Cambodia

In 1999, the first full year of peace in 30 years, the

government made progress on economic reforms. The US and Cambodia

signed a Bilateral Textile Agreement, which gave Cambodia a

guaranteed quota of US textile imports and established a bonus for

improving working conditions and enforcing Cambodian labor laws and

international labor standards in the industry. From 2001 to 2004,

the economy grew at an average rate of 6.4%, driven largely by an

expansion in the garment sector and tourism. With the January 2005

expiration of a WTO Agreement on Textiles and Clothing,

Cambodia-based textile producers were forced to compete directly

with lower-priced producing countries such as China and India.

Although initial 2005 GDP growth estimates were less than 3%,

better-than-expected garment sector performance led the IMF to

forecast 6% growth in 2005. Faced with the possibility that its

vibrant garment industry, with more than 200,000 jobs, could be in

serious danger, the Cambodian government has committed itself to a

policy of continued support for high labor standards in an attempt

to maintain favor with buyers. The tourism industry continues to

grow rapidly, with foreign visitors surpassing 1 million for the

year by September 2005. In 2005, exploitable oil and natural gas

deposits were found beneath Cambodia's territorial waters,

representing a new revenue stream for the government once commercial

extraction begins in the coming years. The long-term development of

the economy remains a daunting challenge. The Cambodian government

continues to work with bilateral and multilateral donors, including

the World Bank and IMF, to address the country's many pressing

needs. In December 2004, official donors pledged $504 million in aid

for 2005 on the condition that the Cambodian government implement

steps to reduce corruption. The major economic challenge for

Cambodia over the next decade will be fashioning an economic

environment in which the private sector can create enough jobs to

handle Cambodia's demographic imbalance. More than 50% of the

population is 20 years or younger. The population lacks education

and productive skills, particularly in the poverty-ridden

countryside, which suffers from an almost total lack of basic

infrastructure. Fully 75% of the population remains engaged in

subsistence farming.

Cameroon

Because of its oil resources and favorable agricultural

conditions, Cameroon has one of the best-endowed primary commodity

economies in sub-Saharan Africa. Still, it faces many of the serious

problems facing other underdeveloped countries, such as a top-heavy

civil service and a generally unfavorable climate for business

enterprise. Since 1990, the government has embarked on various IMF

and World Bank programs designed to spur business investment,

increase efficiency in agriculture, improve trade, and recapitalize

the nation's banks. In June 2000, the government completed an

IMF-sponsored, three-year structural adjustment program; however,

the IMF is pressing for more reforms, including increased budget

transparency, privatization, and poverty reduction programs.

International oil and cocoa prices have considerable impact on the

economy.

Canada

As an affluent, high-tech industrial society in the trillion

dollar class, Canada resembles the US in its market-oriented

economic system, pattern of production, and affluent living

standards. Since World War II, the impressive growth of the

manufacturing, mining, and service sectors has transformed the

nation from a largely rural economy into one primarily industrial

and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the

1994 North American Free Trade Agreement (NAFTA) (which includes

Mexico) touched off a dramatic increase in trade and economic

integration with the US. Given its great natural resources, skilled

labor force, and modern capital plant, Canada enjoys solid economic

prospects. Top-notch fiscal management has produced consecutive

balanced budgets since 1997, although public debate continues over

how to manage the rising cost of the publicly funded healthcare

system. Exports account for roughly a third of GDP. Canada enjoys a

substantial trade surplus with its principal trading partner, the

US, which absorbs more than 85% of Canadian exports. Canada is the

US' largest foreign supplier of energy, including oil, gas, uranium,

and electric power.

Cape Verde

This island economy suffers from a poor natural resource

base, including serious water shortages exacerbated by cycles of

long-term drought. The economy is service-oriented, with commerce,

transport, tourism, and public services accounting for 66% of GDP.

Although nearly 70% of the population lives in rural areas, the

share of agriculture in GDP in 2004 was only 12%, of which fishing

accounted for 1.5%. About 82% of food must be imported. The fishing

potential, mostly lobster and tuna, is not fully exploited. Cape

Verde annually runs a high trade deficit, financed by foreign aid

and remittances from emigrants; remittances supplement GDP by more

than 20%. Economic reforms are aimed at developing the private

sector and attracting foreign investment to diversify the economy.

Future prospects depend heavily on the maintenance of aid flows, the

encouragement of tourism, remittances, and the momentum of the

government's development program.

Cayman Islands

With no direct taxation, the islands are a thriving

offshore financial center. More than 40,000 companies were

registered in the Cayman Islands as of 1998, including almost 600

banks and trust companies; banking assets exceed $500 billion. A

stock exchange was opened in 1997. Tourism is also a mainstay,

accounting for about 70% of GDP and 75% of foreign currency

earnings. The tourist industry is aimed at the luxury market and

caters mainly to visitors from North America. Total tourist arrivals

exceeded 1.2 million in 1997, with 600,000 from the US. About 90% of

the islands' food and consumer goods must be imported. The

Caymanians enjoy one of the highest outputs per capita and one of

the highest standards of living in the world.

Central African Republic

Subsistence agriculture, together with

forestry, remains the backbone of the economy of the Central African

Republic (CAR), with more than 70% of the population living in

outlying areas. The agricultural sector generates half of GDP.

Timber has accounted for about 16% of export earnings and the

diamond industry, for 40%. Important constraints to economic

development include the CAR's landlocked position, a poor

transportation system, a largely unskilled work force, and a legacy

of misdirected macroeconomic policies. Factional fighting between

the government and its opponents remains a drag on economic

revitalization, with GDP growth at only 0.5% in 2004 and 2.5% in

2005. Distribution of income is extraordinarily unequal. Grants from

France and the international community can only partially meet

humanitarian needs.

Chad

Chad's primarily agricultural economy will continue to be

boosted by major foreign direct investment projects in the oil

sector that began in 2000. Over 80% of Chad's population relies on

subsistence farming and livestock raising for its livelihood. Chad's

economy has long been handicapped by its landlocked position, high

energy costs, and a history of instability. Chad relies on foreign

assistance and foreign capital for most public and private sector

investment projects. A consortium led by two US companies has been

investing $3.7 billion to develop oil reserves - estimated at 1

billion barrels - in southern Chad. The nation's total oil reserves

has been estimated to be 2 billion barrels. Oil production came on

stream in late 2003. Chad began to export oil in 2004. Cotton,

cattle, and gum arabic provide the bulk of Chad's non-oil export

earnings.

