed
longstanding weaknesses in South Korea's development model,
including high debt/equity ratios, massive foreign borrowing, and an
undisciplined financial sector. GDP plunged by 6.9% in 1998, then
recovered 9.5% in 1999 and 8.5% in 2000. Growth fell back to 3.3% in
2001 because of the slowing global economy, falling exports, and the
perception that much-needed corporate and financial reforms had
stalled. Led by consumer spending and exports, growth in 2002 was an
impressive 7%, despite anemic global growth. Between 2003 and 2006,
growth moderated to about 4-5%. A downturn in consumer spending was
offset by rapid export growth. Moderate inflation, low unemployment,
an export surplus, and fairly equal distribution of income
characterize this solid economy.
Kuwait
Kuwait is a small, rich, relatively open economy with
self-reported crude oil reserves of about 96 billion barrels - 10%
of world reserves. Petroleum accounts for nearly half of GDP, 95% of
export revenues, and 80% of government income. Kuwait's climate
limits agricultural development. Consequently, with the exception of
fish, it depends almost wholly on food imports. About 75% of potable
water must be distilled or imported. Kuwait continues its
discussions with foreign oil companies to develop fields in the
northern part of the country. High oil prices in recent years have
helped build Kuwait's budget and trade surpluses and foreign
reserves. As a result of this positive fiscal situation, the need
for economic reforms is less urgent and the government has not
earnestly pushed through new initiatives.
Kyrgyzstan
Kyrgyzstan is a poor, mountainous country with a
predominantly agricultural economy. Cotton, tobacco, wool, and meat
are the main agricultural products, although only tobacco and cotton
are exported in any quantity. Industrial exports include gold,
mercury, uranium, natural gas, and electricity. Following
independence Kyrgyzstan was progressive in carrying out market
reforms, such as an improved regulatory system and land reform, but
political instability during 2005-06 has undercut the investment
climate. Kyrgyzstan was the first CIS country to be accepted into
the World Trade Organization. Much of the government's stock in
enterprises has been sold. Drops in production had been severe after
the breakup of the Soviet Union in December 1991, but by mid-1995,
production began to recover and exports began to increase. The
economy is heavily weighted toward gold export and a drop in output
at the main Kumtor gold mine sparked a 0.5% decline in GDP in 2002,
but GDP growth bounced back the following year. In 2005 Kyrgyzstan
again experienced a decline in GDP, this time 0.6%. The government
has made steady strides in controlling its substantial fiscal
deficit, virtually balancing revenues and expenditures in 2006. The
government and international financial institutions have been
engaged in a comprehensive medium-term poverty reduction and
economic growth strategy; in 2005 Bishkek agreed to pursue
much-needed tax reform and in 2006 became eligible for the heavily
indebted poor countries (HIPC) initiative. Progress fighting
corruption, further restructuring of domestic industry, and success
in attracting foreign investment are keys to future growth.
Laos
The government of Laos, one of the few remaining official
Communist states, began decentralizing control and encouraging
private enterprise in 1986. The results, starting from an extremely
low base, were striking - growth averaged 6% per year in 1988-2006
except during the short-lived drop caused by the Asian financial
crisis beginning in 1997. Despite this high growth rate, Laos
remains a country with a primitive infrastructure. It has no
railroads, a rudimentary road system, and limited external and
internal telecommunications, though the government is sponsoring
major improvements in the road system with possible support from
Japan. Electricity is available in only a few urban areas.
Subsistence agriculture, dominated by rice, accounts for about half
of GDP and provides 80% of total employment. The economy will
continue to benefit from aid by the IMF and other international
sources and from new foreign investment in hydropower and mining.
Construction will be another strong economic driver, especially as
hydroelectric dam and road projects gain steam. Several policy
changes since 2004 may help spur growth. In late 2004, Laos gained
Normal Trade Relations status with the US, allowing Laos-based
producers to benefit from lower tariffs on exports. Laos is taking
steps to join the World Trade Organization in the next few years;
the resulting trade policy reforms will improve the business
environment. On the fiscal side, a value-added tax (VAT) regime,
slated to begin in 2008, will streamline the government's
inefficient tax system.
Latvia
Latvia's transitional economy recovered from the 1998 Russian
financial crisis, largely due to the government's budget stringency
and a gradual reorientation of exports toward EU countries,
lessening Latvia's trade dependency on Russia. The majority of
companies, banks, and real estate have been privatized, although the
state still holds sizable stakes in a few large enterprises. Latvia
officially joined the World Trade Organization in February 1999. EU
membership, a top foreign policy goal, came in May 2004. The current
account deficit - 15.7% of GDP in 2006 - remains a major concern.
The perception that many of Latvia's banks facilitate illicit
activity could damage the country's vibrant financial sector.
Lebanon
The 1975-91 civil war seriously damaged Lebanon's economic
infrastructure, cut national output by half, and all but ended
Lebanon's position as a Middle Eastern entrepot and banking hub. In
the years since, Lebanon has rebuilt much of its war-torn physical
and financial infrastructure by borrowing heavily - mostly from
domestic banks. In an attempt to reduce the ballooning national
debt, the Rafiq HARIRI government began an austerity program,
reining in government expenditures, increasing revenue collection,
and privatizing state enterprises, but economic and financial reform
initiatives stalled and public debt continued to grow despite
receipt of more than $2 billion in bilateral assistance at the Paris
II Donors Conference. The Israeli-Hizballah conflict caused an
estimated $3.6 billion in infrastructure damage in July and August
2006, and internal Lebanese political tension continues to hamper
economic activity.
Lesotho
Small, landlocked, and mountainous, Lesotho relies on
remittances from miners employed in South Africa and customs duties
from the Southern Africa Customs Union for the majority of
government revenue. However, the government has recently
strengthened its tax system to reduce dependency on customs duties.
Completion of a major hydropower facility in January 1998 now
permits the sale of water to South Africa, also generating royalties
for Lesotho. As the number of mineworkers has declined steadily over
the past several years, a small manufacturing base has developed
based on farm products that support the milling, canning, leather,
and jute industries, as well as a rapidly expanding apparel-assembly
sector. The latter has grown significantly, mainly due to Lesotho
qualifying for the trade benefits contained in the Africa Growth and
Opportunity Act. The economy is still primarily based on subsistence
agriculture, especially livestock, although drought has decreased
agricultural activity. The extreme inequality in the distribution of
income remains a major drawback. Lesotho has signed an Interim
Poverty Reduction and Growth Facility with the IMF.
Liberia
Civil war and government mismanagement have destroyed much
of Liberia's economy, especially the infrastructure in and around
Monrovia. Many businessmen have fled the country, taking capital and
expertise with them. Some have returned, but many will not. Richly
endowed with water, mineral resources, forests, and a climate
favorable to agriculture, Liberia had been a producer and exporter
of basic products - primarily raw timber and rubber. Local
manufacturing, mainly foreign owned, had been small in scope.
President JOHNSON SIRLEAF, a Harvard-trained economist, has taken
steps to reduce corruption, build support from international donors,
and encourage private investment. An embargo on timber exports has
been lifted, opening a source of revenue for the government, but
diamonds remain under UN sanctions. The reconstruction of
infrastructure and the raising of incomes in this ravaged economy
will largely depend on generous financial support and technical
assistance from donor countries.
Libya
The Libyan economy depends primarily upon revenues from the
oil sector, which contribute about 95% of export earnings, about
one-quarter of GDP, and 60% of public sector wages. Substantial
revenues from the energy sector coupled with a small population give
Libya one of the highest per capita GDPs in Africa, but little of
this income flows down to the lower orders of society. Libyan
officials in the past four years have made progress on economic
reforms as part of a broader campaign to reintegrate the country
into the international fold. This effort picked up steam after UN
sanctions were lifted in September 2003 and as Libya announced in
December 2003 that it would abandon programs to build weapons of
mass destruction. Almost all US unilateral sanctions against Libya
were removed in April 2004, helping Libya attract more foreign
direct investment, mostly in the energy sector. Libyan oil and gas
licensing rounds continue to draw high international interest. Libya
faces a long road ahead in liberalizing the socialist-oriented
economy, but initial steps - including applying for WTO membership,
reducing some subsidies, and announcing plans for privatization -
are laying the groundwork for a transition to a more market-based
economy. The non-oil manufacturing and construction sectors, which
account for more than 20% of GDP, have expanded from processing
mostly agricultural products to include the production of
petrochemicals, iron, steel, and aluminum. Climatic conditions and
poor soils severely limit agricultural output, and Libya imports
about 75% of its food.
Liechtenstein
Despite its small size and limited natural resources,
Liechtenstein has developed into a prosperous, highly
industrialized, free-enterprise economy with a vital financial
service sector and living standards on a par with its large European
neighbors. The Liechtenstein economy is widely diversified with a
large number of small businesses. Low business taxes - the maximum
tax rate is 20% - and easy incorporation rules have induced many
holding or so-called letter box companies to establish nominal
offices in Liechtenstein, providing 30% of state revenues. The
country participates in a customs union with Switzerland and uses
the Swiss franc as its national currency. It imports more than 90%
of its energy requirements. Liechtenstein has been a member of the
European Economic Area (an organization serving as a bridge between
the European Free Trade Association (EFTA) and the EU) since May
1995. The government is working to harmonize its economic policies
with those of an integrated Europe.
Lithuania
Lithuania, the Baltic state that has conducted the most
trade with Russia, has slowly rebounded from the 1998 Russian
financial crisis. Unemployment dropped from 11% in 2003 to 4.5% in
2006. Growing domestic consumption and increased investment have
furthered recovery. Trade has been increasingly oriented toward the
West. Lithuania has gained membership in the World Trade
Organization and joined the EU in May 2004. Privatization of the
large, state-owned utilities, particularly in the energy sector, is
nearing completion. Overall, more than 80% of enterprises have been
privatized. Foreign government and business support have helped in
the transition from the old command economy to a market economy.
Luxembourg
This stable, high-income economy - benefitting from its
proximity to France, Belgium, and Germany - features solid growth,
low inflation, and low unemployment. The industrial sector,
initially dominated by steel, has become increasingly diversified to
include chemicals, rubber, and other products. Growth in the
financial sector, which now accounts for about 28% of GDP, has more
than compensated for the decline in steel. Most banks are
foreign-owned and have extensive foreign dealings. Agriculture is
based on small family-owned farms. The economy depends on foreign
and cross-border workers for about 60% of its labor force. Although
Luxembourg, like all EU members, has suffered from the global
economic slump, the country enjoys an extraordinarily high standard
of living - GDP per capita ranks first in the world.
Macau
Macau's well-to-do economy has remained one of the most open
in the world since its reversion to China in 1999. Apparel exports
and tourism are mainstays of the economy. Although the territory was
hit hard by the 1997-98 Asian financial crisis and the global
downturn in 2001, its economy grew 10.1% in 2002, 14.2% in 2003, and
28.6% in 2004 before slowing to 6.7% in 2005. The economic boom was
powered by gambling, tourism, and the construction necessary to
support such endeavours. China's decision to ease travel
restrictions led to a rapid rise in the number of mainland visitors.
The opening of Macau's gaming industry to foreign access in 2001
spurred an increase in public works expenditures. The budget also
returned to surplus in 2002 because of the surge in visitors from
China and a hike in taxes on gambling profits, which generated about
70% of government revenue. Much of Macau's textile industry may move
to the mainland due to the termination in 2005 of the Multi-Fiber
Agreement, which provided a near guarantee of export markets,
leaving the territory more dependant on gambling and trade-related
services to generate growth. The Closer Economic Partnership
Agreement (CEPA) between Macau and mainland China that came into
effect on 1 January 2004 offers many Macau-made products tariff-free
access to the mainland. The range of products covered by CEPA was
expanded on 1 January 2005.
Macedonia
At independence in September 1991, Macedonia was the least
developed of the Yugoslav republics, producing a mere 5% of the
total federal output of goods and services. The collapse of
Yugoslavia ended transfer payments from the central government and
eliminated advantages from inclusion in a de facto free trade area.
An absence of infrastructure, UN sanctions on the downsized
Yugoslavia, and a Greek economic embargo over a dispute about the
country's constitutional name and flag hindered economic growth
until 1996. GDP subsequently rose each year through 2000. However,
the leadership's commitment to economic reform, free trade, and
regional integration was undermined by the ethnic Albanian
insurgency of 2001. The economy shrank 4.5% because of decreased
trade, intermittent border closures, increased deficit spending on
security needs, and investor uncertainty. Growth barely recovered in
2002 to 0.9%, then averaged 4% per year during 2003-06. Macedonia
has maintained macroeconomic stability with low inflation, but it
has lagged the region in attracting foreign investment and job
growth has been anemic. Macedonia has an extensive grey market,
estimated to be more than 20 percent of GDP, that falls outside
official statistics.
Madagascar
Having discarded past socialist economic policies,
Madagascar has since the mid 1990s followed a World Bank- and
IMF-led policy of privatization and liberalization. This strategy
placed the country on a slow and steady growth path from an
extremely low level. Agriculture, including fishing and forestry, is
a mainstay of the economy, accounting for more than one-fourth of
GDP and employing 80% of the population. Exports of apparel have
boomed in recent years primarily due to duty-free access to the
United States. Deforestation and erosion, aggravated by the use of
firewood as the primary source of fuel, are serious concerns.
President RAVALOMANANA has worked aggressively to revive the economy
following the 2002 political crisis, which triggered a 12% drop in
GDP that year. Poverty reduction and combating corruption will be
the centerpieces of economic policy for the next few years.
Malawi
Landlocked Malawi ranks among the world's least developed
countries. The economy is predominately agricultural, with about 90%
of the population living in rural areas. Agriculture accounted for
nearly 36% of GDP and 80% of export revenues in 2005. The
performance of the tobacco sector is key to short-term growth as
tobacco accounts for over 60% of exports. The economy depends on
substantial inflows of economic assistance from the IMF, the World
Bank, and individual donor nations. In late 2000, Malawi was
approved for relief under the Heavily Indebted Poor Countries (HIPC)
program. The government faces strong challenges, including
developing a market economy, improving educational facilities,
facing up to environmental problems, dealing with the rapidly
growing problem of HIV/AIDS, and satisfying foreign donors that
fiscal discipline is being tightened. In 2005, President MUTHARIKA
championed an anticorruption campaign. Malawi's recent fiscal policy
performance has been very strong, but a serious drought in 2005 and
2006 heightened pressure on the government to increase spending.
