American SamoaAmerican Samoa has a traditional Polynesian economyin which more than 90% of the land is communally owned. Economicactivity is strongly linked to the US with which American Samoaconducts most of its commerce. Tuna fishing and tuna processingplants are the backbone of the private sector, with canned tuna theprimary export. Transfers from the US Government add substantiallyto American Samoa's economic well being. Attempts by the governmentto develop a larger and broader economy are restrained by Samoa'sremote location, its limited transportation, and its devastatinghurricanes. Tourism is a promising developing sector.note: as a territory of the US, American Samoa does not treat the USas an external trade partner
AndorraTourism, the mainstay of Andorra's tiny, well-to-do economy,accounts for more than 80% of GDP. An estimated 11.6 milliontourists visit annually, attracted by Andorra's duty-free status andby its summer and winter resorts. Andorra's comparative advantagehas recently eroded as the economies of neighboring France and Spainhave been opened up, providing broader availability of goods andlower tariffs. The banking sector, with its partial "tax haven"status, also contributes substantially to the economy. Agriculturalproduction is limited - only 2% of the land is arable - and mostfood has to be imported. The principal livestock activity is sheepraising. Manufacturing output consists mainly of cigarettes, cigars,and furniture. Andorra is a member of the EU Customs Union and istreated as an EU member for trade in manufactured goods (no tariffs)and as a non-EU member for agricultural products.
AngolaAngola's high growth rate is driven by its oil sector, withrecord oil prices and rising petroleum production. Oil productionand its supporting activities contribute about 85% of GDP. Increasedoil production supported growth averaging more than 15% per yearfrom 2004 to 2007. A postwar reconstruction boom and resettlement ofdisplaced persons has led to high rates of growth in constructionand agriculture as well. Much of the country's infrastructure isstill damaged or undeveloped from the 27-year-long civil war.Remnants of the conflict such as widespread land mines still mar thecountryside even though an apparently durable peace was establishedafter the death of rebel leader Jonas SAVIMBI in February 2002.Subsistence agriculture provides the main livelihood for most of thepeople, but half of the country's food must still be imported. In2005, the government started using a $2 billion line of credit,since increased to $7 billion, from China to rebuild Angola's publicinfrastructure, and several large-scale projects were completed in2006. Angola also has large credit lines from Brazil, Portugal,Germany, Spain, and the EU. The central bank in 2003 implemented anexchange rate stabilization program using foreign exchange reservesto buy kwanzas out of circulation. This policy became moresustainable in 2005 because of strong oil export earnings; it hassignificantly reduced inflation. Although consumer inflationdeclined from 325% in 2000 to under 13% in 2007, the stabilizationpolicy has put pressure on international net liquidity. Angolabecame a member of OPEC in late 2006 and in late 2007 was assigned aproduction quota of 1.9 million barrels a day, somewhat less thanthe 2-2.5 million bbl Angola's government had wanted. To fully takeadvantage of its rich national resources - gold, diamonds, extensiveforests, Atlantic fisheries, and large oil deposits - Angola willneed to implement government reforms, increase transparency, andreduce corruption. The government has rejected a formal IMFmonitored program, although it continues Article IV consultationsand ad hoc cooperation. Corruption, especially in the extractivesectors, and the negative effects of large inflows of foreignexchange, are major challenges facing Angola.
AnguillaAnguilla has few natural resources, and the economy dependsheavily on luxury tourism, offshore banking, lobster fishing, andremittances from emigrants. Increased activity in the tourismindustry has spurred the growth of the construction sector,contributing to economic growth. Anguillan officials have putsubstantial effort into developing the offshore financial sector,which is small, but growing. In the medium term, prospects for theeconomy will depend largely on the tourism sector and, therefore, onrevived income growth in the industrialized nations as well as onfavorable weather conditions.
AntarcticaFishing off the coast and tourism, both based abroad,account for Antarctica's limited economic activity. Antarcticfisheries in 2005-06 (1 July-30 June) reported landing 128,081metric tons (estimated fishing from the area covered by theConvention on the Conservation of Antarctic Marine Living Resources(CCAMLR), which extends slightly beyond the Antarctic Treaty area).Unregulated fishing, particularly of Patagonian toothfish(Dissostichus eleginoides), is a serious problem. The CCAMLRdetermines the recommended catch limits for marine species. A totalof 36,460 tourists visited the Antarctic Treaty area in the 2006-07Antarctic summer, up from the 30,877 visitors the previous year(estimates provided to the Antarctic Treaty by the InternationalAssociation of Antarctica Tour Operators (IAATO); this does notinclude passengers on overflights). Nearly all of them werepassengers on commercial (nongovernmental) ships and several yachtsthat make trips during the summer. Most tourist trips lastapproximately two weeks.
Antigua and BarbudaAntigua has a relatively high GDP per capita incomparison to most other Caribbean nations. It has experienced solidgrowth since 2003, driven by a construction boom in hotels andhousing that which should wind down in 2008. Tourism continues todominate the economy, accounting for more than half of GDP. Thedual-island nation's agricultural production is focused on thedomestic market and constrained by a limited water supply and alabor shortage stemming from the lure of higher wages in tourism andconstruction. Manufacturing comprises enclave-type assembly forexport with major products being bedding, handicrafts, andelectronic components. Prospects for economic growth in the mediumterm will continue to depend on income growth in the industrializedworld, especially in the US, which accounts for slightly more thanone-third of tourist arrivals. Since taking office in 2004, theSPENCER government has adopted an ambitious fiscal reform program,but will continue to be saddled by its debt burden with adebt-to-GDP ratio exceeding 100%.
Arctic OceanEconomic activity is limited to the exploitation ofnatural resources, including petroleum, natural gas, fish, and seals.
ArgentinaArgentina benefits from rich natural resources, a highlyliterate population, an export-oriented agricultural sector, and adiversified industrial base. Although one of the world's wealthiestcountries 100 years ago, Argentina suffered during most of the 20thcentury from recurring economic crises, persistent fiscal andcurrent account deficits, high inflation, mounting external debt,and capital flight. A severe depression, growing public and externalindebtedness, and a bank run culminated in 2001 in the most seriouseconomic, social, and political crisis in the country's turbulenthistory. Interim President Adolfo RODRIGUEZ SAA declared a default -the largest in history - on the government's foreign debt inDecember of that year, and abruptly resigned only a few days aftertaking office. His successor, Eduardo DUHALDE, announced an end tothe peso's decade-long 1-to-1 peg to the US dollar in early 2002.The economy bottomed out that year, with real GDP 18% smaller thanin 1998 and almost 60% of Argentines under the poverty line. RealGDP rebounded to grow by an average 9% annually over the subsequentfive years, taking advantage of previously idled industrial capacityand labor, an audacious debt restructuring and reduced debt burden,excellent international financial conditions, and expansionarymonetary and fiscal policies. Inflation, however, reacheddouble-digit levels in 2006 and the government of President NestorKIRCHNER responded with "voluntary" price agreements withbusinesses, as well as export taxes and restraints. Multi-year pricefreezes on electricity and natural gas rates for residential usersstoked consumption and kept private investment away, leading torestrictions on industrial use and blackouts in 2007.