Chile

Chile has a market-oriented economy characterized by a high

level of foreign trade. During the early 1990s, Chile's reputation

as a role model for economic reform was strengthened when the

democratic government of Patricio AYLWIN - which took over from the

military in 1990 - deepened the economic reform initiated by the

military government. Growth in real GDP averaged 8% during 1991-97,

but fell to half that level in 1998 because of tight monetary

policies implemented to keep the current account deficit in check

and because of lower export earnings - the latter a product of the

global financial crisis. A severe drought exacerbated the recession

in 1999, reducing crop yields and causing hydroelectric shortfalls

and electricity rationing, and Chile experienced negative economic

growth for the first time in more than 15 years. Despite the effects

of the recession, Chile maintained its reputation for strong

financial institutions and sound policy that have given it the

strongest sovereign bond rating in South America. By the end of

1999, exports and economic activity had begun to recover, and growth

rebounded to 4.2% in 2000. Growth fell back to 3.1% in 2001 and 2.1%

in 2002, largely due to lackluster global growth and the devaluation

of the Argentine peso. Chile's economy began a slow recovery in

2003, growing 3.2%, and accelerated to 6.1% in 2004-05, while Chile

maintained a low rate of inflation. GDP growth benefited from high

copper prices, solid export earnings (particularly forestry,

fishing, and mining), and stepped-up foreign direct investment.

Unemployment, however, remains stubbornly high. Chile deepened its

longstanding commitment to trade liberalization with the signing of

a free trade agreement with the US, which took effect on 1 January

2004. Chile signed a free trade agreement with China in November

2005, and it already has several trade deals signed with other

nations and blocs, including the European Union, Mercosur, South

Korea, and Mexico. Record-high copper prices helped to strengthen

the peso to a 5½-year high, as of December 2005, and will boost GDP

in 2006.

China

China's economy during the last quarter century has changed

from a centrally planned system that was largely closed to

international trade to a more market-oriented economy that has a

rapidly growing private sector and is a major player in the global

economy. Reforms started in the late 1970s with the phasing out of

collectivized agriculture, and expanded to include the gradual

liberalization of prices, fiscal decentralization, increased

autonomy for state enterprises, the foundation of a diversified

banking system, the development of stock markets, the rapid growth

of the non-state sector, and the opening to foreign trade and

investment. China has generally implemented reforms in a gradualist

or piecemeal fashion. The process continues with key moves in 2005

including the sale of equity in China's largest state banks to

foreign investors and refinements in foreign exchange and bond

markets. The restructuring of the economy and resulting efficiency

gains have contributed to a more than tenfold increase in GDP since

1978. Measured on a purchasing power parity (PPP) basis, China in

2005 stood as the second-largest economy in the world after the US,

although in per capita terms the country is still lower

middle-income and 150 million Chinese fall below international

poverty lines. Economic development has generally been more rapid in

coastal provinces than in the interior, and there are large

disparities in per capita income between regions. The government has

struggled to: (a) sustain adequate job growth for tens of millions

of workers laid off from state-owned enterprises, migrants, and new

entrants to the work force; (b) reduce corruption and other economic

crimes; and (c) contain environmental damage and social strife

related to the economy's rapid transformation. From 100 to 150

million surplus rural workers are adrift between the villages and

the cities, many subsisting through part-time, low-paying jobs. One

demographic consequence of the "one child" policy is that China is

now one of the most rapidly aging countries in the world. Another

long-term threat to growth is the deterioration in the environment -

notably air pollution, soil erosion, and the steady fall of the

water table, especially in the north. China continues to lose arable

land because of erosion and economic development. China has

benefited from a huge expansion in computer Internet use, with more

than 100 million users at the end of 2005. Foreign investment

remains a strong element in China's remarkable expansion in world

trade and has been an important factor in the growth of urban jobs.

In July 2005, China revalued its currency by 2.1% against the US

dollar and moved to an exchange rate system that references a basket

of currencies. Reports of shortages of electric power in the summer

of 2005 in southern China receded by September-October and did not

have a substantial impact on China's economy. More power generating

capacity is scheduled to come on line in 2006 as large scale

investments are completed. Thirteen years in construction at a cost

of $24 billion, the immense Three Gorges Dam across the Yangtze

River will be essentially completed in 2006 and will revolutionize

electrification and flood control in the area. The Central Committee

of the Chinese Communist Party in October 2005 approved the draft

11th Five-Year Plan and the National People's Congress is expected

to give final approval in March 2006. The plan calls for a 20%

reduction in energy consumption per unit of GDP by 2010 and an

estimated 45% increase in GDP by 2010. The plan states that

conserving resources and protecting the environment are basic goals,

but it lacks details on the policies and reforms necessary to

achieve these goals.

Christmas Island

Phosphate mining had been the only significant

economic activity, but in December 1987 the Australian Government

closed the mine. In 1991, the mine was reopened. With the support of

the government, a $34 million casino opened in 1993. The casino

closed in 1998. The Australian Government in 2001 agreed to support

the creation of a commercial space-launching site on the island,

projected to begin operations in the near future.

Clipperton Island

Although 115 species of fish have been identified

in the territorial waters of Clipperton Island, the only economic

activity is tuna fishing.

Cocos (Keeling) Islands

Grown throughout the islands, coconuts are

the sole cash crop. Small local gardens and fishing contribute to

the food supply, but additional food and most other necessities must

be imported from Australia. There is a small tourist industry.

Colombia

Colombia's economy has been on a recovery trend during the

past two years despite a serious armed conflict. The economy

continues to improve thanks to austere government budgets, focused

efforts to reduce public debt levels, an export-oriented growth

strategy, and an improved security situation in the country. Ongoing

economic problems facing President URIBE range from reforming the

pension system to reducing high unemployment. New exploration is

needed to offset declining oil production. On the positive side,

several international financial institutions have praised the

economic reforms introduced by URIBE, which succeeded in reducing

the public-sector deficit below 1.5% of GDP. The government's

economic policy and democratic security strategy have engendered a

growing sense of confidence in the economy, particularly within the

business sector. Coffee prices have recovered from previous lows as

the Colombian coffee industry pursues greater market shares in

developed countries such as the United States.

Comoros

One of the world's poorest countries, Comoros is made up of

three islands that have inadequate transportation links, a young and

rapidly increasing population, and few natural resources. The low

educational level of the labor force contributes to a subsistence

level of economic activity, high unemployment, and a heavy

dependence on foreign grants and technical assistance. Agriculture,

including fishing, hunting, and forestry, contributes 40% to GDP,

employs 80% of the labor force, and provides most of the exports.

The country is not self-sufficient in food production; rice, the

main staple, accounts for the bulk of imports. The government -

which is hampered by internal political disputes - is struggling to

upgrade education and technical training, privatize commercial and

industrial enterprises, improve health services, diversify exports,

promote tourism, and reduce the high population growth rate.

Increased foreign support is essential if the goal of 4% annual GDP

growth is to be met. Remittances from 150,000 Comorans abroad help

supplement GDP.

Congo, Democratic Republic of the

The economy of the Democratic

Republic of the Congo - a nation endowed with vast potential wealth

- has declined drastically since the mid-1980s. The war, which began

in August 1998, dramatically reduced national output and government

revenue, increased external debt, and resulted in the deaths of

perhaps 3.5 million people from violence, famine, and disease.