Malaysia
Malaysia, a middle-income country, transformed itself from
1971 through the late 1990s from a producer of raw materials into an
emerging multi-sector economy. Growth was almost exclusively driven
by exports - particularly of electronics. As a result, Malaysia was
hard hit by the global economic downturn and the slump in the
information technology (IT) sector in 2001 and 2002. GDP in 2001
grew only 0.5% because of an estimated 11% contraction in exports,
but a substantial fiscal stimulus package equal to US $1.9 billion
mitigated the worst of the recession, and the economy rebounded in
2002 with a 4.1% increase. The economy grew 4.9% in 2003,
notwithstanding a difficult first half, when external pressures from
Severe Acute Respiratory Syndrome (SARS) and the Iraq War led to
caution in the business community. Growth topped 7% in 2004 and 5%
per year in 2005-06. As an oil and gas exporter, Malaysia has
profited from higher world energy prices, although the rising cost
of domestic gasoline and diesel fuel forced Kuala Lumpur to reduce
government subsidies, contributing to higher inflation. Malaysia
"unpegged" the ringgit from the US dollar in 2005 and the currency
appreciated 6% against the dollar in 2006. Healthy foreign exchange
reserves and a small external debt greatly reduce the risk that
Malaysia will experience a financial crisis over the near term
similar to the one in 1997. The economy remains dependent on
continued growth in the US, China, and Japan - top export
destinations and key sources of foreign investment.
Maldives
Tourism, Maldives' largest industry, accounts for 28% of
GDP and more than 60% of the Maldives' foreign exchange receipts.
Over 90% of government tax revenue comes from import duties and
tourism-related taxes. Fishing is the second leading sector.
Agriculture and manufacturing continue to play a lesser role in the
economy, constrained by the limited availability of cultivable land
and the shortage of domestic labor. Most staple foods must be
imported. Industry, which consists mainly of garment production,
boat building, and handicrafts, accounts for about 7% of GDP. The
Maldivian Government began an economic reform program in 1989
initially by lifting import quotas and opening some exports to the
private sector. Subsequently, it has liberalized regulations to
allow more foreign investment. Real GDP growth averaged over 7.5%
per year for more than a decade. In late December 2004, a major
tsunami left more than 100 dead, 12,000 displaced, and property
damage exceeding $300 million. As a result of the tsunami, the GDP
contracted by about 3.6% in 2005. A rebound in tourism, post-tsunami
reconstruction, and development of new resorts helped boost GDP by
nearly 18 percent in 2006. The trade deficit has expanded sharply as
a result of high oil prices and imports of construction material.
Diversifying beyond tourism and fishing is the major challenge
facing the government. Over the longer term Maldivian authorities
worry about the impact of erosion and possible global warming on
their low-lying country; 80% of the area is one meter or less above
sea level.
Mali
Mali is among the poorest countries in the world, with 65% of
its land area desert or semidesert and with a highly unequal
distribution of income. Economic activity is largely confined to the
riverine area irrigated by the Niger. About 10% of the population is
nomadic and some 80% of the labor force is engaged in farming and
fishing. Industrial activity is concentrated on processing farm
commodities. Mali is heavily dependent on foreign aid and vulnerable
to fluctuations in world prices for cotton, its main export, along
with gold. The government has continued its successful
implementation of an IMF-recommended structural adjustment program
that is helping the economy grow, diversify, and attract foreign
investment. Mali's adherence to economic reform and the 50%
devaluation of the CFA franc in January 1994 have pushed up economic
growth to a sturdy 5% average in 1996-2006. Worker remittances and
external trade routes for the landlocked country have been
jeopardized by continued unrest in neighboring Cote d'Ivoire.
Malta
Major resources are limestone, a favorable geographic
location, and a productive labor force. Malta produces only about
20% of its food needs, has limited fresh water supplies, and has few
domestic energy sources. The economy is dependent on foreign trade,
manufacturing (especially electronics and textiles), and tourism.
Continued sluggishness in the European economy is holding back
exports, tourism, and overall growth.
Marshall Islands
US Government assistance is the mainstay of this
tiny island economy. Agricultural production, primarily subsistence,
is concentrated on small farms; the most important commercial crops
are coconuts and breadfruit. Small-scale industry is limited to
handicrafts, tuna processing, and copra. The tourist industry, now a
small source of foreign exchange employing less than 10% of the
labor force, remains the best hope for future added income. The
islands have few natural resources, and imports far exceed exports.
Under the terms of the Amended Compact of Free Association, the US
will provide millions of dollars per year to the Marshall Islands
(RMI) through 2023, at which time a Trust Fund made up of US and RMI
contributions will begin perpetual annual payouts. Government
downsizing, drought, a drop in construction, the decline in tourism,
and less income from the renewal of fishing vessel licenses have
held GDP growth to an average of 1% over the past decade.
Mauritania
Half the population still depends on agriculture and
livestock for a livelihood, even though many of the nomads and
subsistence farmers were forced into the cities by recurrent
droughts in the 1970s and 1980s. Mauritania has extensive deposits
of iron ore, which account for nearly 40% of total exports. The
nation's coastal waters are among the richest fishing areas in the
world, but overexploitation by foreigners threatens this key source
of revenue. The country's first deepwater port opened near
Nouakchott in 1986. In the past, drought and economic mismanagement
resulted in a buildup of foreign debt which now stands at more than
three times the level of annual exports. In February 2000,
Mauritania qualified for debt relief under the Heavily Indebted Poor
Countries (HIPC) initiative and in December 2001 received strong
support from donor and lending countries at a triennial Consultative
Group review. A new investment code approved in December 2001
improved the opportunities for direct foreign investment. Ongoing
negotiations with the IMF involve problems of economic reforms and
fiscal discipline. In 2001, exploratory oil wells in tracts 80 km
offshore indicated potential extraction at current world oil prices.
Mauritania has an estimated 1 billion barrels of proved reserves.
Substantial oil production and exports began in early 2006 and
averaged 75,000 barrels per day for the year. Meantime the
government emphasizes reduction of poverty, improvement of health
and education, and promoting privatization of the economy.
Mauritius
Since independence in 1968, Mauritius has developed from a
low-income, agriculturally based economy to a middle-income
diversified economy with growing industrial, financial, and tourist
sectors. For most of the period, annual growth has been in the order
of 5% to 6%. This remarkable achievement has been reflected in more
equitable income distribution, increased life expectancy, lowered
infant mortality, and a much-improved infrastructure. Sugarcane is
grown on about 90% of the cultivated land area and accounts for 25%
of export earnings. The government's development strategy centers on
expanding local financial institutions and building a domestic
information telecommunications industry. Mauritius has attracted
more than 9,000 offshore entities, many aimed at commerce in India
and South Africa, and investment in the banking sector alone has
reached over $1 billion. Mauritius, with its strong textile sector,
has been well poised to take advantage of the Africa Growth and
Opportunity Act (AGOA).
Mayotte
Economic activity is based primarily on the agricultural
sector, including fishing and livestock raising. Mayotte is not
self-sufficient and must import a large portion of its food
requirements, mainly from France. The economy and future development
of the island are heavily dependent on French financial assistance,
an important supplement to GDP. Mayotte's remote location is an
obstacle to the development of tourism.
Mexico
Mexico has a free market economy that recently entered the
trillion dollar class. It contains a mixture of modern and outmoded
industry and agriculture, increasingly dominated by the private
sector. Recent administrations have expanded competition in
seaports, railroads, telecommunications, electricity generation,
natural gas distribution, and airports. Per capita income is
one-fourth that of the US; income distribution remains highly
unequal. Trade with the US and Canada has tripled since the
implementation of NAFTA in 1994. Mexico has 12 free trade agreements
with over 40 countries including, Guatemala, Honduras, El Salvador,
the European Free Trade Area, and Japan, putting more than 90% of
trade under free trade agreements. The new Felipe CALDERON
administration that took office in December 2006 faces many of the
same challenges that former President FOX tried to tackle, including
the need to upgrade infrastructure, modernize the tax system and
labor laws, and allow private investment in the energy sector.
CALDERON has stated that his top priorities include reducing poverty
and creating jobs. The success of his economic agenda will depend on
his ability to garner support from the opposition.
Micronesia, Federated States of
Economic activity consists primarily
of subsistence farming and fishing. The islands have few mineral
deposits worth exploiting, except for high-grade phosphate. The
potential for a tourist industry exists, but the remote location, a
lack of adequate facilities, and limited air connections hinder
development. The Amended Compact of Free Association with the US
guarantees the Federated States of Micronesia (FSM) millions of
dollars in annual aid through 2023, and establishes a Trust Fund
into which the US and the FSM make annual contributions in order to
provide annual payouts to the FSM in perpetuity after 2023. The
country's medium-term economic outlook appears fragile due not only
to the reduction in US assistance but also to the slow growth of the
private sector.
Midway Islands
The economy is based on providing support services
for the national wildlife refuge activities located on the islands.
All food and manufactured goods must be imported.
Moldova
Moldova remains one of the poorest countries in Europe
despite recent progress from its small economic base. It enjoys a
favorable climate and good farmland but has no major mineral
deposits. As a result, the economy depends heavily on agriculture,
featuring fruits, vegetables, wine, and tobacco. Moldova must import
almost all of its energy supplies. Moldova's dependence on Russian
energy was underscored at the end of 2005, when a Russian-owned
electrical station in Moldova's separatist Transnistria region cut
off power to Moldova and Russia's Gazprom cut off natural gas to
Moldova in disputes over pricing. The economy achieved six percent
or more GDP growth every year from 2000-2005, though this was based
largely on consumption fueled by remittances received from Moldovans
working abroad. Russia's decision to ban Moldovan wine and
agricultural products, coupled with its decision to double the price
Moldova paid for Russian natural gas, slowed GDP growth in 2006 and
greatly exacerbated Moldova's economic troubles. Economic reforms
have been slow because of corruption and strong political forces
backing government controls; nevertheless, the government's primary
goal of EU integration has resulted in some market-oriented
progress. The economy remains vulnerable to higher fuel prices, poor
agricultural weather, and the skepticism of foreign investors. Also,
the presence of an illegal separatist regime in Moldova's
Transnistria region continues to be a drag on the Moldovan economy.
Monaco
Monaco, bordering France on the Mediterranean coast, is a
popular resort, attracting tourists to its casino and pleasant
climate. In 2001, a major construction project extended the pier
used by cruise ships in the main harbor. The principality has
successfully sought to diversify into services and small,
high-value-added, nonpolluting industries. The state has no income
tax and low business taxes and thrives as a tax haven both for
individuals who have established residence and for foreign companies
that have set up businesses and offices. The state retains
monopolies in a number of sectors, including tobacco, the telephone
network, and the postal service. Living standards are high, roughly
comparable to those in prosperous French metropolitan areas.
Mongolia
Economic activity in Mongolia has traditionally been based
on herding and agriculture. Mongolia has extensive mineral deposits.
Copper, coal, molybdenum, tin, tungsten and gold account for a large
part of industrial production. Soviet assistance, at its height
one-third of GDP, disappeared almost overnight in 1990 and 1991 at
the time of the dismantlement of the USSR. The following decade saw
Mongolia endure both deep recession due to political inaction and
natural disasters, as well as economic growth because of
reform-embracing, free-market economics and extensive privatization
of the formerly state-run economy. Severe winters and summer
droughts in 2000-2002 resulted in massive livestock die-off and zero
or negative GDP growth. This was compounded by falling prices for
Mongolia's primary sector exports and widespread opposition to
privatization. Growth was 10.6% in 2004, 5.5% in 2005, and 7.5% in
2006, largely because of high copper prices and new gold production.
Mongolia's economy continues to be heavily influenced by its
neighbors. For example, Mongolia purchases 80% of its petroleum
products and a substantial amount of electric power from Russia,
leaving it vulnerable to price increases. China is Mongolia's chief
export partner and a main source of the "shadow" or "grey" economy.
The World Bank and other international financial institutions
estimate the grey economy to be at least equal to that of the
official economy, but the former's actual size is difficult to
calculate since the money does not pass through the hands of tax
authorities or the banking sector. Remittances from Mongolians
working abroad both legally and illegally are sizeable, and money
laundering is a growing concern. Mongolia settled its $11 billion
debt with Russia at the end of 2003 on favorable terms. Mongolia,
which joined the World Trade Organization in 1997, seeks to expand
its participation and integration into Asian regional economic and
trade regimes.
Montenegro
The republic of Montenegro severed its economy from
federal control and from Serbia during the MILOSEVIC era and
continues to maintain its own central bank, uses the euro instead of
the Yugoslav dinar as official currency, collects customs tariffs,
and manages its own budget. The dissolution of the loose political
union between Serbia and Montenegro in 2006 led to separate
membership in several international financial institutions, such as
the European Bank for Reconstruction and Development. On January 18,
2007, Montenegro joined the World Bank and IMF. Montenegro is
pursuing its own membership in the World Trade Organization as well
as negotiating a Stabilization and Association agreement with the
European Union in anticipation of eventual membership. Severe
unemployment remains a key political and economic problem for this
entire region. Montenegro has privatized its large aluminum complex
- the dominant industry - as well as most of its financial sector,
and has begun to attract foreign direct investment in the tourism
sector.
Montserrat
Severe volcanic activity, which began in July 1995, has
put a damper on this small, open economy. A catastrophic eruption in
June 1997 closed the airports and seaports, causing further economic
and social dislocation. Two-thirds of the 12,000 inhabitants fled
the island. Some began to return in 1998, but lack of housing
limited the number. The agriculture sector continued to be affected
by the lack of suitable land for farming and the destruction of
crops. Prospects for the economy depend largely on developments in
relation to the volcanic activity and on public sector construction
activity. The UK has launched a three-year $122.8 million aid
program to help reconstruct the economy. Half of the island is
expected to remain uninhabitable for another decade.
Morocco
Moroccan economic policies brought macroeconomic stability
to the country in the early 1990s but have not spurred growth
sufficient to reduce unemployment that nears 20% in urban areas.
Poverty has increased due to the volatile nature of GDP, Morocco's
continued dependence on foreign energy, and its inability to promote
the growth of small and medium size enterprises. However, GDP growth
rebounded to 6.7% in 2006 due to high rainfall, which resulted in a
strong second harvest. Despite structural adjustment programs
supported by the IMF, the World Bank, and the Paris Club, the dirham
is only fully convertible for current account transactions and
Morocco's financial sector is rudimentary. Moroccan authorities
understand that reducing poverty and providing jobs is key to
domestic security and development. In 2004, Moroccan authorities
instituted measures to boost foreign direct investment and trade by
signing a free trade agreement with the US, which entered into force
in January 2006, and sold government shares in the state
telecommunications company and in the largest state-owned bank.
Long-term challenges include preparing the economy for freer trade
with the US and European Union, improving education and job
prospects for Morocco's youth, and raising living standards, which
the government hopes to achieve by increasing tourist arrivals and
boosting competitiveness in textiles.
Mozambique
At independence in 1975, Mozambique was one of the
world's poorest countries. Socialist mismanagement and a brutal
civil war from 1977-92 exacerbated the situation. In 1987, the
government embarked on a series of macroeconomic reforms designed to
stabilize the economy. These steps, combined with donor assistance
and with political stability since the multi-party elections in
1994, have led to dramatic improvements in the country's growth
rate. Inflation was reduced to single digits during the late 1990s
although it returned to double digits in 2000-06. Fiscal reforms,
including the introduction of a value-added tax and reform of the
customs service, have improved the government's revenue collection
abilities. In spite of these gains, Mozambique remains dependent
upon foreign assistance for much of its annual budget, and the
majority of the population remains below the poverty line.