ArmeniaSince the breakup of the Soviet Union in 1991, Armenia hasmade progress in implementing many economic reforms includingprivatization, price reforms, and prudent fiscal policies. Theconflict with Azerbaijan over the ethnic Armenian-dominated regionof Nagorno-Karabakh contributed to a severe economic decline in theearly 1990s. By 1994, however, the Armenian Government launched anambitious IMF-sponsored economic liberalization program thatresulted in positive growth rates. Economic growth has averaged over13% in recent years. Armenia has managed to reduce poverty, slashinflation, stabilize its currency, and privatize most small- andmedium-sized enterprises. Under the old Soviet central planningsystem, Armenia developed a modern industrial sector, supplyingmachine tools, textiles, and other manufactured goods to sisterrepublics, in exchange for raw materials and energy. Armenia hassince switched to small-scale agriculture and away from the largeagroindustrial complexes of the Soviet era. Nuclear power plantsbuilt at Metsamor in the 1970s were closed following the 1988 SpitakEarthquake, though they sustained no damage. One of the two reactorswas re-opened in 1995, but the Armenian government is underinternational pressure to close it due to concerns that the Sovietera design lacks important safeguards. Metsamor provides 40 percentof the country's electricity - hydropower accounts for aboutone-fourth. Economic ties with Russia remain close, especially inthe energy sector. The electricity distribution system wasprivatized in 2002 and bought by Russia's RAO-UES in 2005.Construction of a pipeline to deliver natural gas from Iran toArmenia is halfway completed and is scheduled to be commissioned byJanuary 2009. Armenia has some mineral deposits (copper, gold,bauxite). Pig iron, unwrought copper, and other nonferrous metalsare Armenia's highest valued exports. Armenia's severe tradeimbalance has been offset somewhat by international aid, remittancesfrom Armenians working abroad, and foreign direct investment.Armenia joined the WTO in January 2003. The government made someimprovements in tax and customs administration in recent years, butanti-corruption measures will be more difficult to implement.Despite strong economic growth, Armenia's unemployment rate remainshigh. Armenia will need to pursue additional economic reforms inorder to improve its economic competitiveness and to build on recentimprovements in poverty and unemployment, especially given itseconomic isolation from two of its nearest neighbors, Turkey andAzerbaijan.
ArubaTourism is the mainstay of the small, open Aruban economy,with offshore banking and oil refining and storage also important.The rapid growth of the tourism sector over the last decade hasresulted in a substantial expansion of other activities. Over 1.5million tourists per year visit Aruba, with 75% of those from theUS. Construction continues to boom, with hotel capacity five timesthe 1985 level. In addition, the country's oil refinery reopened in1993, providing a major source of employment, foreign exchangeearnings, and growth. Tourist arrivals have rebounded stronglyfollowing a dip after the 11 September 2001 attacks. The islandexperiences only a brief low season, and hotel occupancy in 2004averaged 80%, compared to 68% throughout the rest of the Caribbean.The government has made cutting the budget and trade deficits a highpriority.
Ashmore and Cartier Islandsno economic activity
Atlantic OceanThe Atlantic Ocean provides some of the world's mostheavily trafficked sea routes, between and within the Eastern andWestern Hemispheres. Other economic activity includes theexploitation of natural resources, e.g., fishing, dredging ofaragonite sands (The Bahamas), and production of crude oil andnatural gas (Caribbean Sea, Gulf of Mexico, and North Sea).
AustraliaAustralia has an enviable, strong economy with a percapita GDP on par with the four dominant West European economies.Robust business and consumer confidence and high export prices forraw materials and agricultural products are fueling the economy,particularly in mining states. Australia's emphasis on reforms, lowinflation, a housing market boom, and growing ties with China havebeen key factors behind the economy's 16 solid years of expansion.Drought, robust import demand, and a strong currency have pushed thetrade deficit up in recent years, while infrastructure bottlenecksand a tight labor market are constraining growth in export volumesand stoking inflation. Australia's budget has been in surplus since2002 due to strong revenue growth.
AustriaAustria, with its well-developed market economy and highstandard of living, is closely tied to other EU economies,especially Germany's. The Austrian economy also benefits greatlyfrom strong commercial relations, especially in the banking andinsurance sectors, with central, eastern, and southeastern Europe.The economy features a large service sector, a sound industrialsector, and a small, but highly developed agricultural sector.Membership in the EU has drawn an influx of foreign investorsattracted by Austria's access to the single European market andproximity to the new EU economies. The outgoing government hassuccessfully pursued a comprehensive economic reform program, aimedat streamlining government and creating a more competitive businessenvironment, further strengthening Austria's attractiveness as aninvestment location. It has implemented effective pension reforms;however, lower taxes in 2005-06 led to a small budget deficit in2006 and 2007. Boosted by strong exports, growth neverthelessreached 3.3% in both 2006 and 2007, although the economy may slow in2008 because of the strong euro, high oil prices, and problems ininternational financial markets. To meet increased competition -especially from new EU members and Central European countries -Austria will need to continue restructuring, emphasizingknowledge-based sectors of the economy, and encouraging greaterlabor flexibility and greater labor participation by its agingpopulation.