Foreign businesses curtailed operations due to uncertainty about the

outcome of the conflict, lack of infrastructure, and the difficult

operating environment. Conditions improved in late 2002 with the

withdrawal of a large portion of the invading foreign troops. The

transitional government has reopened relations with international

financial institutions and international donors, and President

KABILA has begun implementing reforms. Much economic activity lies

outside the GDP data. Economic stability improved in 2003-05,

although an uncertain legal framework, corruption, and a lack of

openness in government policy continues to hamper growth. In 2005,

renewed activity in the mining sector, the source of most exports,

boosted Kinshasa's fiscal position and GDP growth. Business and

economic prospects are expected to improve once a new government is

installed after elections.

Congo, Republic of the

The economy is a mixture of village

agriculture and handicrafts, an industrial sector based largely on

oil, support services, and a government characterized by budget

problems and overstaffing. Oil has supplanted forestry as the

mainstay of the economy, providing a major share of government

revenues and exports. In the early 1980s, rapidly rising oil

revenues enabled the government to finance large-scale development

projects with GDP growth averaging 5% annually, one of the highest

rates in Africa. The government has mortgaged a substantial portion

of its oil earnings through oil-backed loans that have contributed

to a growing debt burden and chronic revenue shortfalls. Economic

reform efforts have been undertaken with the support of

international organizations, notably the World Bank and the IMF.

However, the reform program came to a halt in June 1997 when civil

war erupted. Denis SASSOU-NGUESSO, who returned to power when the

war ended in October 1997, publicly expressed interest in moving

forward on economic reforms and privatization and in renewing

cooperation with international financial institutions. Economic

progress was badly hurt by slumping oil prices and the resumption of

armed conflict in December 1998, which worsened the republic's

budget deficit. The current administration presides over an uneasy

internal peace and faces difficult economic challenges of

stimulating recovery and reducing poverty. Recovery of oil prices

has boosted the economy's GDP and near-term prospects. The Republic

of Congo may be eligible for an IMF-World Bank heavily indebted poor

countries (HIPC) initiative in early 2006, provided it meets the

strict fiscal and monetary targets set out for it under a new

three-year Poverty Reduction and Growth Facility (PRGF) with the IMF.

Cook Islands

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. Low prices for coffee and

bananas have hurt the agricultural sector. 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 rises in the price of imports, labor market

rigidities, and fiscal deficits. The country also needs to reform

its tax system and its pattern of public expenditure. Costa Rica is

the only signatory to the US-Central American Free Trade Agreement

(CAFTA) that has not ratified it. CAFTA implementation would result

in economic reforms and 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, and severe civil war. In November 2004, the

situation deteriorated when President GBAGBO's troops attacked and

killed nine French peacekeeping forces, and the UN imposed an arms

embargo. Political turmoil damaged the economy in 2005, with fear

among Ivorians spreading, foreign investment shriveling, French

businesses and expats fleeing, travel within the country falling,

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. Though the 2005 harvest was largely unaffected by past

fighting, the government will likely 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 over 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 18%, 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. The

government in 2005 strengthened its controls over dollars coming

into the economy from tourism, remittances, and trade. External

financing has helped growth in the mining, oil, construction, and

tourism sectors.

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

plans to provide around $550 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

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

accelerated through 2005. 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. Production of bananas dropped

precipitously in 2003, a major reason for the 1% decline in GDP.

Tourism increased in 2003 as the government sought 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 and 2005. 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, unemployment

remains an important challenge. 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.

Non-petroleum GDP growth was held back in 2003 by extensive drought

and the gradual winding down of the international presence but

recovered somewhat in 2004. 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 nearly

5%. 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 8% of GDP in

2005 - 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, is viewed as a key policy

to help achieve these objectives. The trade deficit has been offset

by annual remittances from Salvadorans living abroad - 16.6% of GDP

in 2005 - 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.

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 2005, led by oil. Equatorial Guinea now has the

second highest per capita income in the world, after Luxembourg.

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 2002-05. 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 late in 2003 helped agricultural and GDP growth recover in

2004-05.

Europa Island

no economic activity

European Union

Domestically, 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 (from $15,000

to $56,000) and historic national animosities, the European

Community 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, the EU

admitted 10 central and eastern European countries that are, in

general, less advanced technologically and economically than the

other 15. Twelve EU member states introduced the euro as their

common currency on 1 January 1999, but the UK, Sweden, and Denmark

do not participate. The 10 new member states may choose to adopt the

euro when they meet the EU's fiscal and monetary criteria and the

other euro states so agree.

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. Long-term problems include low

investment, uncertain land ownership rights, and the government's

ability to manage its budget. Yet, because of a tourist boom,

short-run economic prospects are good, provided tensions do not

again erupt between indigenous Fijians and Indo-Fijians. 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. Rapidly increasing integration with Western Europe

- Finland was one of the 12 countries joining the European Economic

and Monetary Union (EMU) - will dominate the economic picture over

the next several years. 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 has lowered income taxes and introduced

measures to boost employment and reform the pension system. In

addition, it is focusing on the problems of the high cost of labor

and labor market inflexibility resulting from the 35-hour workweek

and restrictions on lay-offs. The tax burden remains one of the

highest in Europe (nearly 50% of GDP in 2005). The lingering

economic slowdown and inflexible budget items have pushed the budget

deficit above the eurozone's 3%-of-GDP limit; unemployment stands at

10%.

French Guiana

The economy is tied closely to the much larger French

economy through subsidies and imports. Besides the French space

center at Kourou (which accounts for 25% of GDP), fishing and

forestry are the most important economic activities. Forest and

woodland cover 90% of the country. The large reserves of tropical

hardwoods, not fully exploited, support an expanding sawmill

industry that provides sawn logs for export. Cultivation of crops is

limited to the coastal area, where the population is largely

concentrated; rice and manioc are the major crops. French Guiana is

heavily dependent on imports of food and energy. Unemployment is a

serious problem, particularly among younger workers.

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 significant 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 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 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 in response to security interests

in Israel, disrupted labor and commodity relationships with the Gaza

Strip. In 2001, and even more severely in 2003, Israeli military

measures in PA areas resulted in the destruction of much capital

plant, the disruption of administrative structure, and widespread

business closures. Including the West Bank, the UN estimates that

more than 100,000 Palestinians out of the 125,000 who used to work

in Israel or in joint industrial zones have lost their jobs. Half

the labor force is unemployed. Israeli withdrawal from the Gaza

Strip in September 2005 offers some medium-term opportunities for

economic growth, especially given the removal of restrictions on

internal movement. In addition, recent agreements and continuing

negotiations on the administration of Gaza's border crossings

increase the prospects for trade.

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

in 2006 will compound 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. Growth in 2001-03 fell short of

1%, rising to 1.7% in 2004 before falling back to 0.9% in 2005. 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 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 - have made unemployment a chronic problem. Corporate

restructuring and growing capital markets are setting the

foundations that could allow Germany to meet the long-term

challenges of European economic integration and globalization,

particularly if labor market rigidities are further addressed. In

the short run, however, the fall in government revenues and the rise

in expenditures have raised the deficit above the EU's 3% debt limit.