Subsistence agriculture continues to employ the vast majority of the
country's work force. A substantial trade imbalance persists
although the opening of the Mozal aluminum smelter, the country's
largest foreign investment project to date, has increased export
earnings. In late 2005, and after years of negotiations, the
government signed an agreement to gain Portugal's majority share of
the Cahora Bassa Hydroelectricity (HCB) company, a dam that was not
transferred to Mozambique at independence because of the ensuing
civil war and unpaid debts. More power is needed for additional
investment projects in titanium extraction and processing and
garment manufacturing that could further close the import/export
gap. Mozambique's once substantial foreign debt has been reduced
through forgiveness and rescheduling under the IMF's Heavily
Indebted Poor Countries (HIPC) and Enhanced HIPC initiatives, and is
now at a manageable level.
Namibia
The economy is heavily dependent on the extraction and
processing of minerals for export. Mining accounts for 20% of GDP.
Rich alluvial diamond deposits make Namibia a primary source for
gem-quality diamonds. Namibia is the fourth-largest exporter of
nonfuel minerals in Africa, the world's fifth-largest producer of
uranium, and the producer of large quantities of lead, zinc, tin,
silver, and tungsten. The mining sector employs only about 3% of the
population while about half of the population depends on subsistence
agriculture for its livelihood. Namibia normally imports about 50%
of its cereal requirements; in drought years food shortages are a
major problem in rural areas. A high per capita GDP, relative to the
region, hides the world's worst inequality of income distribution.
The Namibian economy is closely linked to South Africa with the
Namibian dollar pegged one-to-one to the South African rand.
Privatization of several enterprises in coming years may stimulate
long-run foreign investment. Increased fish production and mining of
zinc, copper, uranium, and silver spurred growth in 2003-06.
Nauru
Revenues of this tiny island have traditionally come from
exports of phosphates, now significantly depleted. An Australian
company in 2005 entered into an agreement intended to exploit
remaining supplies. Few other resources exist with most necessities
being imported, mainly from Australia, its former occupier and later
major source of support. The rehabilitation of mined land and the
replacement of income from phosphates are serious long-term
problems. In anticipation of the exhaustion of Nauru's phosphate
deposits, substantial amounts of phosphate income were invested in
trust funds to help cushion the transition and provide for Nauru's
economic future. As a result of heavy spending from the trust funds,
the government faces virtual bankruptcy. To cut costs the government
has frozen wages and reduced overstaffed public service departments.
In 2005, the deterioration in housing, hospitals, and other capital
plant continued, and the cost to Australia of keeping the government
and economy afloat continued to climb. Few comprehensive statistics
on the Nauru economy exist, with estimates of Nauru's GDP varying
widely.
Navassa Island
Subsistence fishing and commercial trawling occur
within refuge waters.
Nepal
Nepal is among the poorest and least developed countries in
the world with almost one-third of its population living below the
poverty line. Agriculture is the mainstay of the economy, providing
a livelihood for three-fourths of the population and accounting for
38% of GDP. Industrial activity mainly involves the processing of
agricultural produce including jute, sugarcane, tobacco, and grain.
Security concerns relating to the Maoist conflict have led to a
decrease in tourism, a key source of foreign exchange. Nepal has
considerable scope for exploiting its potential in hydropower and
tourism, areas of recent foreign investment interest. Prospects for
foreign trade or investment in other sectors will remain poor,
however, because of the small size of the economy, its technological
backwardness, its remoteness, its landlocked geographic location,
its civil strife, and its susceptibility to natural disaster.
Netherlands
The Netherlands has a prosperous and open economy, which
depends heavily on foreign trade. The economy is noted for stable
industrial relations, moderate unemployment and inflation, a sizable
current account surplus, and an important role as a European
transportation hub. Industrial activity is predominantly in food
processing, chemicals, petroleum refining, and electrical machinery.
A highly mechanized agricultural sector employs no more than 2% of
the labor force but provides large surpluses for the food-processing
industry and for exports. The Netherlands, along with 11 of its EU
partners, began circulating the euro currency on 1 January 2002. The
country continues to be one of the leading European nations for
attracting foreign direct investment. Economic growth slowed
considerably in 2001-06, as part of the global economic slowdown,
but for the four years before that, annual growth averaged nearly
4%, well above the EU average.
Netherlands Antilles
Tourism, petroleum refining, and offshore
finance are the mainstays of this small economy, which is closely
tied to the outside world. Although GDP has declined or grown
slightly in each of the past eight years, the islands enjoy a high
per capita income and a well-developed infrastructure compared with
other countries in the region. Almost all consumer and capital goods
are imported, the US and Mexico being the major suppliers. Poor
soils and inadequate water supplies hamper the development of
agriculture. Budgetary problems hamper reform of the health and
pension systems of an aging population.
New Caledonia
New Caledonia has about 25% of the world's known
nickel resources. Only a small amount of the land is suitable for
cultivation, and food accounts for about 20% of imports. In addition
to nickel, substantial financial support from France - equal to more
than 15% of GDP - and tourism are keys to the health of the economy.
Substantial new investment in the nickel industry, combined with the
recovery of global nickel prices, brightens the economic outlook for
the next several years.
New Zealand
Over the past 20 years the government has transformed
New Zealand from an agrarian economy dependent on concessionary
British market access to a more industrialized, free market economy
that can compete globally. This dynamic growth has boosted real
incomes (but left behind many at the bottom of the ladder),
broadened and deepened the technological capabilities of the
industrial sector, and contained inflationary pressures. Per capita
income has risen for eight consecutive years and was more than
$25,500 in 2006 in purchasing power parity terms. Consumer and
government spending have driven growth in recent years, and exports
picked up in 2006 after struggling for several years. Exports are
equal to about 28% of GDP, down from 33 percent of GDP in 2001. Thus
far the economy has been resilient, and the Labor Government
promises that expenditures on health, education, and pensions will
increase proportionately to output.
Nicaragua
Nicaragua, the second poorest country in the Western
Hemisphere, has low per capita income and widespread
underemployment. Distribution of income is one of the most unequal
on the globe. While the country has progressed toward macroeconomic
stability in the past few years, GDP annual growth has been far too
low to meet the country's needs, forcing the country to rely on
international economic assistance to meet fiscal and debt financing
obligations. Nicaragua qualified in early 2004 for some $4.5 billion
in foreign debt reduction under the Heavily Indebted Poor Countries
(HIPC) initiative and in November 2006 obtained over $800 million in
debt relief from the Inter-American Development Bank. In October
2005, Nicaragua ratified the US-Central America Free Trade Agreement
(CAFTA), which will provide an opportunity for Nicaragua to attract
investment, create jobs, and deepen economic development. Energy
shortages, however, are a serious bottleneck to growth.
Niger
Niger is one of the poorest countries in the world, ranking
last on the United Nations Development Fund index of human
development. It is a landlocked, Sub-Saharan nation, whose economy
centers on subsistence crops, livestock, and some of the world's
largest uranium deposits. Drought cycles, desertification, and a
2.9% population growth rate, have undercut the economy. Niger shares
a common currency, the CFA franc, and a common central bank, the
Central Bank of West African States (BCEAO), with seven other
members of the West African Monetary Union. In December 2000, Niger
qualified for enhanced debt relief under the International Monetary
Fund program for Highly Indebted Poor Countries (HIPC) and concluded
an agreement with the Fund on a Poverty Reduction and Growth
Facility (PRGF). Debt relief provided under the enhanced HIPC
initiative significantly reduces Niger's annual debt service
obligations, freeing funds for expenditures on basic health care,
primary education, HIV/AIDS prevention, rural infrastructure, and
other programs geared at poverty reduction. In December 2005, Niger
received 100% multilateral debt relief from the IMF, which
translates into the forgiveness of approximately $86 million USD in
debts to the IMF, excluding the remaining assistance under HIPC.
Nearly half of the government's budget is derived from foreign donor
resources. Future growth may be sustained by exploitation of oil,
gold, coal, and other mineral resources. Uranium prices have
increased sharply in the last few years. A drought and locust
infestation in 2005 led to food shortages for as many as 2.5 million
Nigeriens.
Nigeria
Oil-rich Nigeria, long hobbled by political instability,
corruption, inadequate infrastructure, and poor macroeconomic
management, is undertaking some reforms under a new reform-minded
administration. Nigeria's former military rulers failed to diversify
the economy away from its overdependence on the capital-intensive
oil sector, which provides 20% of GDP, 95% of foreign exchange
earnings, and about 65% of budgetary revenues. The largely
subsistence agricultural sector has failed to keep up with rapid
population growth - Nigeria is Africa's most populous country - and
the country, once a large net exporter of food, now must import
food. Following the signing of an IMF stand-by agreement in August
2000, Nigeria received a debt-restructuring deal from the Paris Club
and a $1 billion credit from the IMF, both contingent on economic
reforms. Nigeria pulled out of its IMF program in April 2002, after
failing to meet spending and exchange rate targets, making it
ineligible for additional debt forgiveness from the Paris Club. In
the last year the government has begun showing the political will to
implement the market-oriented reforms urged by the IMF, such as to
modernize the banking system, to curb inflation by blocking
excessive wage demands, and to resolve regional disputes over the
distribution of earnings from the oil industry. In 2003, the
government began deregulating fuel prices, announced the
privatization of the country's four oil refineries, and instituted
the National Economic Empowerment Development Strategy, a
domestically designed and run program modeled on the IMF's Poverty
Reduction and Growth Facility for fiscal and monetary management. In
November 2005, Abuja won Paris Club approval for a debt-relief deal
that eliminated $18 billion of debt in exchange for $12 billion in
payments-a total package worth $30 billion of Nigeria's total $37
billion external debt. The deal requires Nigeria to be subject to
stringent IMF reviews. GDP rose strongly in 2006, based largely on
increased oil exports and high global crude prices.
Niue
The economy suffers from the typical Pacific island problems of
geographic isolation, few resources, and a small population.
Government expenditures regularly exceed revenues, and the shortfall
is made up by critically needed grants from New Zealand that are
used to pay wages to public employees. Niue has cut government
expenditures by reducing the public service by almost half. The
agricultural sector consists mainly of subsistence gardening,
although some cash crops are grown for export. Industry consists
primarily of small factories to process passion fruit, lime oil,
honey, and coconut cream. The sale of postage stamps to foreign
collectors is an important source of revenue. The island in recent
years has suffered a serious loss of population because of
emigration to New Zealand. Efforts to increase GDP include the
promotion of tourism and a financial services industry, although the
International Banking Repeal Act of 2002 resulted in the termination
of all offshore banking licenses. Economic aid from New Zealand in
2002 was about US$2 million. Niue suffered a devastating typhoon in
January 2004, which decimated nascent economic programs. While in
the process of rebuilding, Niue has been dependent on foreign aid.
Norfolk Island
Tourism, the primary economic activity, has steadily
increased over the years and has brought a level of prosperity
unusual among inhabitants of the Pacific islands. The agricultural
sector has become self-sufficient in the production of beef,
poultry, and eggs.
Northern Mariana Islands
The economy benefits substantially from
financial assistance from the US. The rate of funding has declined
as locally generated government revenues have grown. The key tourist
industry employs about 50% of the work force and accounts for
roughly one-fourth of GDP. Japanese tourists predominate. Annual
tourist entries have exceeded one-half million in recent years, but
financial difficulties in Japan have caused a temporary slowdown.
The agricultural sector is made up of cattle ranches and small farms
producing coconuts, breadfruit, tomatoes, and melons. Garment
production is by far the most important industry with the employment
of 17,500 mostly Chinese workers and sizable shipments to the US
under duty and quota exemptions.
Norway
The Norwegian economy is a prosperous bastion of welfare
capitalism, featuring a combination of free market activity and
government intervention. The government controls key areas such as
the vital petroleum sector (through large-scale state enterprises).
The country is richly endowed with natural resources - petroleum,
hydropower, fish, forests, and minerals - and is highly dependent on
its oil production and international oil prices, with oil and gas
accounting for one-third of exports. Only Saudi Arabia and Russia
export more oil than Norway. Norway opted to stay out of the EU
during a referendum in November 1994; nonetheless, it contributes
sizably to the EU budget. The government has moved ahead with
privatization. Although Norwegian oil production peaked in 2000,
natural gas production is still rising. Norwegians realize that once
their gas production peaks they will eventually face declining oil
and gas revenues; accordingly, Norway has been saving its
oil-and-gas-boosted budget surpluses in a Government Petroleum Fund,
which is invested abroad and now is valued at more than $250
billion. After lackluster growth of less than 1% in 2002-03, GDP
growth picked up to 3-4% in 2004-06. Norway's economy remains
buoyant. Domestic economic activity is, and will continue to be, the
main driver of growth, supported by high consumer confidence and
strong investment spending in the offshore oil and gas sector.
Oman
Oman is a middle-income economy in the Middle East with notable
oil and gas resources, a substantial trade surplus, and low
inflation. Sustained high oil prices in recent years have helped
build Oman's budget and trade surpluses and foreign reserves. Oman
joined the World Trade Organization in November 2000 and continues
to liberalize its markets. To reduce unemployment and limit
dependence on foreign labor, the government is encouraging the
replacement of foreign expatriate workers with local workers. Oman
actively seeks private foreign investors, especially in the
industrial, information technology, tourism, and higher education
fields. Industrial development plans focus on gas resources, metal
manufacturing, petrochemicals, and international transshipment ports.
Pacific Ocean
The Pacific Ocean is a major contributor to the world
economy and particularly to those nations its waters directly touch.
It provides low-cost sea transportation between East and West,
extensive fishing grounds, offshore oil and gas fields, minerals,
and sand and gravel for the construction industry. In 1996, over 60%
of the world's fish catch came from the Pacific Ocean. Exploitation
of offshore oil and gas reserves is playing an ever-increasing role
in the energy supplies of the US, Australia, NZ, China, and Peru.
The high cost of recovering offshore oil and gas, combined with the
wide swings in world prices for oil since 1985, has led to
fluctuations in new drillings.
Pakistan
Pakistan, an impoverished and underdeveloped country, has
suffered from decades of internal political disputes, low levels of
foreign investment, and a costly, ongoing confrontation with
neighboring India. However, IMF-approved government policies,
bolstered by generous foreign assistance and renewed access to
global markets since 2001, have generated solid macroeconomic
recovery the last five years. The government has made substantial
macroeconomic reforms since 2000, most notably privatizing the
banking sector. Poverty levels have decreased by 10 percent since
2001, and Islamabad has steadily raised development spending in
recent years, including a 52-percent real increase in the budget
allocation for development in fiscal year 2007, a necessary step
toward reversing the broad underdevelopment of its social sector.
The fiscal deficit - the result of chronically low tax collection
and increased spending, including reconstruction costs from the
October 2005 earthquake - appears manageable for now. GDP growth,
spurred by gains in the industrial and service sectors, remained in
the 6-8% range in 2004-06. Inflation remains the biggest threat to
the economy, jumping to more than 9% in 2005 before easing to 7.9%
in 2006. The central bank is pursuing tighter monetary policy -
raising interest rates in 2006 - while trying to preserve growth.