AzerbaijanAzerbaijan's high economic growth in 2006 and 2007 isattributable to large and growing oil exports. Azerbaijan's oilproduction declined through 1997, but has registered an increaseevery year since. Negotiation of production-sharing arrangements(PSAs) with foreign firms, which have committed $60 billion tolong-term oilfield development, should generate the funds needed tospur future industrial development. Oil production under the firstof these PSAs, with the Azerbaijan International Operating Company,began in November 1997. A consortium of Western oil companies beganpumping 1 million barrels a day from a large offshore field in early2006, through a $4 billion pipeline it built from Baku to Turkey'sMediterranean port of Ceyhan. By 2010 revenues from this projectwill double the country's current GDP. Azerbaijan shares all theformidable problems of the former Soviet republics in making thetransition from a command to a market economy, but its considerableenergy resources brighten its long-term prospects. Baku has onlyrecently begun making progress on economic reform, and old economicties and structures are slowly being replaced. Several otherobstacles impede Azerbaijan's economic progress: the need forstepped up foreign investment in the non-energy sector, thecontinuing conflict with Armenia over the Nagorno-Karabakh region,pervasive corruption, and elevated inflation. Trade with Russia andthe other former Soviet republics is declining in importance, whiletrade is building with Turkey and the nations of Europe. Long-termprospects will depend on world oil prices, the location of new oiland gas pipelines in the region, and Azerbaijan's ability to manageits energy wealth.
Bahamas, TheThe Bahamas is one of the wealthiest Caribbeancountries with an economy heavily dependent on tourism and offshorebanking. Tourism together with tourism-driven construction andmanufacturing accounts for approximately 60% of GDP and directly orindirectly employs half of the archipelago's labor force. Steadygrowth in tourism receipts and a boom in construction of new hotels,resorts, and residences had led to solid GDP growth in recent years,but tourist arrivals have been on the decline since 2006. Financialservices constitute the second-most important sector of the Bahamianeconomy and, when combined with business services, account for about36% of GDP. However, since December 2000, when the governmentenacted new regulations on the financial sector, many internationalbusinesses have left The Bahamas. Manufacturing and agriculturecombined contribute approximately a tenth of GDP and show littlegrowth, despite government incentives aimed at those sectors.Overall growth prospects in the short run rest heavily on thefortunes of the tourism sector. Tourism, in turn, depends on growthin the US, the source of more than 80% of the visitors.
BahrainWith its highly developed communication and transportfacilities, Bahrain is home to numerous multinational firms withbusiness in the Gulf. Petroleum production and refining account forover 60% of Bahrain's export receipts, over 70% of governmentrevenues, and 11% of GDP (exclusive of allied industries),underpinning Bahrain's strong economic growth in recent years.Aluminum is Bahrain's second major export after oil. Other majorsegments of Bahrain's economy are the financial and constructionsectors. Bahrain is focused on Islamic banking and is competing onan international scale with Malaysia as a worldwide banking center.Bahrain is actively pursuing the diversification and privatizationof its economy to reduce the country's dependence on oil. As part ofthis effort, in August 2006 Bahrain and the US implemented a FreeTrade Agreement (FTA), the first FTA between the US and a Gulfstate. Continued strong growth hinges on Bahrain's ability toacquire new natural gas supplies as feedstock to support itsexpanding petrochemical and aluminum industries. Unemployment,especially among the young, and the depletion of oil and undergroundwater resources are long-term economic problems.
BangladeshThe economy has grown 5-6% over the past few yearsdespite inefficient state-owned enterprises, delays in exploitingnatural gas resources, insufficient power supplies, and slowimplementation of economic reforms. Bangladesh remains a poor,overpopulated, and inefficiently-governed nation. Although more thanhalf of GDP is generated through the service sector, nearlytwo-thirds of Bangladeshis are employed in the agriculture sector,with rice as the single-most-important product. Garment exports andremittances from Bangladeshis working overseas, mainly in the MiddleEast and East Asia, fuel economic growth.
BarbadosHistorically, the Barbadian economy was dependent onsugarcane cultivation and related activities. However, production inrecent years has diversified into light industry and tourism, withabout three-quarters of GDP and 80% of exports being attributed toservices. Growth has rebounded since 2003, bolstered by increases inconstruction projects and tourism revenues - reflecting its successin the higher-end segment. The country enjoys one of the highest percapita incomes in the region and an investment grade rating whichbenefits from its political stability and stable institutions.Offshore finance and information services are important foreignexchange earners and thrive from having the same time zone aseastern US financial centers and a relatively highly educatedworkforce. The government continues its efforts to reduceunemployment, to encourage direct foreign investment, and toprivatize remaining state-owned enterprises.
BelarusBelarus has seen little structural reform since 1995, whenPresident LUKASHENKO launched the country on the path of "marketsocialism." In keeping with this policy, LUKASHENKO reimposedadministrative controls over prices and currency exchange rates andexpanded the state's right to intervene in the management of privateenterprises. Since 2005, the government has re-nationalized a numberof private companies. In addition, businesses have been subject topressure by central and local governments, e.g., arbitrary changesin regulations, numerous rigorous inspections, retroactiveapplication of new business regulations, and arrests of "disruptive"businessmen and factory owners. A wide range of redistributivepolicies has helped those at the bottom of the ladder; the Ginicoefficient is among the lowest in the world. Because of theserestrictive economic policies, Belarus has had trouble attractingforeign investment. Nevertheless, GDP growth has been strong inrecent years, reaching nearly 7% in 2007, despite the roadblocks ofa tough, centrally directed economy with a high, but decreasing,rate of inflation. Belarus receives heavily discounted oil andnatural gas from Russia and much of Belarus' growth can beattributed to the re-export of Russian oil at market prices. Tradewith Russia - by far its largest single trade partner - decreased in2007, largely as a result of a change in the way the Value Added Tax(VAT) on trade was collected. Russia has introduced an export dutyon oil shipped to Belarus, which will increase gradually through2009, and a requirement that Belarusian duties on re-exportedRussian oil be shared with Russia - 80% will go to Russia in 2008,and 85% in 2009. Russia also increased Belarusian natural gas pricesfrom $47 per thousand cubic meters (tcm) to $100 per tcm in 2007,and plans to increase prices gradually to world levels by 2011.Russia's recent policy of bringing energy prices for Belarus toworld market levels may result in a slowdown in economic growth inBelarus over the next few years. Some policy measures, includingtightening of fiscal and monetary policies, improving energyefficiency, and diversifying exports, have been introduced, butexternal borrowing has been the main mechanism used to manage thegrowing pressures on the economy.
BelgiumThis modern, private-enterprise economy has capitalized onits central geographic location, highly developed transport network,and diversified industrial and commercial base. Industry isconcentrated mainly in the populous Flemish area in the north. Withfew natural resources, Belgium must import substantial quantities ofraw materials and export a large volume of manufactures, making itseconomy unusually dependent on the state of world markets. Roughlythree-quarters of its trade is with other EU countries. Public debtis more than 85% of GDP. On the positive side, the government hassucceeded in balancing its budget, and income distribution isrelatively equal. Belgium began circulating the euro currency inJanuary 2002. Economic growth in 2001-03 dropped sharply because ofthe global economic slowdown, with moderate recovery in 2004-07.Economic growth and foreign direct investment are expected to slowdown in 2008, due to credit tightening, falling consumer andbusiness confidence, and above average inflation. However, with thesuccessful negotiation of the 2008 budget and devolution of powerwithin the government, political tensions seem to be easing andcould lead to an improvement in the economic outlook for 2008.