Ghana

Well endowed with natural resources, Ghana has roughly twice

the per capita output of the poorer 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 2005

along with record high prices for Ghana's largest cocoa crop to

date. Inflation should ease but remains a major internal problem.

Ghana also remains a candidate country to benefit from Millennium

Challenge Corporation (MCC) funding that could assist in

transforming Ghana's agricultural export sector. A final decision on

its MCC bid is expected in spring 2006.

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 about 4.0% for the

between 2003 and 2005, largely because of an investment boom and

infrastructure upgrades for the 2004 Athens Olympic Games. Economic

growth slowed to about 3% in 2005. 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.

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.

Guadeloupe

This Caribbean economy depends on agriculture, tourism,

light industry, and services. It also depends on France for large

subsidies and imports. Tourism is a key industry, with most tourists

from the US; an increasingly large number of cruise ships visit the

islands. The traditional sugarcane crop is slowly being replaced by

other crops, such as bananas (which now supply about 50% of export

earnings), eggplant, and flowers. Other vegetables and root crops

are cultivated for local consumption, although Guadeloupe is still

dependent on imported food, mainly from France. Light industry

features sugar and rum production. Most manufactured goods and fuel

are imported. Unemployment is especially high among the young.

Hurricanes periodically devastate the economy.

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-thirds 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, but widespread

political violence and corruption scandals continue to dampen

investor confidence. The distribution of income remains highly

unequal with perhaps 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.

Guernsey

Financial services - banking, fund management, insurance -

account for about 55% of total income in this tiny, prosperous

Channel Island economy. Tourism, manufacturing, and horticulture,

mainly tomatoes and cut flowers, have been declining. 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 accounted for

over 70% of exports in 2004. 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 not receiving

multilateral aid; the IMF and World Bank cut off most assistance in

2003. Growth rose slightly in 2005, primarily due to increases in

global demand and commodity prices on world markets.

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

2002-05.

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. Growth slowed in 2003 and

came back gradually in 2004, buoyed largely by increased export

earnings; it slowed again in 2005. 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 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 might broaden the country's export

market, primarily in the raw materials sector.

Haiti

In this poorest country in the Western Hemisphere, 80% of the

population lives 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.

The economy grew 1.5% in 2005, the highest growth rate since 1999.

Haiti suffers from rampant inflation, a lack of investment, and a

severe trade deficit. In early 2005, Haiti paid its arrears to the

World Bank, paving the way for reengagement with the Bank. The

government is reliant on formal international economic assistance

for fiscal sustainability. Remittances are the primary source of

foreign exchange, equaling nearly a quarter of GDP in 2005.

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, 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. Growth remains dependent on the economy of the US,

its largest trading partner, on continued exports of non-traditional

agricultural products (such as melons, chiles, tilapia, and shrimp),

and on reduction of the high crime rate.

Hong Kong

Hong Kong has a free market, entrepot economy, highly

dependent on international trade. 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. Even before Hong Kong reverted to Chinese

administration on 1 July 1997, it had extensive trade and investment

ties with China. Hong Kong has been further integrating its economy

with China because China's growing openness to the world economy has

made manufacturing in China much more cost effective. Hong Kong's

reexport business to and from China is a major driver of growth. Per

capita GDP is comparable to that of the four big economies of

Western Europe. GDP growth averaged a strong 5% from 1989 to 2005,

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 2005.

Howland Island

no economic activity

Hungary

Hungary has made the transition from a centrally planned to

a market economy, with a per capita income about 60% 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 $34 billion between 1990 and 2003. Several private sector

analysts and sovereign ratings agencies have expressed concerns over

Hungary's unsustainable budget and current account deficits.

Inflation has declined from 14% in 1998 to 3.5% in 2005.

Unemployment in 2005 rose to 7.1%, its highest point since 1999;

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 6.1% in 2005, 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 70% of export earnings and

employs 4% 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. Growth had

been remarkably steady in 1996-2001 at 3%-5%, but could not be

sustained in 2002 in an environment of global recession. Growth

resumed in 2003, and estimates call for strong growth until 2007,

slowly dropping until the end of the decade.

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 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. Government controls on foreign trade and

investment have been reduced in some areas, but high tariffs

(averaging 20% on non-agricultural items in 2004) and limits on

foreign direct investment are still in place. The government in 2005

liberalized investment in the civil aviation, telecom, and

construction sectors. Privatization of government-owned industries

essentially came to a halt in 2005, and continues to generate

political debate; continued social, political, and economic

rigidities hold back needed initiatives. The economy has posted an

average growth rate of more than 7% in the decade since 1994,

reducing poverty by about 10 percentage points. India achieved 7.6%

GDP growth in 2005, 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. Despite strong growth, the World Bank and

others worry about the combined state and federal budget deficit,

running at approximately 9% of GDP; government borrowing has kept

interest rates high. Economic deregulation would help attract

additional foreign capital and lower interest rates. 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

unemployment, a fragile banking sector, endemic corruption,

inadequate infrastructure, a poor investment climate, and unequal

resource distribution among regions. Indonesia became a net oil

importer in 2004 because of declining production and lack of new

exploration investment. In late December 2004, the Indian Ocean

tsunami took 131,000 lives with another 37,000 missing, left some

570,000 displaced persons, and caused an estimated $4.5 billion in

damages and losses. 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 2005, prompting the government to enact a 126% average fuel

price hike in October. The resulting inflation and interest rate

hikes dampened growth prospects in 2006. However, in October 2006,

Jakarta paid off its outstanding IMF debt, incurred during the

1997-98 Asian financial crisis, four years ahead of schedule. 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 some $40

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. Per capita food imports

increased significantly, while medical supplies and health care

services steadily improved. Per capita output and living standards

were still well below the pre-1991 level, but any estimates have a

wide range of error. 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 has established the institutions needed to

implement economic policy, has successfully concluded a three-stage

debt reduction agreement with the Paris Club, and is working toward

a Standby Arrangement with the IMF. The Standby Arrangement would

clear the way for continued debt relief from the Paris Club.

Ireland

Ireland is a small, modern, trade-dependent economy with

growth averaging a robust 7% in 1995-2004. 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. 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 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 current account

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 and

2004, 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. In 2005, rising consumer

confidence, tourism, and foreign direct investment - as well as

higher demand for Israeli exports - boosted GDP by 4.7%.

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 almost no growth in 2005, 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.

The global economic slowdown, particularly after the terrorist

attacks in the US on 11 September 2001, stunted economic growth; the

economy rebounded moderately in 2003-04, with brisk tourist seasons.