Foreign exchange reserves are bolstered by steady worker
remittances, but a growing current account deficit - driven by a
widening trade gap as import growth outstrips export expansion -
could draw down reserves and dampen GDP growth in the medium term.
Palau
The economy consists primarily of tourism, subsistence
agriculture, and fishing. The government is the major employer of
the work force, relying heavily on financial assistance from the US.
Business and tourist arrivals numbered 63,000 in 2003. The
population enjoys a per capita income twice that of the Philippines
and much of Micronesia. Long-run prospects for the key tourist
sector have been greatly bolstered by the expansion of air travel in
the Pacific, the rising prosperity of leading East Asian countries,
and the willingness of foreigners to finance infrastructure
development.
Palmyra Atoll
no economic activity
Panama
Panama's dollarised economy rests primarily on a
well-developed services sector that accounts for three-fourths of
GDP. Services include operating the Panama Canal, banking, the Colon
Free Zone, insurance, container ports, flagship registry, and
tourism. A slump in the Colon Free Zone and agricultural exports,
the global slowdown, and the withdrawal of US military forces held
back economic growth in 2000-03; growth picked up in 2004-06 led by
export-oriented services and a construction boom stimulated by tax
incentives. The government has implemented tax reforms, as well as
social security reforms, and backs regional trade agreements and
development of tourism. Unemployment remains high. In October 2006,
voters passed a referendum to expand the Panama Canal to accommodate
ships that are now too large to cross the transoceanic crossway. Not
a CAFTA signatory, Panama in December 2006 independently negotiated
a free trade agreement with the United States, which, when
implemented, will help promote the country's economic growth.
Papua New Guinea
Papua New Guinea is richly endowed with natural
resources, but exploitation has been hampered by rugged terrain and
the high cost of developing infrastructure. Agriculture provides a
subsistence livelihood for 85% of the population. Mineral deposits,
including oil, copper, and gold, account for nearly two-thirds of
export earnings. The economy has improved over the past three years
because of high commodity prices following a prolonged period of
instability. The government of Prime Minister SOMARE has expended
much of its energy remaining in power and should be the first
government in decades to serve a full five-year term. The government
has also brought stability to the national budget thus far, largely
through expenditure control. Numerous challenges still face the
government including regaining investor confidence, restoring
integrity to state institutions, promoting economic efficiency by
privatizing moribund state institutions, and balancing relations
with Australia, the former colonial ruler. Other socio-cultural
challenges could upend the economy including a worsening HIV/Aids
epidemic and chronic law and order and land tenure issues. Australia
annually supplies $240 million in aid, which accounts for nearly 20%
of the national budget.
Paracel Islands
China announced plans in 1997 to open the islands
for tourism.
Paraguay
Landlocked Paraguay has a market economy marked by a large
informal sector. This sector features both reexport of imported
consumer goods to neighboring countries, as well as the activities
of thousands of microenterprises and urban street vendors. Because
of the importance of the informal sector, accurate economic measures
are difficult to obtain. A large percentage of the population
derives its living from agricultural activity, often on a
subsistence basis. The formal economy grew by an average of about 3%
annually in 1995-97, but averaged near-zero growth in 1998-2001 and
contracted by 2.3 percent in 2002, in response to regional contagion
and an outbreak of hoof-and-mouth disease. On a per capita basis,
real income has stagnated at 1980 levels. Most observers attribute
Paraguay's poor economic performance to political uncertainty,
corruption, lack of progress on structural reform, substantial
internal and external debt, and deficient infrastructure. Aided by a
firmer exchange rate and perhaps a greater confidence in the
economic policy of the DUARTE FRUTOS administration, the economy
rebounded between 2003 and 2006, posting modest growth each year.
Peru
Peru's economy reflects its varied geography - an arid coastal
region, the Andes further inland, and tropical lands bordering
Colombia and Brazil. Abundant mineral resources are found in the
mountainous areas, and Peru's coastal waters provide excellent
fishing grounds. However, overdependence on minerals and metals
subjects the economy to fluctuations in world prices, and a lack of
infrastructure deters trade and investment. After several years of
inconsistent economic performance, the Peruvian economy grew by more
than 4 percent per year during the period 2002-2006, with a stable
exchange rate and low inflation. Risk premiums on Peruvian bonds on
secondary markets reached historically low levels in late 2004,
reflecting investor optimism regarding the government's prudent
fiscal policies and openness to trade and investment. Despite the
strong macroeconomic performance, underemployment and poverty have
stayed persistently high. Economic growth continues to be driven by
the Camisea natural gas megaproject and by exports of minerals,
textiles, and agricultural products. Upon taking office, President
GARCIA announced the formation of Sierria Exportadora, a program
aimed at promoting economic growth in Southern Peru and the
highlands.
Philippines
The Philippines was less severely affected by the Asian
financial crisis of 1998 than its neighbors, aided in part by its
high level of annual remittances from overseas workers, and no
sustained runup in asset prices or foreign borrowing prior to the
crisis. From a 0.6% decline in 1998, GDP expanded by 2.4% in 1999,
and 4.4% in 2000, but slowed to 3.2% in 2001 in the context of a
global economic slowdown, an export slump, and political and
security concerns. GDP growth accelerated to about 5% between 2002
and 2006 reflecting the continued resilience of the service sector,
and improved exports and agricultural output. Nonetheless, it will
take a higher, sustained growth path to make appreciable progress in
the alleviation of poverty given the Philippines' high annual
population growth rate and unequal distribution of income. The
Philippines also faces higher oil prices, higher interest rates on
its dollar borrowings, and higher inflation. Fiscal constraints
limit Manila's ability to finance infrastructure and social
spending. The Philippines' consistently large budget deficit has
produced a high debt level, and this situation has forced Manila to
spend a large portion of the national government budget on debt
service. Large unprofitable public enterprises, especially in the
energy sector, contribute to the government's debt because of slow
progress on privatization. Credit rating agencies have at times
expressed concern about the Philippines' ability to service the
debt, though central bank reserves appear adequate and large
remittance inflows appear stable. The implementation of the expanded
Value Added Tax (VAT) in November 2005 boosted confidence in the
government's fiscal capacity and helped to strengthen the peso,
making it East Asia's best performing currency in 2005-06. Investors
and credit rating institutions will continue to look for effective
implementation of the new VAT and continued improvement in the
government's overall fiscal capacity in the coming year.
Pitcairn Islands
The inhabitants of this tiny isolated economy exist
on fishing, subsistence farming, handicrafts, and postage stamps.
The fertile soil of the valleys produces a wide variety of fruits
and vegetables, including citrus, sugarcane, watermelons, bananas,
yams, and beans. Bartering is an important part of the economy. The
major sources of revenue are the sale of postage stamps to
collectors and the sale of handicrafts to passing ships. In October
2004, more than one-quarter of Pitcairn's small labor force was
arrested, putting the economy in a bind, since their services were
required as lighter crew to load or unload passing ships.
Poland
Poland has steadfastly pursued a policy of economic
liberalization since 1990 and today stands out as a success story
among transition economies. Even so, much remains to be done,
especially in bringing down the unemployment rate - still the
highest in the EU despite recent improvement. The privatization of
small- and medium-sized state-owned companies and a liberal law on
establishing new firms has encouraged the development of the private
business sector, but legal and bureaucratic obstacles alongside
persistent corruption are hampering its further development.
Poland's agricultural sector remains handicapped by surplus labor,
inefficient small farms, and lack of investment. Restructuring and
privatization of "sensitive sectors" (e.g., coal, steel, railroads,
and energy), while recently initiated, have stalled. Reforms in
health care, education, the pension system, and state administration
have resulted in larger-than-expected fiscal pressures. Further
progress in public finance depends mainly on reducing losses in
Polish state enterprises, restraining entitlements, and overhauling
the tax code to incorporate the growing gray economy and farmers,
most of whom pay no tax. The previous Socialist-led government
introduced a package of social and administrative spending cuts to
reduce public spending by about $17 billion through 2007, but full
implementation of the plan was trumped by election-year politics in
2005. The right-wing Law and Justice party won parliamentary
elections in September, and Lech KACZYNSKI won the presidential
election in October 2005, running on a state-interventionist fiscal
and monetary platform. Poland joined the EU in May 2004, and surging
exports to the EU contributed to Poland's strong growth in 2004,
though its competitiveness could be threatened by the zloty's
appreciation. GDP per capita roughly equals that of the three Baltic
states. Poland benefited from nearly $23.2 billion in EU funds,
which were available through 2006. Farmers have already begun to
reap the rewards of membership via booming exports, higher food
prices, and EU agricultural subsidies.
Portugal
Portugal has become a diversified and increasingly
service-based economy since joining the European Community in 1986.
Over the past two decades, successive governments have privatized
many state-controlled firms and liberalized key areas of the
economy, including the financial and telecommunications sectors. The
country qualified for the European Monetary Union (EMU) in 1998 and
began circulating the euro on 1 January 2002 along with 11 other EU
member economies. Economic growth had been above the EU average for
much of the 1990s, but fell back in 2001-06. GDP per capita stands
at roughly 70% of the EU-25 average. A poor educational system, in
particular, has been an obstacle to greater productivity and growth.
Portugal has been increasingly overshadowed by lower-cost producers
in Central Europe and Asia as a target for foreign direct
investment. The budget deficit surged to an all-time high of 6% of
GDP in 2005 but was reduced to 4.6% in 2006. The government faces
tough choices in its attempts to boost Portugal's economic
competitiveness while keeping the budget deficit within the
eurozone's 3%-of-GDP ceiling.
Puerto Rico
Puerto Rico has one of the most dynamic economies in the
Caribbean region. A diverse industrial sector has far surpassed
agriculture as the primary locus of economic activity and income.
Encouraged by duty-free access to the US and by tax incentives, US
firms have invested heavily in Puerto Rico since the 1950s. US
minimum wage laws apply. Sugar production has lost out to dairy
production and other livestock products as the main source of income
in the agricultural sector. Tourism has traditionally been an
important source of income, with estimated arrivals of nearly 5
million tourists in 2004. Growth fell off in 2001-03, largely due to
the slowdown in the US economy, recovered in 2004-05, but declined
again in 2006.
Qatar
Oil and gas account for more than 60% of GDP, roughly 85% of
export earnings, and 70% of government revenues. Oil and gas have
given Qatar a per capita GDP about 80% of that of the leading West
European industrial countries. Sustained high oil prices and
increased natural gas exports in recent years have helped build
Qatar's budget and trade surpluses and foreign reserves. Proved oil
reserves of more than 15 billion barrels should ensure continued
output at current levels for 23 years. Qatar's proved reserves of
natural gas exceed 25 trillion cubic meters, more than 5% of the
world total and third largest in the world. Qatar has permitted
substantial foreign investment in the development of its gas fields
during the last decade and is expected to become the world's top
liquefied natural gas (LNG) exporter in 2007. Qatar is also trying
to attract foreign investment in the development of its non-energy
projects by further liberalizing the economy. Qatar has become one
of the world's fastest growing and highest per-capita income
countries.
Romania
Romania began the transition from Communism in 1989 with a
largely obsolete industrial base and a pattern of output unsuited to
the country's needs. The country emerged in 2000 from a punishing
three-year recession thanks to strong demand in EU export markets.
Despite the global slowdown in 2001-02, strong domestic activity in
construction, agriculture, and consumption have kept GDP growth
above 4%. However, macroeconomic gains have only recently started to
spur creation of a middle class and address Romania's widespread
poverty, while corruption and red tape continue to handicap the
business environment. Romanian government confidence in continuing
disinflation was underscored by its currency revaluation in 2005,
making 10,000 "old" lei equal 1 "new" leu. The economy grew at 6.4%
in 2006, the strongest growth in the last decade. Romania joined the
European Union on 1 January 2007, and the IMF has praised the
country's recent reform efforts in preparation for EU accession.
Russia
Russia ended 2006 with its eighth straight year of growth,
averaging 6.7% annually since the financial crisis of 1998. Although
high oil prices and a relatively cheap ruble are important drivers
of this economic rebound, since 2000 investment and consumer-driven
demand have played a noticeably increasing role. Real fixed capital
investments have averaged gains greater than 10% over the last five
years, and real personal incomes have realized average increases
over 12%. During this time, poverty has declined steadily and the
middle class has continued to expand. Russia has also improved its
international financial position since the 1998 financial crisis.
Over the past several years, Russia has used its stabilization fund
based on oil taxes to prepay all Soviet-era sovereign debt to Paris
Club creditors and the IMF. Foreign debt has decreased to 39% of
GDP, mainly due to decreasing state debt, while commercial debt to
foreigners has risen strongly. Oil export earnings have allowed
Russia to increase its foreign reserves from $12 billion in 1999 to
some $315 billion at yearend 2006, the third largest reserves in the
world. These achievements, along with a renewed government effort to
advance structural reforms and fiscal restraint, have raised
business and investor confidence in Russia's economic prospects.
Russia's economy grew 6.6% in 2006 and inflation growth was below
10% for the first time in the past 10 years. Russia shows signs of
increasing its ties to the global economy, having signed a bilateral
market access agreement with the US as a prelude to possible WTO
entry. Nevertheless, serious problems persist. Oil, natural gas,
metals, and timber account for more than 80% of exports, leaving the
country vulnerable to swings in world commodity prices. Russia's
manufacturing base is dilapidated and must be replaced or modernized
if the country is to achieve broad-based economic growth. The
banking system, while growing at a high rate and increasing consumer
lending, is still small relative to the banking sectors of Russia's
emerging market peers. Domestic and foreign investor sentiment is
tempered by political uncertainties ahead of elections, corruption,
and widespread lack of trust in institutions. President PUTIN
continues to grant more influence to forces within his government
that desire to reassert state control over the economy. Government
spending has increased and risks becoming populist, most notably in
the form of the four "national projects" of agriculture, education,
housing, and medicine. Russia has made little progress in building
the rule of law, the bedrock of a modern market economy.
Rwanda
Rwanda is a poor rural country with about 90% of the
population engaged in (mainly subsistence) agriculture. It is the
most densely populated country in Africa and is landlocked with few
natural resources and minimal industry. Primary foreign exchange
earners are coffee and tea. The 1994 genocide decimated Rwanda's
fragile economic base, severely impoverished the population,
particularly women, and eroded the country's ability to attract
private and external investment. However, Rwanda has made
substantial progress in stabilizing and rehabilitating its economy
to pre-1994 levels, although poverty levels are higher now. GDP has
rebounded and inflation has been curbed. Despite Rwanda's fertile
ecosystem, food production often does not keep pace with population
growth, requiring food imports. Rwanda continues to receive
substantial aid money and obtained IMF-World Bank Heavily Indebted
Poor Country (HIPC) initiative debt relief in 2005. Kigali's high
defense expenditures have caused tension between the government and
international donors and lending agencies. Rwanda obtained debt
relief from the IMF and World Bank in 2006. Rwanda also received
Millennium Challenge Account Threshold status in 2006. Energy
shortages, instability in neighboring states, and lack of adequate
transportation linkages to other countries continue to handicap
growth.