BelizeIn this small, essentially private-enterprise economy,tourism is the number one foreign exchange earner followed byexports of marine products, citrus, cane sugar, bananas, andgarments. The government's expansionary monetary and fiscalpolicies, initiated in September 1998, led to sturdy GDP growthaveraging nearly 4% in 1999-2007. Oil discoveries in 2006 bolsteredthe economic growth in 2006 and 2007. Major concerns continue to bethe sizable trade deficit and unsustainable foreign debt. InFebruary 2007, the government restructured nearly all of its publicexternal commercial debt, which will reduce interest payments andrelieve liquidity concerns. A key short-term objective remains thereduction of poverty with the help of international donors.
BeninThe economy of Benin remains underdeveloped and dependent onsubsistence agriculture, cotton production, and regional trade.Growth in real output has averaged around 5% in the past sevenyears, but rapid population growth has offset much of this increase.Inflation has subsided over the past several years. In order toraise growth still further, Benin plans to attract more foreigninvestment, place more emphasis on tourism, facilitate thedevelopment of new food processing systems and agriculturalproducts, and encourage new information and communicationtechnology. Specific projects to improve the business climate byreforms to the land tenure system, the commercial justice system,and the financial sector were included in Benin's $307 millionMillennium Challenge Account grant signed in February 2006. The 2001privatization policy continues in telecommunications, water,electricity, and agriculture though the government annulled theprivatization of Benin's state cotton company in November 2007 afterthe discovery of irregularities in the bidding process. The ParisClub and bilateral creditors have eased the external debt situation,with Benin benefiting from a G8 debt reduction announced in July2005, while pressing for more rapid structural reforms. Aninsufficient electrical supply continues to adversely affect Benin'seconomic growth though the government recently has taken steps toincrease domestic power production.
BermudaBermuda enjoys the third highest per capita income in theworld, more than 50% higher than that of the US. Its economy isprimarily based on providing financial services for internationalbusiness and luxury facilities for tourists. A number of reinsurancecompanies relocated to the island following the 11 September 2001attacks and again after Hurricane Katrina in August 2005,contributing to the expansion of an already robust internationalbusiness sector. Bermuda's tourism industry - which derives over 80%of its visitors from the US - continues to struggle but remains theisland's number two industry. Most capital equipment and food mustbe imported. Bermuda's industrial sector is small, althoughconstruction continues to be important; the average cost of a housein June 2003 had risen to $976,000. Agriculture is limited with only20% of the land being arable.
BhutanThe economy, one of the world's smallest and least developed,is based on agriculture and forestry, which provide the mainlivelihood for more than 60% of the population. Agriculture consistslargely of subsistence farming and animal husbandry. Ruggedmountains dominate the terrain and make the building of roads andother infrastructure difficult and expensive. The economy is closelyaligned with India's through strong trade and monetary links anddependence on India's financial assistance. The industrial sector istechnologically backward, with most production of the cottageindustry type. Most development projects, such as road construction,rely on Indian migrant labor. Model education, social, andenvironment programs are underway with support from multilateraldevelopment organizations. Each economic program takes into accountthe government's desire to protect the country's environment andcultural traditions. For example, the government, in its cautiousexpansion of the tourist sector, encourages visits by upscale,environmentally conscientious tourists. Detailed controls anduncertain policies in areas such as industrial licensing, trade,labor, and finance continue to hamper foreign investment. Hydropowerexports to India had a major impact on growth in 2007.
BoliviaBolivia is one of the poorest and least developed countriesin Latin America. Following a disastrous economic crisis during theearly 1980s, reforms spurred private investment, stimulated economicgrowth, and cut poverty rates in the 1990s. The period 2003-05 wascharacterized by political instability, racial tensions, and violentprotests against plans - subsequently abandoned - to exportBolivia's newly discovered natural gas reserves to large northernhemisphere markets. In 2005, the government passed a controversialhydrocarbons law that imposed significantly higher royalties andrequired foreign firms then operating under risk-sharing contractsto surrender all production to the state energy company, which wasmade the sole exporter of natural gas. The law also required thatthe state energy company regain control over the five companies thatwere privatized during the 1990s - a process that is still underway.In 2006, higher earnings for mining and hydrocarbons exports pushedthe current account surplus to about 12% of GDP and the government'shigher tax take produced a fiscal surplus after years of largedeficits. Debt relief from the G8 - announced in 2005 - also hassignificantly reduced Bolivia's public sector debt burden. Privateinvestment as a share of GDP, however, remains among the lowest inLatin America, and inflation reached double-digit levels in 2007.
Bosnia and HerzegovinaBosnia and Herzegovina ranked next toMacedonia as the poorest republic in the old Yugoslav federation.Although agriculture is almost all in private hands, farms are smalland inefficient, and the republic traditionally is a net importer offood. The private sector is growing and foreign investment is slowlyincreasing, but government spending, at nearly 40% of adjusted GDP,remains unreasonably high. The interethnic warfare in Bosnia causedproduction to plummet by 80% from 1992 to 1995 and unemployment tosoar. With an uneasy peace in place, output recovered in 1996-99 athigh percentage rates from a low base; but output growth slowed in2000-02. Part of the lag in output was made up in 2003-07 when GDPgrowth exceeded 5% per year. National-level statistics are limitedand do not capture the large share of black market activity. Thekonvertibilna marka (convertible mark or BAM)- the national currencyintroduced in 1998 - is pegged to the euro, and confidence in thecurrency and the banking sector has increased. Implementingprivatization, however, has been slow, particularly in theFederation, although more successful in the Republika Srpska.Banking reform accelerated in 2001 as all the Communist-era paymentsbureaus were shut down; foreign banks, primarily from WesternEurope, now control most of the banking sector. A sizeable currentaccount deficit and high unemployment rate remain the two mostserious macroeconomic problems. On 1 January 2006 a new value-addedtax (VAT) went into effect. The VAT has been successful in capturingmuch of the gray market economy and has developed into a significantand predictable source of revenues for all layers of government.Bosnia and Herzegovina became a full member of the Central EuropeanFree Trade Agreement in September 2007. The country receivessubstantial reconstruction assistance and humanitarian aid from theinternational community but will have to prepare for an era ofdeclining assistance.