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 growing stock of internal debt - the result

of government bailouts to ailing sectors of the economy, most

notably the financial sector in the mid-1990s. The ratio of debt to

GDP is 135%. Inflation, previously a bright spot, is expected to

remain in the double digits. Uncertain economic conditions have led

to increased civil unrest, including gang violence fueled by the

drug trade. In 2004, the government faced 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. Attempts at deficit

control were derailed by Hurricane Ivan in September 2004, which

required substantial government spending to repair the damage.

Despite the hurricane, tourism looks set to enjoy solid growth for

the foreseeable future.

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 and 2005, growth improved and the lingering fears of deflation

in prices and economic activity lessened. Japan's huge government

debt, which totals 170% 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 1996, the finance sector

accounted for about 60% 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 24% 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 inadequate supplies of

water and other natural resources such as oil. 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. 'Amman in

the past three years has worked closely with the IMF, practiced

careful monetary policy, and made 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, forcing 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 - 9% or more per year in

2002-05 - 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 also has begun work on an ambitious

cooperative construction effort with China to build an oil pipeline

that will extend from the country's Caspian coast eastward to the

Chinese border. 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 2005

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. GDP grew more

than 5% in 2005.

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 about 20% 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. Despite an increased

harvest in 2005 because of more stable weather conditions,

fertilizer assistance from South Korea, and an extraordinary

mobilization of the population to help with agricultural production,

the nation has suffered its 11th 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. In December 2005, the regime confirmed that

it intended to carry out earlier threats to terminate all

international humanitarian assistance operations in the DPRK

(calling instead for developmental assistance only) and to restrict

the activities of 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 early 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 through the late 1980s 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 2005, growth moderated to

about 4%. A downturn in consumer spending was offset by rapid export

growth. In 2005, the government proposed labor reform legislation

and a corporate pension scheme to help make the labor market more

flexible, and new real estate policies to cool property speculation.

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.

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. Kyrgyzstan has been

progressive in carrying out market reforms, such as an improved

regulatory system and land reform. 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. Kyrgyzstan has distinguished itself by

adopting relatively liberal economic policies. The drop in output at

the Kumtor gold mine sparked a 0.5% decline in GDP in 2002, but GDP

growth bounced back in 2003-05. The government has made steady

strides in controlling its substantial fiscal deficit and reduced

the deficit to 1% of GDP in 2005. The government and international

financial institutions have been engaged in a comprehensive

medium-term poverty reduction and economic growth strategy, and in

2005 agreed to pursue much-needed tax reform. 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% in 1988-2004 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 food processing and mining. Construction

will be another strong economic driver, especially as hydroelectric

dam and road projects gain steam. In late 2004, Laos gained Normal

Trade Relations status with the US, allowing Laos-based producers to

face lower tariffs on exports. This new status may help spur growth.

In addition, the European Union has agreed to provide $1 million to

the Lao Government for technical assistance in preparations for WTO

membership. If the avian flu worsens and spreads in the region,

however, prospects for tourism could dim.

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 - 11.5% of GDP in 2005 - remains a major concern. A

growing 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. In November 2002, the government

met with international donors at the Paris II conference to seek

bilateral assistance in restructuring its massive domestic debt at

lower interest rates. Substantial receipts from donor nations

stabilized government finances in 2003, but did little to reduce the

debt, which stands at nearly 170% of GDP. In 2004 the HARIRI

government issued Eurobonds in an effort to manage maturing debt.

The downturn in economic activity that followed the assassination of

Rafiq al-HARIRI has eased, but has yet to be reversed. Tourism

remains below the level of 2004. The new Prime Minister, Fuad

SINIORA, has pledged to push ahead with economic reform, including

privatization and more efficient government. The Core Group of

nations has announced plans to hold a Donor's Conference in early

2006 to assist the government of Lebanon in restructuring its debt

and increasing foreign investment.

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, while continued international sanctions on diamonds and

timber exports will limit growth prospects for the foreseeable

future. 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. The

departure of the former president, Charles TAYLOR, to Nigeria in

August 2003, the establishment of the all-inclusive Transitional

Government, and the arrival of a UN mission have helped defuse the

political crisis, but have done little to encourage economic

development. Wealthy international donors, who are ready to assist

reconstruction efforts, are withholding funding until Liberia's

National Assembly signs onto a Governance and Economic Management

Action Plan (GEMAP). The Plan was created in October 2005 by the

International Contact Group for Liberia to help ensure transparent

revenue collection and allocation - something that was lacking under

the Transitional Government and that has limited Liberia's economic

recovery. 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 that

it would abandon programs to build weapons of mass destruction in

December 2003. Almost all US unilateral sanctions against Libya were

removed in April 2004, helping Libya attract more foreign direct

investment, mostly in the energy sector. 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

about 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 about 8%

in 2005. 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 more than 30% 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. During the first three quarters of 2005, Macau

registered year-on-year GDP increases of 6.2%. A rapid rise in the

number of mainland visitors because of China's easing of travel

restrictions, increased public works expenditures, and significant

investment inflows associated with the liberalization of Macau's

gaming industry drove the four-year recovery. The budget also

returned to surplus since 2002 because of the surge in visitors from

China and a hike in taxes on gambling profits, which generated about

70% of government revenue. The three companies awarded gambling

licenses have pledged to invest $2.2 billion in the territory, which

will boost GDP growth. Much of Macau's textile industry may move to

the mainland as the Multi-Fiber Agreement is phased out. The

territory may have to rely more on gambling and trade-related

services to generate growth. Two new casinos were opened by new

foreign gambling licensees in 2004; development of new

infrastructure and facilities in preparation for Macau's hosting of

the 2005 East Asian Games led the construction sector. 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, and 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, one of its largest markets, 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 rose by 3.4% in 2003, 4.1% in 2004,

and 3.7% in 2005. 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 will heighten 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%

in 2005. As an oil and gas exporter, Malaysia has profited from

higher world energy prices, although the cost of government

subsidies for domestic gasoline and diesel fuel has risen and offset

some of the benefit. Malaysia "unpegged" the ringgit from the US

dollar in 2005, but so far there has been little movement in the

exchange rate. Healthy foreign exchange reserves, low inflation, and

a small external debt are all strengths that make it unlikely 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 20% 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 a second leading sector. 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. 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 18% of GDP. 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. In

late December 2004, a major tsunami left more than 100 dead, 12,000

displaced, and property damage exceeding $300 million. Over the past

decade, real GDP growth averaged over 7.5% per year. As a result of

the tsunami, the GDP contracted by about 5.5% in 2005.

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 1996-2005. 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 foreign investment due to the Asian financial difficulties, and

less income from the renewal of fishing vessel licenses have held

GDP growth to an average of 1% over the past decade.

Martinique

The economy is based on sugarcane, bananas, tourism, and

light industry. Agriculture accounts for about 6% of GDP and the

small industrial sector for 11%. Sugar production has declined, with

most of the sugarcane now used for the production of rum. Banana

exports are increasing, going mostly to France. The bulk of meat,

vegetable, and grain requirements must be imported, contributing to

a chronic trade deficit that requires large annual transfers of aid

from France. Tourism, which employs more than 11,000 people, has

become more important than agricultural exports as a source of

foreign exchange.