Saint Helena
The economy depends largely on financial assistance
from the UK, which amounted to about $5 million in 1997 or almost
one-half of annual budgetary revenues. The local population earns
income from fishing, raising livestock, and sales of handicrafts.
Because there are few jobs, 25% of the work force has left to seek
employment on Ascension Island, on the Falklands, and in the UK.
Saint Kitts and Nevis
Sugar was the traditional mainstay of the
Saint Kitts economy until the 1970s. The government closed the sugar
industry following the 2005 harvest after decades of losses at the
state-run sugar company. To compensate, the government has embarked
on a program to diversify the agricultural sector and to stimulate
other sectors of the economy. Activities such as tourism,
export-oriented manufacturing, and offshore banking have assumed
larger roles in the economy. Tourism revenues are now the chief
source of the islands' foreign exchange; about 341,800 tourists
visited Nevis in 2005. Additional tourist facilities, including a
second cruise ship pier, hotels, and golf courses are under
construction.
Saint Lucia
Changes in the EU import preference regime and the
increased competition from Latin American bananas have made economic
diversification increasingly important in Saint Lucia. The island
nation has been able to attract foreign business and investment,
especially in its offshore banking and tourism industries. Tourism
is the main source of foreign exchange, with more than 700,000
arrivals in 2005. The manufacturing sector is the most diverse in
the Eastern Caribbean area, and the government is trying to
revitalize the banana industry. Economic fundamentals remain solid,
even though unemployment needs to be cut.
Saint Pierre and Miquelon
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. The islands are heavily subsidized by France
to the great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Recent test
drilling for oil may pave the way for development of the energy
sector.
Saint Vincent and the Grenadines
Economic growth in this
lower-middle-income country hinges upon seasonal variations in the
agricultural and tourism sectors. Tropical storms wiped out
substantial portions of crops in 1994, 1995, and 2002, and tourism
in the Eastern Caribbean suffered low arrivals in the immediate
aftermath of 11 September 2001. The islands had more than 160,000
tourist arrivals in 2005, mostly to the Grenadines. Saint Vincent is
home to a small offshore banking sector and has moved to adopt
international regulatory standards. Saint Vincent is also a producer
of marijuana and is being used as a transshipment point for illegal
narcotics from South America.
Samoa
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, agriculture, and
fishing. The country is vulnerable to devastating storms.
Agriculture employs two-thirds of the labor force, and furnishes 90%
of exports, featuring coconut cream, coconut oil, and copra. The
fish catch declined during the El Nino of 2002-03, but returned to
normal by mid-2005. The manufacturing sector mainly processes
agricultural products. One factory in the Foreign Trade Zone employs
3,000 people to make automobile electrical harnesses for an assembly
plant in Australia. Tourism is an expanding sector, accounting for
25% of GDP; about 100,000 tourists visited the islands in 2005. The
Samoan Government has called for deregulation of the financial
sector, encouragement of investment, and continued fiscal
discipline, while at the same time protecting the environment.
Observers point to the flexibility of the labor market as a basic
strength for future economic advances. Foreign reserves are in a
relatively healthy state, the external debt is stable, and inflation
is low.
San Marino
The tourist sector contributes over 50% of GDP. In 2006
more than 2.1 million tourists visited San Marino. The key
industries are banking, wearing apparel, electronics, and ceramics.
Main agricultural products are wine and cheeses. 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.
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, but strengthening prices helped boost
export earnings in 2003. Sao Tome 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 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, Sao Tome 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. Sao Tome is optimistic about the development
of petroleum resources in its territorial waters in the oil-rich
Gulf of Guinea, which are being jointly developed in a 60-40 split
with Nigeria. The first production licenses were sold in 2004,
though a dispute over licensing with Nigeria delayed Sao Tome's
receipt of more than $20 million in signing bonuses for almost a
year. Real GDP growth exceeded 4% in 2006, as a result of increases
in public expenditures and oil-related capital investment.
Saudi Arabia
This is an oil-based economy with strong government
controls over major economic activities. Saudi Arabia possesses 25%
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 75% of budget revenues, 45% of
GDP, and 90% of export earnings. About 40% of GDP comes from the
private sector. Roughly 5.5 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors. The government is encouraging private sector growth
to lessen the kingdom's dependence on oil and increase employment
opportunities for the swelling Saudi population. The government is
promoting private sector and foreign participation in the power
generation, telecom, natural gas, and petrochemical industries. As
part of its effort to attract foreign investment and diversify the
economy, Saudi Arabia acceded to the WTO in December 2005 after many
years of negotiations. With high oil revenues enabling the
government to post large budget surpluses, Riyadh has been able to
substantially boost spending on job training and education,
infrastructure development, and government salaries.
Senegal
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which was linked at a fixed rate to the
French franc. 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
1995-2006. Annual inflation had been pushed down to the low single
digits. 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. Senegal was
also beset by an energy crisis that caused widespread blackouts in
2006. Senegal still relies heavily upon outside donor assistance.
Under the IMF's Highly Indebted Poor Countries (HIPC) debt relief
program, Senegal will benefit from eradication of two-thirds of its
bilateral, multilateral, and private-sector debt.
Serbia
MILOSEVIC-era mismanagement of the economy, an extended
period of 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 October 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,
a down-sized Yugoslavia continued to reintegrate into the
international community by rejoining the World Bank (IBRD) and the
European Bank for Reconstruction and Development (EBRD). A World
Bank-European Commission sponsored Donors' Conference held in June
2001 raised $1.3 billion for economic restructuring. In November
2001, the Paris Club agreed to reschedule the country's $4.5 billion
public debt and wrote off 66% of the debt. In July 2004, the London
Club of private creditors forgave $1.7 billion of debt, just over
half the total owed. Belgrade has made only minimal progress in
restructuring and privatizing its holdings in major sectors of the
economy, including energy and telecommunications. It has made
halting progress towards EU membership and is currently pursuing a
Stabilization and Association Agreement with Brussels. Serbia is
also pursuing membership in the World Trade Organization.
Unemployment remains an ongoing political and economic problem. The
Republic of Montenegro severed its economy from Serbia during the
MILOSEVIC era; therefore, the formal separation of Serbia and
Montenegro in June 2006 had little real impact on either economy.
Kosovo's economy continues to transition to a market-based system
and is largely dependent on the international community and the
diaspora for financial and technical assistance. The euro and the
Serbian dinar are both accepted currencies in Kosovo. While
maintaining ultimate oversight, UNMIK continues to work with the EU
and Kosovo's local provisional government to accelerate economic
growth, lower unemployment, and attract foreign investment to help
Kosovo integrate into regional economic structures. The complexity
of Serbia and Kosovo's political and legal relationships has created
uncertainty over property rights and hindered the privatization of
state-owned assets in Kosovo. Most of Kosovo's population lives in
rural towns outside of the largest city, Pristina. Inefficient,
near-subsistence farming is common.
note: economic data for Serbia currently reflects information for
the former Serbia and Montenegro, unless otherwise noted; data for
Serbia alone will be added when available
Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the old
near-subsistence level. 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 in order 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.
Sharp drops illustrated the vulnerability of the tourist sector in
1991-92 due largely to the Gulf War, and once again following the 11
September 2001 terrorist attacks on the US. Growth slowed in
1998-2002, and fell in 2003, due to sluggish tourist and tuna
sectors, but resumed in 2004. Growth turned negative again in
2005-06. Tight controls on exchange rates and the scarcity of
foreign exchange have impaired short-term economic prospects. The
black-market value of the Seychelles rupee is half the official
exchange rate; without a devaluation of the currency, the tourist
sector may remain sluggish as vacationers seek cheaper destinations
such as Comoros, Mauritius, and Madagascar.
Sierra Leone
Sierra Leone is an extremely poor African nation with
tremendous inequality in income distribution. While it possesses
substantial mineral, agricultural, and fishery resources, its
economic and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development.
About two-thirds 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. A recent increase in political
stability has led to a revival of economic activity, such as the
rehabilitation of bauxite and rutile mining.
Singapore
Singapore, a highly-developed and successful free-market
economy, enjoys a remarkably open and corruption-free environment,
stable prices, and a per capita GDP equal to that of the four
largest West European countries. The economy depends heavily on
exports, particularly in consumer electronics and information
technology products. It was hard hit in 2001-03 by the global
recession, by the slump in the technology sector, and by an outbreak
of Severe Acute Respiratory Syndrome (SARS) in 2003, which curbed
tourism and consumer spending. Fiscal stimulus, low interest rates,
a surge in exports, and internal flexibility led to vigorous growth
in 2004-06, with real GDP growth averaging 7% annually. The
government hopes to establish a new growth path that will be less
vulnerable to the global demand cycle for information technology
products - it 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.
Slovakia
Slovakia has mastered much of the difficult transition from
a centrally planned economy to a modern market economy. The DZURINDA
government made excellent progress during 2001-04 in macroeconomic
stabilization and structural reform. Major privatizations are nearly
complete, the banking sector is almost completely 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 sector has
been strong. Slovakia's economic growth exceeded expectations in
2001-06, despite the general European slowdown. Unemployment, at an
unacceptable 18% in 2003-04, dropped to 10.2% in 2006, but remains
the economy's Achilles heel. Slovakia joined the EU on 1 May 2004.
Slovenia
With a GDP per capita substantially greater than the other
transitioning economies of Central Europe, Slovenia is a model of
economic success and stability for its neighbors in the former
Yugoslavia. The country, which joined the EU in 2004 and joined the
eurozone on 1 January 2007, has excellent infrastructure, a
well-educated work force, and an excellent central location.
Privatization of the economy proceeded at an accelerated pace in
2002-05. Despite lackluster performance in Europe in 2001-05,
Slovenia maintained moderate growth. Structural reforms to improve
the business environment have allowed for 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. Despite its economic success, Slovenia faces growing
challenges. Much of the economy remains in state hands and foreign
direct investment (FDI) in Slovenia is one of the lowest in the EU
on a per capita basis. Taxes are relatively high, the labor market
is often seen as inflexible, and legacy industries are losing sales
to more competitive firms in China, India, and elsewhere. The
current center-right government, elected in October 2004, has
pledged to accelerate privatization of a number of large state
holdings and is interested in increasing FDI in Slovenia. In late
2005, the government's new Committee for Economic Reforms was
elevated to cabinet-level status. The Committee's program includes
plans for lowering the tax burden, privatizing state-controlled
firms, improving the flexibility of the labor market, and increasing
the government's efficiency.
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 the Regional
Assistance Mission to the Solomon Islands (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
Somalia's economic fortunes are driven by its deep political
divisions. The northwestern area has declared its independence as
the "Republic of Somaliland"; the northeastern region of Puntland is
a semi-autonomous state; and the remaining southern portion is
riddled with the struggles of rival factions. Economic life
continues, in part because much activity is local and relatively
easily protected. Agriculture is the most important sector, with
livestock normally accounting for about 40% of GDP and about 65% of
export earnings, but Saudi Arabia's ban on Somali livestock, due to
Rift Valley Fever concerns, has severely hampered the sector. Nomads
and semi-nomads, 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
sold as scrap metal. Despite the seeming anarchy, Somalia's service
sector has managed to survive and grow. 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 exchange services have sprouted
throughout the country, handling between $500 million and $1 billion
in remittances annually. Mogadishu's main market offers a variety of
goods from food to the newest electronic gadgets. The SCIC has
opened Mogadishu's main port and airport - closed for 15 years - and
now controls most of the ports and airfields in southern Somalia.
Hotels continue to operate, and militias provide security. The
ongoing civil disturbances and clan rivalries, however, have
interfered with any broad-based economic development and
international aid arrangements. Somalia's arrears to the IMF
continued to grow in 2006. Statistics on Somalia's GDP, growth, per
capita income, and inflation should be viewed skeptically. In late
December 2004, a major tsunami caused an estimated 150 deaths and
resulted in destruction of property in coastal areas.
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 ranks among the 10 largest in the world; and a modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. However, growth has not
been strong enough to lower South Africa's high unemployment rate,
and daunting economic problems remain from the apartheid era -
especially poverty and lack of economic empowerment among the
disadvantaged groups. South African economic policy is fiscally
conservative, but pragmatic, focusing on targeting inflation and
liberalizing trade as means to increase job growth and household
income.
South Georgia and the 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 2003-04 landed 136,262 metric tons, of
which 87% (118,166 tons) was krill and 8% (11,182 tons) Patagonian
toothfish, compared to 142,555 tons in 2002-03 of which 83% (117,728
tons) was krill and 12% (16,479 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 2004-05 Antarctic summer 28,202 tourists, most of them
seaborne (approximately 97%), visited the Southern Ocean and
Antarctica, compared to 14,762 in 1999-2000.
Spain
The Spanish economy boomed from 1986 to 1990, averaging 5%
annual growth. After a European-wide recession in the early 1990s,
the Spanish economy resumed moderate growth starting in 1994.
Spain's mixed capitalist economy supports a GDP that on a per capita
basis is 80% that of the four leading West European economies. The
center-right government of former President AZNAR successfully
worked to gain admission to the first group of countries launching
the European single currency (the euro) on 1 January 1999. The AZNAR
administration continued to advocate liberalization, privatization,
and deregulation of the economy and introduced some tax reforms to
that end. Unemployment fell steadily under the AZNAR administration
but remains high at 8.7%. Growth averaging 3% annually during
2003-06 was satisfactory given the background of a faltering
European economy. The Socialist president, RODRIGUEZ ZAPATERO, has
made mixed progress in carrying out key structural reforms, which
need to be accelerated and deepened to sustain Spain's strong
economic growth. Despite the economy's relative solid footing
significant downside risks remain, including Spain's continued loss
of competitiveness, the potential for a housing market collapse, the
country's changing demographic profile and a decline in EU
structural funds.
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.
Sri Lanka
In 1977, Colombo abandoned statist economic policies and
its import substitution trade policy for more market-oriented
policies, export-oriented trade, and encouragement of foreign
investment. Recent changes in government have brought some policy
reversals, however. Currently, the ruling Sri Lanka Freedom Party
has a more statist economic approach which seeks to reduce poverty
by steering investment to disadvantaged areas, developing small and
medium enterprises, promoting agriculture, and expanding the already
enormous civil service. The government has halted most
privatizations. Although suffering a brutal civil war that began in
1983, Sri Lanka saw GDP growth average 4.5% in the last ten years,
with a brief interruption during the global downturn in 2001. In
late December 2004, a major tsunami took about 31,000 lives, left
more than 6,300 missing and 443,000 displaced, and destroyed an
estimated $1.5 billion worth of property. Growth, partly spurred by
reconstruction, reached 5% in 2005 and more than 6% in 2006. Sri
Lanka's most dynamic sectors now are food processing, textiles and
apparel, food and beverages, port contstruction, telecommunications,
and insurance and banking. In 2005, plantation crops made up only
about 15% of exports (compared with more than 90% in 1970), while
textiles and garments accounted for more than 60%. About 800,000 Sri
Lankans work abroad, 90% in the Middle East. They send home about $1
billion a year. The struggle by the Tamil Tigers of the north and
east for a largely independent homeland continues to cast a shadow
over the economy.