BotswanaBotswana has maintained one of the world's highest economicgrowth rates since independence in 1966, though growth slowed to4.7% annually in 2006-07. Through fiscal discipline and soundmanagement, Botswana has transformed itself from one of the poorestcountries in the world to a middle-income country with a per capitaGDP of nearly $15,000 in 2007. Two major investment services rankBotswana as the best credit risk in Africa. Diamond mining hasfueled much of the expansion and currently accounts for more thanone-third of GDP and for 70-80% of export earnings. Tourism,financial services, subsistence farming, and cattle raising areother key sectors. On the downside, the government must deal withhigh rates of unemployment and poverty. Unemployment officially was23.8% in 2004, but unofficial estimates place it closer to 40%.HIV/AIDS infection rates are the second highest in the world andthreaten Botswana's impressive economic gains. An expected levelingoff in diamond mining production overshadows long-term prospects.
Bouvet Islandno economic activity; declared a nature reserve
BrazilCharacterized by large and well-developed agricultural,mining, manufacturing, and service sectors, Brazil's economyoutweighs that of all other South American countries and isexpanding its presence in world markets. Having weathered 2001-03financial turmoil, capital inflows are regaining strength and thecurrency has resumed appreciating. The appreciation has slowedexport volume growth, but since 2004, Brazil's growth has yieldedincreases in employment and real wages. The resilience in theeconomy stems from commodity-driven current account surpluses, andsound macroeconomic policies that have bolstered internationalreserves to historically high levels, reduced public debt, andallowed a significant decline in real interest rates. A floatingexchange rate, an inflation-targeting regime, and a tight fiscalpolicy are the three pillars of the economic program. From 2003 to2007, Brazil ran record trade surpluses and recorded its firstcurrent account surpluses since 1992. Productivity gains coupledwith high commodity prices contributed to the surge in exports.Brazil improved its debt profile in 2006 by shifting its debt burdentoward real denominated and domestically held instruments. "LULA" DASILVA restated his commitment to fiscal responsibility bymaintaining the country's primary surplus during the 2006 election.Following his second inauguration, "LULA" DA SILVA announced apackage of further economic reforms to reduce taxes and increaseinvestment in infrastructure. The government's goal of achievingstrong growth while reducing the debt burden is likely to createinflationary pressures.
British Indian Ocean Territory All economic activity is concentrated on the largest island of Diego Garcia, where a joint UK-US military facility is located. Construction projects and various services needed to support the military installation are performed by military and contract employees from the UK, Mauritius, the Philippines, and the US. There are no industrial or agricultural activities on the islands. When the native Ilois return, they plan to reestablish sugarcane production and fishing. The territory earns foreign exchange by selling fishing licenses and postage stamps.
British Virgin IslandsThe economy, one of the most stable andprosperous in the Caribbean, is highly dependent on tourism,generating an estimated 45% of the national income. An estimated820,000 tourists, mainly from the US, visited the islands in 2005.In the mid-1980s, the government began offering offshoreregistration to companies wishing to incorporate in the islands, andincorporation fees now generate substantial revenues. Roughly400,000 companies were on the offshore registry by yearend 2000. Theadoption of a comprehensive insurance law in late 1994, whichprovides a blanket of confidentiality with regulated statutorygateways for investigation of criminal offenses, made the BritishVirgin Islands even more attractive to international business.Livestock raising is the most important agricultural activity; poorsoils limit the islands' ability to meet domestic food requirements.Because of traditionally close links with the US Virgin Islands, theBritish Virgin Islands has used the US dollar as its currency since1959.
BruneiBrunei has a small well-to-do economy that encompasses amixture of foreign and domestic entrepreneurship, governmentregulation, welfare measures, and village tradition. Crude oil andnatural gas production account for just over half of GDP and morethan 90% of exports. Per capita GDP is among the highest in Asia,and substantial income from overseas investment supplements incomefrom domestic production. The government provides for all medicalservices and free education through the university level andsubsidizes rice and housing. Brunei's leaders are concerned thatsteadily increased integration in the world economy will undermineinternal social cohesion. Plans for the future include upgrading thelabor force, reducing unemployment, strengthening the banking andtourist sectors, and, in general, further widening the economic basebeyond oil and gas.
BulgariaBulgaria, a former communist country that entered the EU on1 January 2007, has experienced strong growth since a major economicdownturn in 1996. Successive governments have demonstratedcommitment to economic reforms and responsible fiscal planning, buthave failed so far to rein in rising inflation and large currentaccount deficits. Bulgaria has averaged more than 6% growth since2004, attracting significant amounts of foreign direct investment,but corruption in the public administration, a weak judiciary, andthe presence of organized crime remain significant challenges.
Burkina FasoOne of the poorest countries in the world, landlockedBurkina Faso has few natural resources and a weak industrial base.About 90% of the population is engaged in subsistence agriculture,which is vulnerable to periodic drought. Cotton is the main cashcrop and the government has joined with three other cotton producingcountries in the region - Mali, Niger, and Chad - to lobby in theWorld Trade Organization for fewer subsidies to producers in othercompeting countries. Since 1998, Burkina Faso has embarked upon agradual but successful privatization of state-owned enterprises.Having revised its investment code in 2004, Burkina Faso hopes toattract foreign investors. Thanks to this new code and otherlegislation favoring the mining sector, the country has seen anupswing in gold exploration and production. While the bitterinternal crisis in neighboring Cote d'Ivoire is beginning to beresolved, it is still having a negative effect on Burkina Faso'strade and employment. In 2007 higher costs for energy and importedfoodstuffs, as well as low cotton prices, dampened a GDP growth ratethat had averaged 6% in the last 10 years. Burkina Faso received aMillennium Challenge Account threshold grant to improve girls'education at the primary school level, and appears likely to receivea grant in the areas of infrastructure, agriculture, and land reform.