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

decline in world demand for this ore, however, has led to cutbacks

in production. 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

are scheduled to begin in early 2006 and may average 75,000 barrels

per day for that 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 FOX administration is

cognizant of the need to upgrade infrastructure, modernize the tax

system and labor laws, and allow private investment in the energy

sector, but has been unable to win the support of the opposition-led

Congress. The next government that takes office in December 2006

will confront the same challenges of boosting economic growth,

improving Mexico's international competitiveness, and reducing

poverty.

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. Energy shortages contributed to

sharp production declines after the breakup of the Soviet Union in

December 1991. As part of an ambitious reform effort after

independence, Moldova introduced a convertible currency, freed

prices, stopped issuing preferential credits to state enterprises,

backed steady land privatization, removed export controls, and freed

interest rates. The government entered into agreements with the

World Bank and the IMF to promote growth and reduce poverty. The

economy returned to positive growth in 2000, and has remained at or

above 6% every year since. Further reforms will come slowly because

of strong political forces backing government controls. The economy

remains vulnerable to higher fuel prices, poor agricultural weather,

and the skepticism of foreign investors.

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 and 5.5% in 2005, 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 IMF, World Bank, and the European Bank for Reconstruction and

Development. 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 actually 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. 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 and selling

government shares in the state telecommunications company and in the

largest state-owned bank. The Free Trade agreement went into effect

in January 2006. In 2005, GDP growth slipped to 1.2% and the budget

deficit rose sharply - to 7.5% of GDP - because of substantial

increases in wages and oil subsidies. 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 2000-03. 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 2003-05.

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 2001-05, 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 one-fourth 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 six consecutive years and was more than $24,000

in 2005 in purchasing power parity terms. New Zealand is heavily

dependent on trade - particularly in agricultural products - to

drive growth. Exports are equal to about 22% of GDP. 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, one of the Western Hemisphere's poorest

countries, has low per capita income, widespread underemployment,

and a heavy external debt burden. 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 because of its earlier

successful performances under its International Monetary Fund policy

program and other efforts. 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. High oil prices helped drive inflation

to 9.6% in 2005, leading to a fall in real GDP growth to 4% from

over 5% in 2004.

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, a 2.9%

population growth rate, and the drop in world demand for uranium

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, it was announced that Niger had

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

recovered somewhat in the last few years. A drought and locust

infestation in 2005 led to food shortages for as many as 2.5 million

Nigerians.

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.

GDP rose strongly in 2005, based largely on increased oil exports

and high global crude prices. In November 2005, Abuja won Paris Club

approval for a historic debt-relief deal that by March 2006 should

eliminate $30 billion worth of Nigeria's total $37 billion external

debt. The deal first requires that Nigeria repay roughly $12 billion

in arrears to its bilateral creditors. Nigeria would then be allowed

to buy back its remaining debt stock at a discount. The deal also

commits Nigeria to more intensified IMF reviews.

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 1% in 2002 and 0.5% in 2003, GDP

growth picked up to 3.3% in 2004 and to 3.7% in 2005.

Oman

Oman is a middle-income economy in the Middle East with notable

oil and gas resources, a substantial trade surplus, and low

inflation. Work on a new liquefied natural gas (LNG) facility

progressed in 2005 and will contribute to slightly higher oil and

gas exports in 2006. Oman continues to liberalize its markets and

joined the World Trade Organization (WTO) in November 2000. To

reduce unemployment and limit dependence on foreign labor, the

government is encouraging the replacement of foreign expatriate

workers with local workers. Training in information technology,

business management, and English support this objective. Industrial

development plans focus on gas resources, metal manufacturing,

petrochemicals, and international transshipment ports. In 2005, Oman

signed agreements with several foreign investors to boost oil

reserves, build and operate a power plant, and develop a second

mobile phone network in the country.

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 four years. The government has made substantial

macroeconomic reforms since 2000, although progress on more

politically sensitive reforms has slowed. For example, in the budget

for fiscal year 2006, Islamabad did not impose taxes on the

agriculture or real estate sectors, despite Pakistan's chronically

low tax-to-GDP ratio. While long-term prospects remain uncertain,

given Pakistan's low level of development, medium-term prospects for

job creation and poverty reduction are the best in more than a

decade. Islamabad has raised development spending from about 2% of

GDP in the 1990s to 4% in 2003, a necessary step towards reversing

the broad underdevelopment of its social sector. GDP growth, spurred

by double-digit gains in industrial production over the past year,

has become less dependent on agriculture, and remained above 7% in

2004 and 2005. Inflation remains the biggest threat to the economy,

jumping to more than 9% in 2005. The World Bank and Asian

Development Bank announced that they would provide US $1 billion

each in aid to help Pakistan rebuild areas hit by the October 2005

earthquake in Kashmir. Foreign exchange reserves continued to reach

new levels in 2005, supported by steady worker remittances. In the

near term, growth probably cannot be sustained at the 7% level;

however, massive international aid, increased government spending,

lower taxes, and pay increases for government workers will help

Pakistan maintain strong GDP growth over the longer 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 and 2005

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.

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 include the HIV/Aids epidemic, 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 2005, 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 2002-2005, 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, the TOLEDO administration remained

unpopular in 2005, and unemployment and poverty have stayed

persistently high. Economic growth will be driven by the Camisea

natural gas megaproject and by exports of minerals, textiles, and

agricultural products. Peru is expected to sign a free-trade

agreement with the United States in early 2006.

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 2005 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,

which gained 5.7 percent year-on-year, making it East Asia's best

performing currency in 2005. 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 throughout the 1990s 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 -

currently the highest in the EU. 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 stands to benefit from nearly $23.2 billion in EU

funds, 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 decade, 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 past decade, but fell back in 2001-05. GDP per capita stands at

two-thirds that of the Big Four EU economies. 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 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, and has recovered in 2004-2005.

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. Proved oil reserves of 16 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 by

2007. In recent years, Qatar has consistently posted trade surpluses

largely because of high oil prices and increased natural gas

exports, becoming one of the world's fastest growing and highest

per-capita income countries.

Reunion

The economy has traditionally been based on agriculture, but

services now dominate. Sugarcane has been the primary crop for more

than a century, and in some years it accounts for 85% of exports.

The government has been pushing the development of a tourist

industry to relieve high unemployment, which amounts to one-third of

the labor force. The gap in Reunion between the well-off and the

poor is extraordinary and accounts for the persistent social

tensions. The white and Indian communities are substantially better

off than other segments of the population, often approaching

European standards, whereas minority groups suffer the poverty and

unemployment typical of the poorer nations of the African continent.

The outbreak of severe rioting in February 1991 illustrated the

seriousness of socioeconomic tensions. The economic well-being of

Reunion depends heavily on continued financial assistance from

France.