Sudan
Sudan has turned around a struggling economy with sound
economic policies and infrastructure investments, but it still faces
formidable economic problems, starting from its low level of per
capita output. From 1997 to date, Sudan has been implementing IMF
macroeconomic reforms. In 1999, Sudan began exporting crude oil and
in the last quarter of 1999 recorded its first trade surplus, which,
along with monetary policy, has stabilized the exchange rate.
Increased oil production, revived light industry, and expanded
export processing zones helped sustain GDP growth at 10% in 2006.
Agricultural production remains Sudan's most important sector,
employing 80% of the work force, contributing 35% of GDP, and
accounting for most of GDP growth, but most farms remain rain-fed
and susceptible to drought. Chronic instability - resulting from the
long-standing civil war between the Muslim north and the
Christian/pagan south, adverse weather, and weak world agricultural
prices - ensure that much of the population will remain at or below
the poverty line for years.
Suriname
The economy is dominated by the mining industry, which
accounts for more than a third of GDP and subjects government
revenues to mineral price volatility. The short-term economic
outlook depends on the government's ability to control inflation and
on the development of projects in the bauxite and gold mining
sectors. 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. The government of Ronald VENETIAAN,
in his first term, implemented an austerity program, raised taxes,
and attempted to control spending. Economic policies are likely to
remain the same during VENETIAAN's second term. Prospects for local
onshore oil production are good, as a drilling program is underway.
Offshore oil drilling was given a boost in 2004 when the State Oil
Company (Staatsolie) signed exploration agreements with Repsol,
Mearsk, and Occidental. Bidding on these new offshore blocks was
completed in July 2006.
Svalbard
Coal mining is the major economic activity on Svalbard. The
treaty of 9 February 1920 gives 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 mining 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 more than 80% of the population. The manufacturing sector
has diversified since the mid-1980s. Sugar and wood pulp remain
important foreign exchange earners. 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. Customs duties from the
Southern African Customs Union and worker remittances from South
Africa substantially supplement domestically earned income. The
government is trying to improve the atmosphere for foreign
investment. 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 2004-05 because of
drought, and nearly two-fifths 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. 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 only 1% of GDP and
2% of employment. The government's commitment to fiscal discipline
resulted in a substantial budgetary surplus in 2001, which was cut
by more than half in 2002, due to the global economic slowdown,
declining revenue, and increased spending. The Swedish central bank
(the Riksbank) focuses on price stability with its inflation target
of 2%. Growth remained sluggish in 2003, but picked up during
2004-06. Presumably because of generous sick-leave benefits, Swedish
workers report in sick more often than other Europeans. In September
2003, Swedish voters turned down entry into the euro system,
concerned about the impact on the economy and sovereignty.
Switzerland
Switzerland is a peaceful, prosperous, and stable modern
market economy with low unemployment, a highly skilled labor force,
and a per capita GDP larger than that of the big Western European
economies. The Swiss in recent years have brought their economic
practices largely into conformity with the EU's to enhance their
international competitiveness. Switzerland remains a safehaven for
investors, because it has maintained a degree of bank secrecy and
has kept up the franc's long-term external value. Reflecting the
anemic economic conditions of Europe, GDP growth stagnated during
the 2001-03 period, improved during 2004-05 to 1.8% annually and to
2.9% in 2006. Even so, unemployment has remained at less than half
the EU average.
Syria
The Syrian economy grew by an estimated 2.9% in real terms in
2006, led by the petroleum and agricultural sectors, which together
account for about one-half of GDP. Higher crude oil prices countered
declining oil production and exports and led to higher budgetary and
export receipts. Total foreign assets of the Central Bank and
domestic banking system rose to about $20 billion in 2006, and the
government strengthened the private sector foreign exchange rate by
about 7 percent from the start of the year. The Government of Syria
has implemented modest economic reforms in the past few years,
including cutting interest rates, opening private banks,
consolidating some of the multiple exchange rates, and raising
prices on some subsidized foodstuffs. Nevertheless, the economy
remains highly controlled by the government. Long-run economic
constraints include declining oil production and exports, weak
investment, 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 guidance of investment and foreign trade by government
authorities. In keeping with this trend, some large,
government-owned banks and industrial firms are being privatized.
Exports have provided the primary impetus for industrialization. The
island runs a trade surplus, and foreign reserves are the world's
third largest. Despite restrictions cross-strait links, China has
overtaken the US to become Taiwan's largest export market and, in
2006, its second-largest source of imports after Japan. China is
also the island's number one destination for foreign direct
investment. Strong trade performance in 2006 pushed Taiwan's GDP
growth rate above 4%, and unemployment is below 4%. Consumer
spending recovered following a slowdown early in 2006, when banks
tightened lending to address a sharp increase in delinquent consumer
debt.
Tajikistan
Tajikistan has one of the lowest per capita GDPs among
the 15 former Soviet republics. Only 6% of the land area is arable;
cotton is the most important crop. Mineral resources, varied but
limited in amount, 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. While Tajikistan has
experienced steady economic growth since 1997, nearly two-thirds of
the population continue to live in abject poverty. Economic growth
reached 10.6% in 2004, but dropped to 8% in 2005, and to 7% in 2006.
Tajikistan's economic situation, however, remains fragile due to
uneven implementation of structural reforms, weak governance,
widespread unemployment, and the external debt burden. Continued
privatization of medium and large state-owned enterprises could
increase productivity. A debt restructuring agreement was reached
with Russia in December 2002, including a $250 million write-off of
Tajikistan's $300 million debt to Russia. Tajikistan ranks third in
the world in terms of water resources per head. A proposed
investment to finish the hydropower dams Rogun and Sangtuda I and II
would substantially add to electricity production, which could be
exported for profit. If finished, Rogun will be the world's tallest
dam. In 2006, Tajikistan was the recipient of substantial Shanghai
Cooperation Organization infrastructure development credits to
improve its roads and electricity transmission network.
Tanzania
Tanzania is one of the poorest countries in the world. The
economy depends heavily on agriculture, which accounts for almost
half of GDP, provides 85% of exports, and employs 80% of the work
force. Topography and climatic conditions, however, limit cultivated
crops to only 4% of the land area. Industry traditionally featured
the processing of agricultural products and light consumer goods.
The World Bank, the International Monetary Fund, and bilateral
donors have provided funds to rehabilitate Tanzania's out-of-date
economic infrastructure and to alleviate poverty. Long-term growth
through 2005 featured a pickup in industrial production and a
substantial increase in output of minerals, led by gold. Recent
banking reforms have helped increase private-sector growth and
investment. Continued donor assistance and solid macroeconomic
policies supported real GDP growth of nearly 6% in 2006.
Thailand
With a well-developed infrastructure, a free-enterprise
economy, and pro-investment policies, Thailand appears to have fully
recovered from the 1997-98 Asian Financial Crisis. The country was
one of East Asia's best performers in 2002-04. Boosted by increased
consumption and strong export growth, the Thai economy grew 6.9% in
2003 and 6.1% in 2004 despite a sluggish global economy. Bangkok has
pursued preferential trade agreements with a variety of partners in
an effort to boost exports and to maintain high growth. In late
December 2004, a major tsunami took 8,500 lives in Thailand and
caused massive destruction of property in the southern provinces of
Krabi, Phangnga, and Phuket. In 2006, investment stagnated as
investors, spooked by the Thaksin administration's political
problems, stayed on the sidelines. The military coup in September
brought in a new economic team, led by the former central bank
governor. In December, the Thai Board of Investment reported the
value of investment applications from January to November had
declined by 27% year-on-year. On the positive side, exports have
performed at record levels, rising nearly 17% in 2006.
Export-oriented manufacturing - in particular automobile production
- and farm output are driving these gains.
Togo
This small, sub-Saharan economy is heavily dependent 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 working with donors to write a PRGF that could eventually
lead to a debt reduction plan.
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 $4 million annually - to maintain public
services, with annual aid being substantially greater than GDP. 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, a small, open, South Pacific island economy, has a
narrow export base in agricultural goods. Squash, coconuts, bananas,
and vanilla beans are the main crops, and agricultural exports 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. 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.
Trinidad and Tobago
Trinidad and Tobago, the leading Caribbean
producer of oil and gas, has earned a reputation as an excellent
investment site for international businesses. Tourism is a growing
sector, although not proportionately as important as in many other
Caribbean islands. The economy benefits from a growing trade
surplus. Economic growth in 2006 reached 12.6% as prices for oil,
petrochemicals, and liquefied natural gas remained high, and foreign
direct investment continued to grow to support expanded capacity in
the energy sector. The government is coping with a rise in violent
crime.
Tromelin Island
no economic activity
Tunisia
Tunisia has a diverse economy, with important agricultural,
mining, energy, tourism, and manufacturing sectors. Governmental
control of economic affairs while still heavy has gradually lessened
over the past decade with increasing privatization, simplification
of the tax structure, and a prudent approach to debt. Progressive
social policies also have helped raise living conditions in Tunisia
relative to the region. Real growth slowed to a 15-year low of 1.9%
in 2002 because of agricultural drought and lackluster tourism.
Increased rain helped to push GDP growth to an average rate of 5% in
2003-06. However, a recession in agriculture, weak expansion in the
tourism and textile sectors, and increasing import costs due to
rising world energy prices cut growth to 4% in 2006. Tunisia is
gradually removing barriers to trade with the EU. Broader
privatization, further liberalization of the investment code to
increase foreign investment, improvements in government efficiency,
and reduction of the trade deficit are among the challenges ahead.
Turkey
Turkey's dynamic economy is a complex mix of modern industry
and commerce along with a traditional agriculture sector that still
accounts for more than 35% of employment. It has a strong and
rapidly growing private sector, yet the state still plays a major
role in basic industry, banking, transport, and communication. The
largest industrial sector is textiles and clothing, which accounts
for one-third of industrial employment; it faces stiff competition
in international markets with the end of the global quota system.
However, other sectors, notably the automotive and electronics
industries, are rising in importance within Turkey's export mix.
Real GNP growth has exceeded 6% in many years, but this strong
expansion has been interrupted by sharp declines in output in 1994,
1999, and 2001. The economy is turning around with the
implementation of economic reforms, and 2004 GDP growth reached 9%,
followed by roughly 5% annual growth in 2005-06. Inflation fell to
7.7% in 2005 - a 30-year low, but climbed back to 9.8% in 2006.
Despite the strong economic gains in 2002-06, which were largely due
to renewed investor interest in emerging markets, IMF backing, and
tighter fiscal policy, the economy is still burdened by a high
current account deficit and high debt. The public sector fiscal
deficit exceeds 6% of GDP - due in large part to high interest
payments, which accounted for about 37% of central government
spending in 2004. Prior to 2005, foreign direct investment (FDI) in
Turkey averaged less than $1 billion annually, but further economic
and judicial reforms and prospective EU membership are expected to
boost FDI. Privatization sales are currently approaching $21
billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline
in May 2006, marking a major milestone that will bring up to 1
billion barrels per day from the Caspian to market.
Turkmenistan
Turkmenistan is a largely desert country with intensive
agriculture in irrigated oases and large gas and oil resources.
One-half of its irrigated land is planted in cotton; formerly it was
the world's tenth-largest producer. Poor harvests in recent years
have led to an almost 50% decline in cotton exports. With an
authoritarian ex-Communist regime in power and a tribally based
social structure, Turkmenistan has taken a cautious approach to
economic reform, hoping to use gas and cotton sales to sustain its
inefficient economy. Privatization goals remain limited. In
1998-2005, Turkmenistan suffered from the continued lack of adequate
export routes for natural gas and from obligations on extensive
short-term external debt. At the same time, however, total exports
rose by an average of 15% per year in 2003-06, largely because of
higher international oil and gas prices. In 2006, Ashgabat raised
its natural gas export prices to its main customer, Russia, from $66
per thousand cubic meters (tcm) to $100 per tcm. Overall prospects
in the near future are discouraging because of widespread internal
poverty, a poor educational system, government misuse of oil and gas
revenues, and Ashgabat's unwillingness to adopt market-oriented
reforms. Turkmenistan's economic statistics are state secrets, and
GDP and other figures are subject to wide margins of error. In
particular, the rate of GDP growth is uncertain.
Turks and Caicos Islands
The Turks and Caicos economy is based on
tourism, offshore financial services, and fishing. Most capital
goods and food for domestic consumption are imported. The US is the
leading source of tourists, accounting for more than three-quarters
of the 175,000 visitors that arrived in 2004. Major sources of
government revenue also include fees from offshore financial
activities and customs receipts.
Tuvalu
Tuvalu consists of a densely populated, scattered group of
nine coral atolls with poor soil. The country has no known mineral
resources and few exports. Subsistence farming and fishing are the
primary economic activities. Fewer than 1,000 tourists, on average,
visit Tuvalu annually. Government revenues largely come from the
sale of stamps and coins and remittances from seamen on merchant
ships abroad. About 1,000 Tuvaluans are being repatriated from
Nauru, with the decline of phosphate resources there. Substantial
income is received annually from an international trust fund
established in 1987 by Australia, NZ, and the UK and supported also
by Japan and South Korea. Thanks to wise investments and
conservative withdrawals, this fund has grown from an initial $17
million to over $35 million in 1999. The US Government is also a
major revenue source for Tuvalu because of payments from a 1988
treaty on fisheries. In an effort to reduce its dependence on
foreign aid, the government is pursuing public sector reforms,
including privatization of some government functions and personnel
cuts of up to 7%. Tuvalu derives around $1.5 million per year from
the lease of its ".tv" Internet domain name. With merchandise
exports only a fraction of merchandise imports, continued reliance
must be placed on fishing and telecommunications license fees,
remittances from overseas workers, official transfers, and income
from overseas investments.
Uganda
Uganda has substantial natural resources, including fertile
soils, regular rainfall, and sizable mineral deposits of copper and
cobalt. Agriculture is the most important sector of the economy,
employing over 80% of the work force. Coffee accounts for the bulk
of export revenues. Since 1986, the government - with the support of
foreign countries and international agencies - has acted to
rehabilitate and stabilize the economy by undertaking currency
reform, raising producer prices on export crops, increasing prices
of petroleum products, and improving civil service wages. The policy
changes are especially aimed at dampening inflation and boosting
production and export earnings. During 1990-2001, the economy turned
in a solid performance based on continued investment in the
rehabilitation of infrastructure, improved incentives for production
and exports, reduced inflation, gradually improved domestic
security, and the return of exiled Indian-Ugandan entrepreneurs. In
2000, Uganda qualified for enhanced Highly Indebted Poor Countries
(HIPC) debt relief worth $1.3 billion and Paris Club debt relief
worth $145 million. These amounts combined with the original HIPC
debt relief added up to about $2 billion. Growth for 2001-02 was
solid despite continued decline in the price of coffee, Uganda's
principal export. Growth in 2003-06 reflected an upturn in Uganda's
export markets.
Ukraine
After Russia, the Ukrainian republic was far and away the
most important economic component of the former Soviet Union,
producing about four times the output of the next-ranking republic.