Burma Burma, a resource-rich country, suffers from pervasive government controls, inefficient economic policies, and rural poverty. The junta took steps in the early 1990s to liberalize the economy after decades of failure under the "Burmese Way to Socialism," but those efforts stalled, and some of the liberalization measures were rescinded. Despite Burma's increasing oil and gas revenue, socio-economic conditions have deteriorated due to the regime's mismanagement of the economy. Lacking monetary or fiscal stability, the economy suffers from serious macroeconomic imbalances - including rising inflation, fiscal deficits, multiple official exchange rates that overvalue the Burmese kyat, a distorted interest rate regime, unreliable statistics, and an inability to reconcile national accounts to determine a realistic GDP figure. Most overseas development assistance ceased after the junta began to suppress the democracy movement in 1988 and subsequently refused to honor the results of the 1990 legislative elections. In response to the government of Burma's attack in May 2003 on AUNG SAN SUU KYI and her convoy, the US imposed new economic sanctions in August 2003 including a ban on imports of Burmese products and a ban on provision of financial services by US persons. Further, a poor investment climate hampers attracting outside investment slowing the inflow of foreign exchange. The most productive sectors will continue to be in extractive industries, especially oil and gas, mining, and timber with the latter especially causing environmental degradation. Other areas, such as manufacturing and services, are struggling with inadequate infrastructure, unpredictable import/export policies, deteriorating health and education systems, and endemic corruption. A major banking crisis in 2003 shuttered the country's 20 private banks and disrupted the economy. As of 2007, the largest private banks operated under tight restrictions limiting the private sector's access to formal credit. Moreover, the September 2007 crackdown on prodemocracy demonstrators, including thousands of monks, further strained the economy as the tourism industry, which directly employs about 500,000 people, suffered dramatic declines in foreign visitor levels. In November 2007, the European Union announced new sanctions banning investment and trade in Burmese gems, timber and precious stones, while the United States expanded its sanctions list to include more Burmese government and military officials and their family members, as well as prominent regime business cronies, their family members, and associated companies. Official statistics are inaccurate. Published statistics on foreign trade are greatly understated because of the size of the black market and unofficial border trade - often estimated to be as large as the official economy. Though the Burmese government has good economic relations with its neighbors, better investment and business climates and an improved political situation are needed to promote serious foreign investment, exports, and tourism.
BurundiBurundi is a landlocked, resource-poor country with anunderdeveloped manufacturing sector. The economy is predominantlyagricultural with more than 90% of the population dependent onsubsistence agriculture. Economic growth depends on coffee and teaexports, which account for 90% of foreign exchange earnings. Theability to pay for imports, therefore, rests primarily on weatherconditions and international coffee and tea prices. The Tutsiminority, 14% of the population, dominates the government and thecoffee trade at the expense of the Hutu majority, 85% of thepopulation. An ethnic-based war that lasted for over a decaderesulted in more than 200,000 deaths, forced more than 48,000refugees into Tanzania, and displaced 140,000 others internally.Only one in two children go to school, and approximately one in 15adults has HIV/AIDS. Food, medicine, and electricity remain in shortsupply. Burundi's GDP grew around 5% annually in 2006-07. Politicalstability and the end of the civil war have improved aid flows andeconomic activity has increased, but underlying weaknesses - a highpoverty rate, poor education rates, a weak legal system, and lowadministrative capacity - risk undermining planned economic reforms.Burundi will continue to remain heavily dependent on aid frombilateral and multilateral donors; the delay of funds after acorruption scandal cut off bilateral aid in 2007 reducedgovernment's revenues and its ability to pay salaries.
CambodiaFrom 2001 to 2004, the economy grew at an average rate of6.4%, driven largely by an expansion in the garment sector andtourism. The US and Cambodia signed a Bilateral Textile Agreement,which gave Cambodia a guaranteed quota of US textile imports andestablished a bonus for improving working conditions and enforcingCambodian labor laws and international labor standards in theindustry. With the January 2005 expiration of a WTO Agreement onTextiles and Clothing, Cambodia-based textile producers were forcedto compete directly with lower-priced producing countries such asChina and India. Better-than-expected garment sector performance ledto more than 9% growth in 2007. Its vibrant garment industry employsmore than 350,000 people and contributes more than 70% of Cambodia'sexports. The Cambodian government has committed itself to a policysupporting high labor standards in an attempt to maintain buyerinterest. In 2005, exploitable oil and natural gas deposits werefound beneath Cambodia's territorial waters, representing a newrevenue stream for the government if commercial extraction begins.Mining also is attracting significant investor interest,particularly in the northeastern parts of the country, and thegovernment has said opportunities exist for mining bauxite, gold,iron and gems. In 2006, a US-Cambodia bilateral Trade and InvestmentFramework Agreement (TIFA) was signed and the first round ofdiscussions took place in early 2007. The tourism industry continuesto grow rapidly, with foreign arrivals reaching 2 million in 2007.In 2007 the government signed a joint venture agreement with twocompanies to form a new national airline. The long-term developmentof the economy remains a daunting challenge. The Cambodiangovernment is working with bilateral and multilateral donors,including the World Bank and IMF, to address the country's manypressing needs. The major economic challenge for Cambodia over thenext decade will be fashioning an economic environment in which theprivate sector can create enough jobs to handle Cambodia'sdemographic imbalance. More than 50% of the population is less than21 years old. The population lacks education and productive skills,particularly in the poverty-ridden countryside, which suffers froman almost total lack of basic infrastructure.
CameroonBecause of its modest oil resources and favorableagricultural conditions, Cameroon has one of the best-endowedprimary commodity economies in sub-Saharan Africa. Still, it facesmany of the serious problems facing other underdeveloped countries,such as a top-heavy civil service and a generally unfavorableclimate for business enterprise. Since 1990, the government hasembarked on various IMF and World Bank programs designed to spurbusiness investment, increase efficiency in agriculture, improvetrade, and recapitalize the nation's banks. In June 2000, thegovernment completed an IMF-sponsored, three-year structuraladjustment program; however, the IMF is pressing for more reforms,including increased budget transparency, privatization, and povertyreduction programs. In January 2001, the Paris Club agreed to reduceCameroon's debt of $1.3 billion by $900 million; debt relief nowtotals $1.26 billion. International oil and cocoa prices have asignificant impact on the economy.
CanadaAs an affluent, high-tech industrial society in thetrillion-dollar class, Canada resembles the US in itsmarket-oriented economic system, pattern of production, and affluentliving standards. Since World War II, the impressive growth of themanufacturing, mining, and service sectors has transformed thenation from a largely rural economy into one primarily industrialand urban. The 1989 US-Canada Free Trade Agreement (FTA) and the1994 North American Free Trade Agreement (NAFTA) (which includesMexico) touched off a dramatic increase in trade and economicintegration with the US. Given its great natural resources, skilledlabor force, and modern capital plant, Canada enjoys solid economicprospects. Top-notch fiscal management has produced consecutivebalanced budgets since 1997, although public debate continues overthe equitable distribution of federal funds to the Canadianprovinces. Exports account for roughly a third of GDP. Canada enjoysa substantial trade surplus with its principal trading partner, theUS, which absorbs 80% of Canadian exports each year. Canada is theUS's largest foreign supplier of energy, including oil, gas,uranium, and electric power. During 2007, Canada enjoyed goodeconomic growth, moderate inflation, and the lowest unemploymentrate in more than three decades.