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%. An IMF standby agreement, signed in 2001, has been

accompanied by slow but palpable gains in privatization, deficit

reduction, and the curbing of inflation. The IMF Board approved

Romania's completion of the standby agreement in October 2003, the

first time Romania has successfully concluded an IMF agreement since

the 1989 revolution. In July 2004, the executive board of the IMF

approved a 24-month standby agreement for $367 million. IMF concerns

about Romania's tax policy and budget deficit led to a breakdown of

this agreement in 2005. In the past, the IMF has criticized the

government's fiscal, wage, and monetary policies. Meanwhile,

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.

Russia

Russia ended 2005 with its seventh straight year of growth,

averaging 6.4% 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,

with its foreign debt declining from 90% of GDP to around 31%.

Strong oil export earnings have allowed Russia to increase its

foreign reserves from only $12 billion to some $180 billion at

yearend 2005. These achievements, along with a renewed government

effort to advance structural reforms, have raised business and

investor confidence in Russia's economic prospects. Nevertheless,

serious problems persist. Economic growth slowed to 5.9% for 2005

while inflation remains high. Oil, natural gas, metals, and timber

account for more than 80% of exports, leaving the country vulnerable

to swings in world prices. Russia's manufacturing base is

dilapidated and must be replaced or modernized if the country is to

achieve broad-based economic growth. Other problems include a weak

banking system, a poor business climate that discourages both

domestic and foreign investors, corruption, and widespread lack of

trust in institutions. In addition, a string of investigations

launched against a major Russian oil company, culminating with the

arrest of its CEO in the fall of 2003 and the acquisition of the

company by a state owned firm, have raised concerns by some

observers that President PUTIN is granting more influence to forces

within his government that desire to reassert state control over the

economy. State control has increased in the past year with a number

of large acquisitions. Most fundamentally, 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. An energy shortage and

instability in neighboring states may slow growth in 2006, while the

lack of adequate transportation linkages to other countries

continues to handicap export 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. Although the crop still

dominates the agricultural sector, 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 40,000 tourist

visited Nevis during the 2003-2004 season. 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. 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 has suffered low arrivals following 11

September 2001. 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

manufacturing sector mainly processes agricultural products. The

decline of fish stocks in the area is a continuing problem. Tourism

is an expanding sector, accounting for 25% of GDP; about 88,000

tourists visited the islands in 2001. One factory in the Foreign

Trade Zone employs 3,000 people to make automobile electrical

harnesses for an assembly plant in Australia. 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 2000

more than 3 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, and is expected to benefit from an additional round of HIPC

debt relief in early 2006, to help 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 reached 6% in 2004, and also probably

in 2005, 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 has

begun to permit private sector and foreign investor participation in

the power generation and telecom sectors. As part of its effort to

attract foreign investment and diversify the economy, Saudi Arabia

acceded to the WTO in 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

1995-2004. 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.

However, 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

Yugoslav 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, erasing a persistent budget deficit.

Growth turned negative again in 2005. 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 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 electronics and manufacturing. 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.

The government hopes to establish a new growth path that will be

less vulnerable to the external business cycle and will continue

efforts to establish Singapore as Southeast Asia's financial and

high-tech hub. Fiscal stimulus, low interest rates, a surge in

exports, and internal flexibility led to vigorous growth in 2004,

with real GDP rising by 8% - by far the economy's best performance

since 2000 - but growth slowed to 5.7% in 2005.

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

2001-05, despite the general European slowdown. Unemployment, at an

unacceptable 18% in 2003-04, dropped to 16.4% in 2005, but remains

the economy's Achilles heel. Slovakia joined the EU on 1 May 2004.

Slovenia

With its small transition economy and population of

approximately two million, Slovenia is a model of economic success

and stability for its neighbors in the former Yugoslavia. The

country, which joined the EU in 2004, has excellent infrastructure,

a well-educated work force, and an excellent central location. It

enjoys a GDP per capita substantially higher than any of the other

transitioning economies of Central Europe. In March 2004, Slovenia

became the first transition country to graduate from borrower status

to donor partner at the World Bank. Slovenia plans to adopt the euro

by 2007 and has met the EU's Maastricht criteria for inflation.

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 has enabled a return

to law and order, a new period of economic stability, and 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. 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 2005. 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 five

percent 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 10.1%. Growth of 2.5% in 2003, 2.6% in 2004, and

3.4% in 2005 was satisfactory given the background of a faltering

European economy. The socialist president, RODRIGUEZ ZAPATERO, has

initiated economic and social reforms that are generally popular

among the masses of people, but that are anathema to religious and

other conservative elements. Adjusting to the monetary and other

economic policies of an integrated Europe, reducing unemployment,

and absorbing widespread social changes will pose challenges to

Spain over the next few years.

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 market-oriented policies

and export-oriented trade. Sri Lanka's most dynamic sectors now are

food processing, textiles and apparel, food and beverages,

telecommunications, and insurance and banking. In 2003, plantation

crops made up only 15% of exports (compared with 93% in 1970), while

textiles and garments accounted for 63%. GDP grew at an average

annual rate of about 5.5% in the 1990s, but 2001 saw the first

contraction in the country's history, by 1.4%, due to a combination

of power shortages, severe budgetary problems, the global slowdown,

and continuing civil strife. Growth recovered to 5% between 2002 and

2005. 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. 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.

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 8.6% in 2004.

Agricultural production remains Sudan's most important sector,

employing 80% of the work force, contributing 39% 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.

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 about nine-tenths of its imports and

to which it sends nearly two-thirds 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 2% of GDP and

of jobs. 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 in 2004 and

2005. 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 democracy 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 dropped in 2001 to

about 0.8%, to 0.2% in 2002, and to -0.3% in 2003, with a small rise

to 1.8% in 2004-05. Even so, unemployment has remained at less than

half the EU average.

Syria

The Syrian Government estimates the economy grew by 4.5

percent in real terms in 2005, led by the petroleum and agricultural

sectors, which together account for about half of GDP. Economic

performance and the exchange rate on the informal market were hit by

international political developments following the assassination in

February of former Lebanese Prime Minister Rafiq al-HARIRI and the

specter of international sanctions. Higher crude oil prices

countered declining oil production and exports and helped to narrow

the budget deficit and widen the current account surplus. The

Government of Syria has implemented modest economic reforms in the

last 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,

increasing pressure on water supplies caused by 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

trade surplus is substantial, and foreign reserves are the world's

third largest. Agriculture contributes less than 2% to GDP, down

from 32% in 1952. Taiwan is a major investor throughout Southeast

Asia. China has overtaken the US to become Taiwan's largest export

market and, in 2005, Taiwan's third-largest source of imports after

Japan and the US. Taiwan has benefited from cross-Strait economic

integration and a sharp increase in world demand to achieve

substantial growth in its export sector and a seven-year-high real

GDP growth of 6.1% in 2004. However, excess inventory, higher

international oil prices, and rising interest rates dampened

consumption in developed markets, and GDP growth dropped to 3.8% in

2005. The service sector, which accounts for 69% of Taiwan's GDP,

has continued to expand, while unemployment and inflation rates have

declined.