Its fertile black soil generated more than one-fourth of Soviet
agricultural output, and its farms provided substantial quantities
of meat, milk, grain, and vegetables to other republics. Likewise,
its diversified heavy industry supplied the unique equipment (for
example, large diameter pipes) and raw materials to industrial and
mining sites (vertical drilling apparatus) in other regions of the
former USSR. Ukraine depends on imports of energy, especially
natural gas, to meet some 85% of its annual energy requirements.
Shortly after independence was ratified in December 1991, the
Ukrainian Government liberalized most prices and erected a legal
framework for privatization, but widespread resistance to reform
within the government and the legislature soon stalled reform
efforts and led to some backtracking. Output by 1999 had fallen to
less than 40% of the 1991 level. Loose monetary policies pushed
inflation to hyperinflationary levels in late 1993. Ukraine's
dependence on Russia for energy supplies and the lack of significant
structural reform have made the Ukrainian economy vulnerable to
external shocks. A dispute with Russia over pricing in late 2005 and
early 2006 led to a temporary gas cut-off; Ukraine concluded a deal
with Russia in January 2006 that almost doubled the price Ukraine
pays for Russian gas, and could cost the Ukrainian economy $1.4-2.2
billion. Ukrainian Government officials eliminated most tax and
customs privileges in a March 2005 budget law, bringing more
economic activity out of Ukraine's large shadow economy, but more
improvements are needed, including fighting corruption, developing
capital markets, and improving the legislative framework for
businesses. Reforms in the more politically sensitive areas of
structural reform and land privatization are still lagging. Outside
institutions - particularly the IMF - have encouraged Ukraine to
quicken the pace and scope of reforms. GDP growth was 6% in 2006, up
from 2.4% in 2005 mainly because of high steel prices worldwide and
strong demand for Ukrainian goods. The privatization of the
Kryvoryzhstal steelworks in late 2005 produced $4.8 billion in
windfall revenue for the government. Some of the proceeds were used
to finance the budget deficit, some to recapitalize two state banks,
some to retire public debt, and the rest may be used to finance
future deficits. Although the economy is likely to expand in 2007,
long-term growth could be threatened by the government's plans to
reinstate tax, trade, and customs privileges and to maintain
restrictive grain export quotas.
United Arab Emirates
The UAE has an open economy with a high per
capita income and a sizable annual trade surplus. Its wealth is
based on oil and gas output (about 30% of GDP), and the fortunes of
the economy fluctuate with the prices of those commodities. Since
the discovery of oil in the UAE more than 30 years ago, the UAE has
undergone a profound transformation from an impoverished region of
small desert principalities to a modern state with a high standard
of living. The government has increased spending on job creation and
infrastructure expansion and is opening up its utilities to greater
private sector involvement. In April 2004, the UAE signed a Trade
and Investment Framework Agreement (TIFA) with Washington and in
November 2004 agreed to undertake negotiations toward a Free Trade
Agreement (FTA) with the US. Higher oil revenue, strong liquidity,
and cheap credit in 2005-06 led to a surge in asset prices (shares
and real estate) and consumer inflation. Rising prices are
increasing the operating costs for businesses in the UAE and
degrading the UAE's allure to foreign investors. Dependence on a
large expatriate workforce and oil are significant long-term
challenges to the UAE's economy.
United Kingdom
The UK, a leading trading power and financial center,
is one of the quintet of trillion dollar economies of Western
Europe. Over the past two decades, the government has greatly
reduced public ownership and contained the growth of social welfare
programs. Agriculture is intensive, highly mechanized, and efficient
by European standards, producing about 60% of food needs with less
than 2% of the labor force. The UK has large coal, natural gas, and
oil reserves; primary energy production accounts for 10% of GDP, one
of the highest shares of any industrial nation. Services,
particularly banking, insurance, and business services, account by
far for the largest proportion of GDP while industry continues to
decline in importance. GDP growth slipped in 2001-03 as the global
downturn, the high value of the pound, and the bursting of the "new
economy" bubble hurt manufacturing and exports. Output recovered in
2004, to 3.2% growth, then slowed to 1.7% in 2005 and 2.6% in 2006.
The economy is one of the strongest in Europe; inflation, interest
rates, and unemployment remain low. The relatively good economic
performance has complicated the BLAIR government's efforts to make a
case for Britain to join the European Economic and Monetary Union
(EMU). Critics point out that the economy is doing well outside of
EMU, and public opinion polls show a majority of Britons are opposed
to the euro. Meantime, the government has been speeding up the
improvement of education, transport, and health services, at a cost
in higher taxes and a widening public deficit.
United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $43,500. In
this market-oriented economy, private individuals and business firms
make most of the decisions, and the federal and state governments
buy needed goods and services predominantly in the private
marketplace. US business firms enjoy greater flexibility than their
counterparts in Western Europe and Japan in decisions to expand
capital plant, to lay off surplus workers, and to develop new
products. At the same time, they face higher barriers to enter their
rivals' home markets than foreign firms face entering US markets. US
firms are at or near the forefront in technological advances,
especially in computers and in medical, aerospace, and military
equipment; their advantage has narrowed since the end of World War
II. The onrush of technology largely explains the gradual
development of a "two-tier labor market" in which those at the
bottom lack the education and the professional/technical skills of
those at the top and, more and more, fail to get comparable pay
raises, health insurance coverage, and other benefits. Since 1975,
practically all the gains in household income have gone to the top
20% of households. The response to the terrorist attacks of 11
September 2001 showed the remarkable resilience of the economy. The
war in March-April 2003 between a US-led coalition and Iraq, and the
subsequent occupation of Iraq, required major shifts in national
resources to the military. The rise in GDP in 2004-06 was
undergirded by substantial gains in labor productivity. Hurricane
Katrina caused extensive damage in the Gulf Coast region in August
2005, but had a small impact on overall GDP growth for the year.
Soaring oil prices in 2005 and 2006 threatened inflation and
unemployment, yet the economy continued to grow through year-end
2006. Imported oil accounts for about two-thirds of US consumption.
Long-term problems include inadequate investment in economic
infrastructure, rapidly rising medical and pension costs of an aging
population, sizable trade and budget deficits, and stagnation of
family income in the lower economic groups.
United States Pacific Island Wildlife Refuges
no economic activity
Uruguay
Uruguay's well-to-do economy is characterized by an
export-oriented agricultural sector, a well-educated work force, and
high levels of social spending. After averaging growth of 5%
annually during 1996-98, in 1999-2002 the economy suffered a major
downturn, stemming largely from the spillover effects of the
economic problems of its large neighbors, Argentina and Brazil. For
instance, in 2001-02 Argentina made massive withdrawals of dollars
deposited in Uruguayan banks, which led to a plunge in the Uruguayan
peso and a massive rise in unemployment. Total GDP in these four
years dropped by nearly 20%, with 2002 the worst year due to the
banking crisis. The unemployment rate rose to nearly 20% in 2002,
inflation surged, and the burden of external debt doubled.
Cooperation with the IMF helped stem the damage. A debt swap with
private-sector creditors in 2003 extended the maturity dates on
nearly half of Uruguay's then $11.3 billion of public debt and
helped restore public confidence. The economy grew about 12% in 2004
as a result of high commodity prices for Uruguayan exports, a
competitive peso, growth in the region, and low international
interest rates, and it continued to grow nearly 7% annually in 2005
and 2006.
Uzbekistan
Uzbekistan is a dry, landlocked country of which 11%
consists of intensely cultivated, irrigated river valleys. More than
60% of its population lives in densely populated rural communities.
Uzbekistan is now the world's second-largest cotton exporter and
fifth largest producer; it relies heavily on cotton production as
the major source of export earnings. Other major export earners
include gold, natural gas, and oil. Following independence in
September 1991, the government sought to prop up its Soviet-style
command economy with subsidies and tight controls on production and
prices. While aware of the need to improve the investment climate,
the government still sponsors measures that often increase, not
decrease, its control over business decisions. A sharp increase in
the inequality of income distribution has hurt the lower ranks of
society since independence. In 2003, the government accepted the
obligations of Article VIII under the International Monetary Fund
(IMF), providing for full currency convertibility. However, strict
currency controls and tightening of borders have lessened the
effects of convertibility and have also led to some shortages that
have further stifled economic activity. The Central Bank often
delays or restricts convertibility, especially for consumer goods.
Potential investment by Russia and China in Uzbekistan's gas and oil
industry would increase economic growth prospects. In November 2005,
Russian President Vladimir PUTIN and Uzbekistan President KARIMOV
signed an "alliance" treaty, which included provisions for economic
and business cooperation. Russian businesses have shown increased
interest in Uzbekistan, especially in mining, telecom, and oil and
gas. In December 2005, the Russians opened a "Trade House" to
support and develop Russian-Uzbek business and economic ties.
Vanuatu
This South Pacific island economy is based primarily on
small-scale agriculture, which provides a living for 65% of the
population. Fishing, offshore financial services, and tourism, with
more than 60,000 visitors in 2005, are other mainstays of the
economy. Mineral deposits are negligible; the country has no known
petroleum deposits. A small light industry sector caters to the
local market. Tax revenues come mainly from import duties. Economic
development is hindered by dependence on relatively few commodity
exports, vulnerability to natural disasters, and long distances from
main markets and between constituent islands. GDP growth rose less
than 3% on average in the 1990s. In response to foreign concerns,
the government has promised to tighten regulation of its offshore
financial center. In mid-2002 the government stepped up efforts to
boost tourism through improved air connections, resort development,
and cruise ship facilities. Agriculture, especially livestock
farming, is a second target for growth. Australia and New Zealand
are the main suppliers of tourists and foreign aid.
Venezuela
Venezuela remains highly dependent on oil revenues, which
account for roughly 90% of export earnings, more than 50% of the
federal budget revenues, and around 30% of GDP. Tax
collection-Venezuela's primary source of non-oil revenue-is expected
to surpass $23 billion in 2006, exceeding the yearend collection
goal by more than 20%. A nationwide strike between December 2002 and
February 2003 had far-reaching economic consequences - real GDP
declined by around 9% in 2002 and 8% in 2003 - but economic output
since then has recovered strongly. Fueled by higher oil prices,
record government spending helped to boost GDP growth in 2004 and
2005 to approximately 18% and 11%, respectively. Economic growth in
2006 reached around 9%. This spending, combined with recent minimum
wage hikes and improved access to domestic credit, has fueled a
consumption boom - car sales in 2006 increased by around 70% - but
has come at the cost of higher inflation. Despite government
attempts to withdraw liquidity from the economy, Venezuela's money
supply set a record in June 2006, approximately 70% higher than the
previous year. Imports have also jumped significantly.
Vietnam
Vietnam is a densely-populated, developing country that in
the last 30 years has had to recover from the ravages of war, the
loss of financial support from the old Soviet Bloc, and the
rigidities of a centrally-planned economy. Substantial progress was
achieved from 1986 to 1997 in moving forward from an extremely low
level of development and significantly reducing poverty. Growth
averaged around 9% per year from 1993 to 1997. The 1997 Asian
financial crisis highlighted the problems in the Vietnamese economy
and temporarily allowed opponents of reform to slow progress toward
a market-oriented economy. GDP growth averaged 6.8% per year from
1997 to 2004 even against the background of the Asian financial
crisis and a global recession, and growth hit 8% in 2005 and 7.8% in
2006. Since 2001, however, Vietnamese authorities have reaffirmed
their commitment to economic liberalization and international
integration. They have moved to implement the structural reforms
needed to modernize the economy and to produce more competitive,
export-driven industries. Vietnam's membership in the ASEAN Free
Trade Area (AFTA) and entry into force of the US-Vietnam Bilateral
Trade Agreement in December 2001 have led to even more rapid changes
in Vietnam's trade and economic regime. Vietnam's exports to the US
doubled in 2002 and again in 2003. Vietnam joined the World Trade
Organization in January 2007. This should provide an important boost
to the economy and should help to ensure the continuation of
liberalizing reforms. Among other benefits, accession will allow
Vietnam to take advantage of the phase out of the Agreement on
Textiles and Clothing, which eliminated quotas on textiles and
clothing for WTO partners on 1 January 2005. Agriculture's share of
economic output has continued to shrink, from about 25% in 2000 to
20% in 2006. Deep poverty, defined as a percent of the population
living under $1 per day, has declined significantly and is now
smaller than that of China, India, and the Philippines. Vietnam is
working to promote job creation to keep up with the country's high
population growth rate. However, high levels of inflation have
prompted Vietnamese authorities to tighten monetary and fiscal
policies. Hanoi is targeting an economic growth rate between 7.5 and
8% over the next five years.
Virgin Islands
Tourism is the primary economic activity, accounting
for 80% of GDP and employment. The islands hosted 2.6 million
visitors in 2005. The manufacturing sector consists of petroleum
refining, textiles, electronics, pharmaceuticals, and watch
assembly. One of the world's largest petroleum refineries is at
Saint Croix. The agricultural sector is small, with most food being
imported. International business and financial services are small
but growing components of the economy. The islands are vulnerable to
substantial damage from storms. The government is working to improve
fiscal discipline, to support construction projects in the private
sector, to expand tourist facilities, to reduce crime, and to
protect the environment.
Wake Island
Economic activity is limited to providing services to
military personnel and contractors located on the island. All food
and manufactured goods must be imported.
Wallis and Futuna
The economy is limited to traditional subsistence
agriculture, with about 80% of labor force earnings from agriculture
(coconuts and vegetables), livestock (mostly pigs), and fishing.
About 4% of the population is employed in government. Revenues come
from French Government subsidies, licensing of fishing rights to
Japan and South Korea, import taxes, and remittances from expatriate
workers in New Caledonia.
West Bank
The West Bank - the larger of the two areas under the
Palestinian Authority (PA) - has experienced a general decline in
economic conditions since the second intifadah began in September
2000. The downturn has been largely the result of Israeli closure
policies - the imposition of border closures in response to security
incidents in Israel - which disrupted labor and trading
relationships. In 2001, and even more severely in 2002, Israeli
military measures in PA areas resulted in the destruction of
capital, the disruption of administrative structures, and widespread
business closures. International aid of at least $1.14 billion to
the West Bank and Gaza Strip in 2004 prevented the complete collapse
of the economy and allowed some reforms in the government's
financial operations. In 2005, high unemployment and limited trade
opportunities - due to continued closures both within the West Bank
and externally - stymied growth. Israel's and the international
community's financial embargo of the PA since HAMAS took office in
March 2006 has interrupted the provision of PA social services and
the payment of PA salaries.
Western Sahara
Western Sahara depends on pastoral nomadism, fishing,
and phosphate mining as the principal sources of income for the
population. The territory lacks sufficient rainfall for sustainable
agricultural production, and most of the food for the urban
population must be imported. Incomes in Western Sahara are
substantially below the Moroccan level. The Moroccan Government
controls all trade and other economic activities in Western Sahara.
Morocco and the European Union signed a four-year agreement in July
2006 allowing European vessels to fish off the coast of Morocco,
including the disputed waters off the coast of Western Sahara.