Cape VerdeThis island economy suffers from a poor natural resourcebase, including serious water shortages exacerbated by cycles oflong-term drought. The economy is service-oriented, with commerce,transport, tourism, and public services accounting for aboutthree-fourths of GDP. Although nearly 70% of the population lives inrural areas, the share of food production in GDP is low. About 82%of food must be imported. The fishing potential, mostly lobster andtuna, is not fully exploited. Cape Verde annually runs a high tradedeficit, financed by foreign aid and remittances from emigrants;remittances supplement GDP by more than 20%. Economic reforms areaimed at developing the private sector and attracting foreigninvestment to diversify the economy. Future prospects depend heavilyon the maintenance of aid flows, the encouragement of tourism,remittances, and the momentum of the government's developmentprogram. Cape Verde became a member of the WTO in July 2008.
Cayman IslandsWith no direct taxation, the islands are a thrivingoffshore financial center. More than 68,000 companies wereregistered in the Cayman Islands as of 2003, including almost 500banks, 800 insurers, and 5,000 mutual funds. A stock exchange wasopened in 1997. Tourism is also a mainstay, accounting for about 70%of GDP and 75% of foreign currency earnings. The tourist industry isaimed at the luxury market and caters mainly to visitors from NorthAmerica. Total tourist arrivals exceeded 2.1 million in 2003, withabout half from the US. About 90% of the islands' food and consumergoods must be imported. The Caymanians enjoy one of the highestoutputs per capita and one of the highest standards of living in theworld.
Central African RepublicSubsistence agriculture, together withforestry, remains the backbone of the economy of the Central AfricanRepublic (CAR), with more than 70% of the population living inoutlying areas. The agricultural sector generates more than half ofGDP. Timber has accounted for about 16% of export earnings and thediamond industry, for 40%. Important constraints to economicdevelopment include the CAR's landlocked position, a poortransportation system, a largely unskilled work force, and a legacyof misdirected macroeconomic policies. Factional fighting betweenthe government and its opponents remains a drag on economicrevitalization. Distribution of income is extraordinarily unequal.Grants from France and the international community can onlypartially meet humanitarian needs.
ChadChad's primarily agricultural economy will continue to beboosted by major foreign direct investment projects in the oilsector that began in 2000. At least 80% of Chad's population relieson 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 onforeign assistance and foreign capital for most public and privatesector investment projects. A consortium led by two US companies hasbeen investing $3.7 billion to develop oil reserves - estimated at 1billion barrels - in southern Chad. Chinese companies are alsoexpanding exploration efforts and plan to build a refinery. Thenation's total oil reserves have been estimated to be 1.5 billionbarrels. Oil production came on stream in late 2003. Chad began toexport oil in 2004. Cotton, cattle, and gum arabic provide the bulkof Chad's non-oil export earnings.
ChileChile has a market-oriented economy characterized by a highlevel of foreign trade. During the early 1990s, Chile's reputationas a role model for economic reform was strengthened when thedemocratic government of Patricio AYLWIN - which took over from themilitary in 1990 - deepened the economic reform initiated by themilitary government. Growth in real GDP averaged 8% during 1991-97,but fell to half that level in 1998 because of tight monetarypolicies implemented to keep the current account deficit in checkand because of lower export earnings - the latter a product of theglobal financial crisis. A severe drought exacerbated the recessionin 1999, reducing crop yields and causing hydroelectric shortfallsand electricity rationing, and Chile experienced negative economicgrowth for the first time in more than 15 years. Despite the effectsof the recession, Chile maintained its reputation for strongfinancial institutions and sound policy that have given it thestrongest sovereign bond rating in South America. Between 2000 and2007 growth ranged between 2%-6%. Throughout these years Chilemaintained a low rate of inflation with GDP growth coming from highcopper prices, solid export earnings (particularly forestry,fishing, and mining), and growing domestic consumption. PresidentBACHELET in 2006 established an Economic and Social StabilizationFund to hold excess copper revenues so that social spending can bemaintained during periods of copper shortfalls. This fund probablysurpassed $20 billion at the end of 2007. Chile continues to attractforeign direct investment, but most foreign investment goes intogas, water, electricity and mining. Unemployment has exhibited adownward trend over the past two years, dropping to 7.8% and 7.0% atthe end of 2006 and 2007, respectively. Chile deepened itslongstanding commitment to trade liberalization with the signing ofa free trade agreement with the US, which took effect on 1 January2004. Chile claims to have more bilateral or regional tradeagreements than any other country. It has 57 such agreements (notall of them full free trade agreements), including with the EuropeanUnion, Mercosur, China, India, South Korea, and Mexico.
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, including the sale of minority shares in four of China's largest state banks to foreign investors and refinements in foreign exchange and bond markets in 2005. After keeping its currency tightly linked to the US dollar for years, China in July 2005 revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. Cumulative appreciation of the renminbi against the US dollar since the end of the dollar peg reached 15% in January 2008. 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 2007 stood as the second-largest economy in the world after the US, although in per capita terms the country is still lower middle-income. Annual inflows of foreign direct investment in 2007 rose to $75 billion. By the end of 2007, more than 5,000 domestic Chinese enterprises had established direct investments in 172 countries and regions around the world. The Chinese government faces several economic development challenges: (a) to 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) to reduce corruption and other economic crimes; and (c) to contain environmental damage and social strife related to the economy's rapid transformation. Economic development has been more rapid in coastal provinces than in the interior, and approximately 200 million rural laborers have relocated to urban areas to find work. One demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the north - is another long-term problem. China continues to lose arable land because of erosion and economic development. In 2007 China intensified government efforts to improve environmental conditions, tying the evaluation of local officials to environmental targets, publishing a national climate change policy, and establishing a high level leading group on climate change, headed by Premier WEN Jiabao. The Chinese government seeks to add energy production capacity from sources other than coal and oil as its double-digit economic growth increases demand. Chinese energy officials in 2007 agreed to purchase five third generation nuclear reactors from Western companies. More power generating capacity came on line in 2006 as large scale investments - including the Three Gorges Dam across the Yangtze River - were completed.