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. Even though 64% of its

people continue to live in abject poverty, Tajikistan has

experienced steady economic growth since 1997, but experienced a

slight drop in its growth rate to 8% in 2005 from 10.6% in 2004.

Continued privatization of medium and large state-owned enterprises

would further increase productivity. Tajikistan's economic

situation, however, remains fragile due to uneven implementation of

structural reforms, weak governance, widespread unemployment, and

the external debt burden. A debt restructuring agreement was reached

with Russia in December 2002, including a $250 million write-off of

Tajikistan's $300 million debt 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 would

substantially add to electricity production. If finished, Rogun will

be the world's tallest dam.

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 more than 6% in 2005.

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 2004,

Thailand and the US began negotiations on a Free Trade Agreement. 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. Growth slowed to 4.4% in 2005. The

downturn can be attributed to high oil prices, weaker demand from

Western markets, severe drought in rural regions, tsunami-related

declines in tourism, and lower consumer confidence. Moreover, the

THAKSIN administration's expansionist economic policies, including

plans for multi-billion-dollar mega-projects in infrastructure and

social development, has raised concerns about fiscal discipline and

the health of financial institutions. On the positive side, the Thai

economy performed well beginning in the third quarter of 2005.

Export-oriented manufacturing - in particular automobile production

- and farm output are driving these gains. In 2006, the economy

should benefit from an influx of investment and a revived tourism

sector; however, a possible avian flu epidemic could significantly

harm economic prospects throughout the region.

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 low inflation and a

growing trade surplus. Prospects for growth in 2006 are good as

prices for oil, petrochemicals, and liquefied natural gas are

expected to remain high, and foreign direct investment continues 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.

Better rains in 2003 through 2005, however, helped push GDP growth

to about 5% for these years. Tourism also recovered after the end of

combat operations in Iraq. 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%.

Inflation fell to 7.7% in 2005 - a 30-year low. Despite the strong

economic gains in 2002-05, 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.

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 20% to 30% per year in 2003-2005, largely because of higher

international oil and gas prices. In 2005, Ashgabat sought to raise

natural gas export prices to its main customers, Russia and Ukraine,

from $44 per thousand cubic meters (tcm) to $66 per tcm. Overall

prospects in the near future are discouraging because of widespread

internal poverty, the burden of foreign debt, the government's

irrational use of oil and gas revenues, and its 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, fishing, and offshore financial services. Most capital

goods and food for domestic consumption are imported. The US is the

leading source of tourists, accounting for more than half of the

annual 93,000 visitors in the late 1990s. 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 2003-05 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 led to a

temporary gas cut-off; Ukraine concluded a deal with Russia in

January 2006, which almost doubled the price Ukraine pays for

Russian gas, and could cost the Ukrainian economy $1.4-2.2 billion

and cause GDP growth to fall 3-4%. 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 2.4% in 2005, down from 12.4% in 2004. The

current account surplus reached $2.2 billion in 2005. 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.

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. At present levels of production, oil and gas reserves

should last for more than 100 years. The government has increased

spending on job creation and infrastructure expansion and is opening

up its utilities to greater private sector involvement. Higher oil

revenue, strong liquidity, and cheap credit in 2005 led to a surge

in asset prices (shares and real estate) and consumer inflation. Any

sharp correction to the UAE's equity markets could damage investor

and consumer sentiment and affect bank asset quality. 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.

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, but fell in 2005, to 1.7%. Despite slower

growth, 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 $42,000. 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 and 2005 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 mid-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 10% in 2004

as a result of high commodity prices for Uruguayan exports, a

competitive peso, growth in the region, and low international

interest rates, but slowed to 6.1% in 2005.

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

about 50,000 visitors in 2004, 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. 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 continues to be highly dependent on the

petroleum sector, accounting for roughly one-third of GDP, around

80% of export earnings, and over half of government operating

revenues. Government revenue also has been bolstered by increased

tax collection, which has surpassed its 2005 collection goal by

almost 50%. Tax revenue is the primary source of non-oil revenue,

which accounts for 53% of the 2006 budget. A disastrous two-month

national oil strike, from December 2002 to February 2003,

temporarily halted economic activity. The economy remained in

depression in 2003, declining by 9.2% after an 8.9% fall in 2002.

Output recovered strongly in 2004-2005, aided by high oil prices and

strong consumption growth. Venezuela continues to be an important

source of crude oil for the US market. Both inflation and

unemployment remain fundamental problems.

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. 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 hopes to become a member of the WTO in 2006.

Among other benefits, accession would 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 21% in 2005. 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.

Virgin Islands

Tourism is the primary economic activity, accounting

for 80% of GDP and employment. The islands normally host 2 million

visitors a year. The manufacturing sector consists of petroleum

refining, textiles, electronics, pharmaceuticals, and watch

assembly. The agricultural sector is small, with most food being

imported. International business and financial services are small

but growing components of the economy. One of the world's largest

petroleum refineries is at Saint Croix. The islands are subject 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% 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 growth and a degradation in economic conditions made worse

since the second intifadah began in September 2000. The downturn has

been largely the result of the Israeli closure policies - the

imposition of border closures in response to security incidents in

Israel - which disrupted labor and commodity market relationships.

In 2001, and even more severely in 2002, Israeli military measures

in PA areas resulted in the destruction of much capital plant, the

disruption of administrative structure, and widespread business

closures. Including the Gaza Strip, the UN estimates that more than

100,000 Palestinians out of the 125,000 who used to work in Israeli

settlements, or in joint industrial zones, have lost their jobs.

International aid of $2 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.

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. All trade and other economic activities

are controlled by the Moroccan Government. Moroccan energy interests

in 2001 signed contracts to explore for oil off the coast of Western

Sahara, which has angered the Polisario. Incomes and standards of

living in Western Sahara are substantially below the Moroccan level.

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 into 2006.

Yemen

Yemen, one of the poorest countries in the Arab world, has

reported meager growth since 2000. Its economic fortunes depend

mostly on oil. Oil revenues increased in 2005 due to 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.

The people have grown increasingly upset over the economic

situation. In July 2005, a reduction in fuel subsidies sparked

riots; over 20 Yemenis were killed and hundreds were injured.

Zambia

Despite progress in privatization and budgetary reform,

Zambia's economic growth remains somewhat below the 6%-7% 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, for example, drained hundreds of millions of

dollars from the economy. 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% at the end of 2004, and 585% at the end of

2005, although private sector estimates put the figure much higher.

Meanwhile, the official exchange rate fell from 24 Zimbabwean

dollars per US dollar in 1998 to 96,000 in mid-January 2006. 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.

This page was last updated on 19 December, 2006

======================================================================

@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 reined 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)