Moroccan energy interests in 2001 signed contracts to explore for
oil off the coast of Western Sahara, which has angered the
Polisario. However, in 2006, the Polisario awarded similar
exploration licenses in the disputed territory, which would come
into force if Morocco and the Polisario resolve their dispute over
Western Sahara.
World
Global output rose by 4.4% in 2005, led by China (9.3%), India
(7.6%), and Russia (5.9%). The other 14 successor nations of the
USSR and the other old Warsaw Pact nations again experienced widely
divergent growth rates; the three Baltic nations continued as strong
performers, in the 7% range of growth. Growth results posted by the
major industrial countries varied from no gain for Italy to a strong
gain by the United States (3.5%). The developing nations also varied
in their growth results, with many countries facing population
increases that erode gains in output. Externally, the nation-state,
as a bedrock economic-political institution, is steadily losing
control over international flows of people, goods, funds, and
technology. Internally, the central government often finds its
control over resources slipping as separatist regional movements -
typically based on ethnicity - gain momentum, e.g., in many of the
successor states of the former Soviet Union, in the former
Yugoslavia, in India, in Iraq, in Indonesia, and in Canada.
Externally, the central government is losing decisionmaking powers
to international bodies, notably the EU. In Western Europe,
governments face the difficult political problem of channeling
resources away from welfare programs in order to increase investment
and strengthen incentives to seek employment. The addition of 80
million people each year to an already overcrowded globe is
exacerbating the problems of pollution, desertification,
underemployment, epidemics, and famine. Because of their own
internal problems and priorities, the industrialized countries
devote insufficient resources to deal effectively with the poorer
areas of the world, which, at least from an economic point of view,
are becoming further marginalized. The introduction of the euro as
the common currency of much of Western Europe in January 1999, while
paving the way for an integrated economic powerhouse, poses economic
risks because of varying levels of income and cultural and political
differences among the participating nations. The terrorist attacks
on the US on 11 September 2001 accentuated a further growing risk to
global prosperity, illustrated, for example, by the reallocation of
resources away from investment to anti-terrorist programs. The
opening of war in March 2003 between a US-led coalition and Iraq
added new uncertainties to global economic prospects. After the
coalition victory, the complex political difficulties and the high
economic cost of establishing domestic order in Iraq became major
global problems that continued through 2006.
Yemen
Yemen, one of the poorest countries in the Arab world,
reported average annual growth of 3.5% from 2000 through 2006. Its
economic fortunes depend mostly on oil. Oil revenues probably
increased in 2006 as a result of higher prices. Yemen was on an
IMF-supported structural adjustment program designed to modernize
and streamline the economy, which led to substantial foreign debt
relief and restructuring. However, government dedication to the
program waned in 2001 for political reasons. Yemen is struggling to
control excessive spending and rampant corruption. Yemen is
dependent on foreign aid to finance its budget deficits and
development projects. In November, Yemen secured $4.7 billion in
assistance from Arabian Gulf and Western donors.
Zambia
Despite progress in privatization and budgetary reform,
Zambia's economic growth in 2005-06 remained somewhat below the
6%-7% per year needed to reduce poverty significantly. Privatization
of government-owned copper mines relieved the government from
covering mammoth losses generated by the industry and greatly
improved the chances for copper mining to return to profitability
and spur economic growth. Copper output has increased steadily since
2004, due to higher copper prices and the opening of new mines. The
maize harvest was again good in 2005, helping boost GDP and
agricultural exports. Cooperation continues with international
bodies on programs to reduce poverty, including a new lending
arrangement with the IMF in the second quarter of 2004. A tighter
monetary policy will help cut inflation, but Zambia still has a
serious problem with high public debt.
Zimbabwe
The government of Zimbabwe faces a wide variety of
difficult economic problems as it struggles with an unsustainable
fiscal deficit, an overvalued exchange rate, soaring inflation, and
bare shelves. Its 1998-2002 involvement in the war in the Democratic
Republic of the Congo drained hundreds of millions of dollars from
the economy. The government's land reform program, characterized by
chaos and violence, has badly damaged the commercial farming sector,
the traditional source of exports and foreign exchange and the
provider of 400,000 jobs, turning Zimbabwe into a net importer of
food products. Badly needed support from the IMF has been suspended
because of the government's arrears on past loans, which it began
repaying in 2005. The official annual inflation rate rose from 32%
in 1998, to 133% in 2004, 585% in 2005, and approached 1000% in
2006, although private sector estimates put the figure much higher.
Meanwhile, the official exchange rate fell from approximately 1
(revalued) Zimbabwean dollar per US dollar in 2003 to 250 per US
dollar in August 2006.
This page was last updated on 8 February, 2007
======================================================================
@2117 Pipelines (km)
Afghanistan
gas 466 km (2006)
Albania
gas 339 km; oil 207 km (2006)
Algeria
condensate 1,344 km; gas 85,946 km; liquid petroleum gas
2,213 km; oil 6,496 km (2005)
Angola
gas 235 km; liquid petroleum gas 122 km; oil 867 km;
oil/gas/water 5 km (2006)
Argentina
gas 29,804 km; liquid petroleum gas 41 km; oil 10,373 km;
refined products 8,540 km; unknown (oil/water) 13 km (2006)
Armenia
gas 2,002 km (2006)
Australia
condensate/gas 546 km; gas 31,323 km; liquid petroleum gas
240 km; oil 4,808 km; oil/gas/water 110 km (2006)
Austria
gas 2,722 km; oil 663 km; refined products 149 km (2006)
Azerbaijan
gas 3,190 km; oil 2,436 km (2006)
Bahrain
gas 20 km; oil 52 km (2006)
Bangladesh
gas 2,604 km (2006)
Belarus
gas 5,223 km; oil 2,321 km; refined products 1,686 km (2006)
Belgium
gas 1,561 km; oil 158 km; refined products 535 km (2006)
Bolivia
gas 4,860 km; liquid petroleum gas 47 km; oil 2,475 km;
refined products 1,589 km; unknown (oil/water) 247 km (2006)
Brazil
condensate/gas 244 km; gas 11,669 km; liquid petroleum gas
341 km; oil 5,212 km; refined products 4,755 km (2006)
Brunei
gas 672 km; oil 463 km (2006)
Bulgaria
gas 2,505 km; oil 339 km; refined products 156 km (2006)
Burma
gas 2,224 km; oil 558 km (2006)
Cameroon
gas 70 km; liquid petroleum gas 9 km; oil 1,107 km (2006)
Canada
crude and refined oil 23,564 km; liquid petroleum gas 74,980
km (2005)
Chad
oil 205 km (2006)
Chile
gas 2,567 km; gas/lpg 42 km; liquid petroleum gas 539 km; oil
1,003 km; refined products 757 km; unknown (oil/water) 97 km (2006)
China
gas 22,664 km; oil 15,256 km; refined products 6,106 km (2006)
Colombia
gas 4,360 km; oil 6,140 km; refined products 3,158 km (2006)
Congo, Democratic Republic of the
gas 54 km; oil 78 km (2006)
Congo, Republic of the
gas 89 km; liquid petroleum gas 4 km; oil 744
km (2006)
Costa Rica
refined products 242 km (2006)
Cote d'Ivoire
condensate 109 km; gas 240 km; oil 112 km (2006)
Croatia
gas 1,340 km; oil 583 km (2006)
Cuba
gas 49 km; oil 230 km (2006)
Czech Republic
gas 7,010 km; oil 547 km; refined products 94 km
(2006)
Denmark
condensate 12 km; gas 3,931 km; oil 626 km; oil/gas/water 2
km (2006)
Ecuador
extra heavy crude 578 km; gas 71 km; oil 1,386 km; refined
products 1,185 km (2006)
Egypt
condensate 464 km; condensate/gas 94 km; gas 6,021 km; liquid
petroleum gas 897 km; oil 5,120 km; oil/gas/water 36 km; refined
products 897 km (2006)
Equatorial Guinea
condensate 46 km; condensate/gas 5 km; gas 47 km;
oil 31 km (2006)
Estonia
gas 859 km (2006)
Finland
gas 694 km (2006)
France
gas 14,588 km; oil 3,024 km; refined products 4,889 km (2006)
Gabon
gas 272 km; oil 1,354 km (2006)
Georgia
gas 1,349 km; oil 1,010 km (2006)
Germany
condensate 37 km; gas 25,035 km; oil 3,546 km; refined
products 3,827 km (2006)
Ghana
oil 13 km; refined products 316 km (2006)
Greece
gas 1,166 km; oil 94 km (2006)
Guatemala
oil 480 km (2006)
Hungary
gas 4,397 km; oil 990 km; refined products 335 km (2006)
India
condensate/gas 8 km; gas 5,184 km; liquid petroleum gas 1,993
km; oil 6,500 km; refined products 6,152 km (2006)
Indonesia
condensate 944 km; condensate/gas 135 km; gas 9,175 km;
oil 7,684 km; oil/gas/water 89 km; refined products 1,367 km (2006)
Iran
condensate 7 km; condensate/gas 397 km; gas 17,099 km; liquid
petroleum gas 570 km; oil 8,521 km; refined products 7,808 km (2006)
Iraq
gas 2,228 km; liquid petroleum gas 918 km; oil 5,506 km;
refined products 1,637 km (2006)
Ireland
gas 1,728 km (2006)
Israel
gas 193 km; oil 442 km; refined products 261 km (2006)
Italy
gas 17,589 km; oil 1,136 km (2006)
Japan
gas 8,015 km; oil 170 km; oil/gas/water 60 km (2006)
Jordan
gas 426 km; oil 49 km (2006)
Kazakhstan
condensate 658 km; gas 11,019 km; oil 10,338 km; refined
products 1,095 km (2006)
Kenya
refined products 894 km (2006)
Korea, North
oil 154 km (2006)
Korea, South
gas 1,482 km; refined products 827 km (2006)
Kuwait
gas 269 km; oil 540 km; refined products 57 km (2006)
Kyrgyzstan
gas 254 km; oil 16 km (2006)
Laos
refined products 540 km (2006)
Latvia
gas 1,097 km; oil 82 km; refined products 415 km (2006)
Lebanon
gas 43 km (2006)
Libya
condensate 882 km; gas 3,481 km; oil 6,916 km (2006)
Liechtenstein
gas 20 km (2006)
Lithuania
gas 1,696 km; oil 228 km; refined products 121 km (2006)
Luxembourg
gas 155 km (2006)
Macedonia
gas 268 km; oil 120 km (2006)
Malaysia
condensate 282 km; gas 5,372 km; oil 1,715 km;
oil/gas/water 19 km; refined products 114 km (2006)
Mexico
gas 22,705 km; liquid petroleum gas 1,875 km; oil 8,688 km;
oil/gas/water 228 km; refined products 6,520 km (2006)
Moldova
gas 606 km (2006)
Morocco
gas 715 km; oil 285 km (2006)
Mozambique
gas 918 km; refined products 294 km (2006)
Netherlands
condensate 81 km; gas 7,229 km; oil 578 km; refined
products 716 km (2006)
New Zealand
condensate 224 km; gas 1,693 km; liquid petroleum gas 45
km; oil 280 km; refined products 288 km (2006)
Nicaragua
oil 54 km (2006)
Nigeria
condensate 126 km; gas 2,812 km; liquid petroleum gas 125
km; oil 4,278 km; refined products 3,517 km (2006)
Norway
condensate 508 km; gas 5,910 km; oil 2,557 km; oil/gas/water
746 km (2006)
Oman
gas 4,072 km; oil 3,405 km (2006)
Pakistan
gas 10,257 km; oil 2,001 km (2006)
Papua New Guinea
oil 264 km (2006)
Peru
gas 983 km; gas/lpg 61 km; liquid natural gas 106 km; liquid
petroleum gas 517 km; oil 1,754 km; refined products 13 km (2006)
Philippines
gas 565 km; oil 135 km; refined products 105 km (2006)
Poland
gas 13,552 km; oil 1,384 km; refined products 777 km (2006)
Portugal
gas 1,099 km; oil 8 km; refined products 174 km (2006)
Qatar
condensate 319 km; condensate/gas 209 km; gas 1,024 km; liquid
petroleum gas 87 km; oil 844 km (2006)
Romania
gas 3,508 km; oil 2,427 km (2006)
Russia
condensate 122 km; gas 156,285 km; oil 72,283 km; refined
products 13,658 km (2006)
Saudi Arabia
condensate 212 km; gas 1,880 km; liquid petroleum gas
1,183 km; oil 4,531 km; refined products 1,150 km (2006)
Senegal
gas 43 km (2006)
Serbia
gas 3,177 km; oil 393 km (2006)
Singapore
gas 139 km; refined products 8 km (2006)
Slovakia
gas 6,769 km; oil 416 km (2006)
Slovenia
gas 2,526 km; oil 11 km (2006)
South Africa
condensate 100 km; gas 1,062 km; oil 966 km; refined
products 1,354 km (2006)
Spain
gas 7,962 km; oil 622 km; refined products 3,447 km (2006)
Sudan
gas 156 km; oil 3,930 km; refined products 1,613 km (2006)
Suriname
oil 51 km (2006)
Sweden
gas 798 km (2006)
Switzerland
gas 1,831 km; oil 94 km; refined products 7 km (2006)
Syria
gas 2,764 km; oil 2,000 km (2006)
Taiwan
condensate 25 km; gas 661 km (2006)
Tajikistan
gas 549 km; oil 38 km (2006)
Tanzania
gas 254 km; oil 872 km (2006)
Thailand
gas 3,760 km; refined products 379 km (2006)
Trinidad and Tobago
condensate 253 km; gas 1,278 km; oil 571 km
(2006)
Tunisia
gas 2,945 km; oil 1,227 km; refined products 351 km (2006)
Turkey
gas 4,621 km; oil 3,543 km (2006)
Turkmenistan
gas 6,441 km; oil 1,361 km (2006)
Ukraine
gas 19,951 km; oil 4,514 km; refined products 4,211 km (2006)
United Arab Emirates
condensate 520 km; gas 2,580 km; liquid
petroleum gas 300 km; oil 2,950 km; oil/gas/water 5 km; refined
products 156 km (2006)
United Kingdom
condensate 565 km; condensate/gas 6 km; gas 21,575
km; liquid petroleum gas 59 km; oil 5,094 km; oil/gas/water 161 km;
refined products 4,444 km (2006)
United States
petroleum products 244,620 km; natural gas 548,665 km
(2003)
Uruguay
gas 257 km; oil 160 km (2006)
Uzbekistan
gas 9,594 km; oil 868 km (2006)
Venezuela
extra heavy crude 992 km; gas 5,369 km; oil 7,607 km;
refined products 1,681 km; unknown (oil/water) 141 km (2006)
Vietnam
condensate/gas 432 km; gas 163 km; oil 50 km; refined
products 206 km (2006)
Yemen
gas 71 km; liquid petroleum gas 22 km; oil 1,284 km (2006)
Zambia
oil 771 km (2006)
Zimbabwe
refined products 261 km (2006)
This page was last updated on 8 February, 2007
======================================================================
@2118 Political parties and leaders