Christmas IslandPhosphate mining had been the only significanteconomic activity, but in December 1987 the Australian Governmentclosed the mine. In 1991, the mine was reopened. With the support ofthe government, a $34 million casino opened in 1993, but closed in1998. The Australian Government in 2001 agreed to support thecreation of a commercial space-launching site on the island,expected to begin operations in the near future.
Clipperton IslandAlthough 115 species of fish have been identifiedin the territorial waters of Clipperton Island, the only economicactivity is tuna fishing.
Cocos (Keeling) IslandsGrown throughout the islands, coconuts arethe sole cash crop. Small local gardens and fishing contribute tothe food supply, but additional food and most other necessities mustbe imported from Australia. There is a small tourist industry.
ColombiaColombia's economy has experienced positive growth over thepast five years despite a serious armed conflict. In fact, 2007 isregarded by policy makers and the private sector as one of the besteconomic years in recent history, after 2005. The economy continuesto improve in part because of austere government budgets, focusedefforts to reduce public debt levels, an export-oriented growthstrategy, improved domestic security, and high commodity prices.Ongoing economic problems facing President URIBE include reformingthe pension system, reducing high unemployment, and funding newexploration to offset declining oil production. The government'seconomic reforms and democratic security strategy, coupled withincreased investment, have engendered a growing sense of confidencein the economy. However, the business sector continues to beconcerned about failure of the US Congress to approve the signed FTA.
ComorosOne of the world's poorest countries, Comoros is made up ofthree islands that have inadequate transportation links, a young andrapidly increasing population, and few natural resources. The loweducational level of the labor force contributes to a subsistencelevel of economic activity, high unemployment, and a heavydependence 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, themain staple, accounts for the bulk of imports. The government -which is hampered by internal political disputes - is struggling toupgrade education and technical training, privatize commercial andindustrial enterprises, improve health services, diversify exports,promote tourism, and reduce the high population growth rate. Thepolitical problems caused the economy to contract in 2007.Remittances from 150,000 Comorans abroad help supplement GDP.
Congo, Democratic Republic of theThe economy of the DemocraticRepublic of the Congo - a nation endowed with vast potential wealth- is slowly recovering from two decades of decline. Conflict, whichbegan in August 1998, dramatically reduced national output andgovernment revenue, increased external debt, and resulted in thedeaths of more than 3.5 million people from violence, famine, anddisease. Foreign businesses curtailed operations due to uncertaintyabout the outcome of the conflict, lack of infrastructure, and thedifficult operating environment. Conditions began to improve in late2002 with the withdrawal of a large portion of the invading foreigntroops. The transitional government reopened relations withinternational financial institutions and international donors, andPresident KABILA has begun implementing reforms, although progressis slow and the International Monetary Fund curtailed their programfor the DRC at the end of March 2006 because of fiscal overruns.Much economic activity still occurs in the informal sector, and isnot reflected in GDP data. Renewed activity in the mining sector,the source of most export income, boosted Kinshasa's fiscal positionand GDP growth. Government reforms and improved security may lead toincreased government revenues, outside budget assistance, andforeign direct investment, although an uncertain legal framework,corruption, and a lack of transparency in government policy arecontinuing long-term problems.
Congo, Republic of theThe economy is a mixture of subsistenceagriculture, an industrial sector based largely on oil, and supportservices, and a government characterized by budget problems andoverstaffing. Oil has supplanted forestry as the mainstay of theeconomy, providing a major share of government revenues and exports.In the early 1980s, rapidly rising oil revenues enabled thegovernment to finance large-scale development projects with GDPgrowth averaging 5% annually, one of the highest rates in Africa.The government has mortgaged a substantial portion of its oilearnings through oil-backed loans that have contributed to a growingdebt burden and chronic revenue shortfalls. Economic reform effortshave been undertaken with the support of internationalorganizations, notably the World Bank and the IMF. However, thereform program came to a halt in June 1997 when civil war erupted.Denis SASSOU-NGUESSO, who returned to power when the war ended inOctober 1997, publicly expressed interest in moving forward oneconomic reforms and privatization and in renewing cooperation withinternational financial institutions. Economic progress was badlyhurt by slumping oil prices and the resumption of armed conflict inDecember 1998, which worsened the republic's budget deficit. Thecurrent administration presides over an uneasy internal peace andfaces difficult economic challenges of stimulating recovery andreducing poverty. Recovery of oil prices has boosted the economy'sGDP and near-term prospects. In March 2006, the World Bank and theInternational Monetary Fund (IMF) approved Heavily Indebted PoorCountries (HIPC) treatment for Congo.
Cook IslandsLike many other South Pacific island nations, the CookIslands' economic development is hindered by the isolation of thecountry from foreign markets, the limited size of domestic markets,lack of natural resources, periodic devastation from naturaldisasters, and inadequate infrastructure. Agriculture, employingabout one-third of the working population, provides the economicbase with major exports made up of copra and citrus fruit. Blackpearls are the Cook Islands' leading export. Manufacturingactivities are limited to fruit processing, clothing, andhandicrafts. Trade deficits are offset by remittances from emigrantsand by foreign aid, overwhelmingly from New Zealand. In the 1980sand 1990s, the country lived beyond its means, maintaining a bloatedpublic service and accumulating a large foreign debt. Subsequentreforms, including the sale of state assets, the strengthening ofeconomic management, the encouragement of tourism, and a debtrestructuring agreement, have rekindled investment and growth.
Coral Sea Islandsno economic activity
Costa RicaCosta Rica's basically stable economy depends on tourism,agriculture, and electronics exports. Poverty has remained around20% for nearly 20 years, and the strong social safety net that hadbeen put into place by the government has eroded due to increasedfinancial constraints on government expenditures. Immigration fromNicaragua has increasingly become a concern for the government. Theestimated 300,000-500,000 Nicaraguans estimated to be in Costa Ricalegally and illegally are an important source of (mostly unskilled)labor, but also place heavy demands on the social welfare system.Foreign investors remain attracted by the country's politicalstability and high education levels, as well as the fiscalincentives offered in the free-trade zones. Exports have become morediversified in the past 10 years due to the growth of the high-techmanufacturing sector, which is dominated by the microprocessorindustry. Tourism continues to bring in foreign exchange, as CostaRica's impressive biodiversity makes it a key destination forecotourism. The government continues to grapple with its largeinternal and external deficits and sizable internal debt. Reducinginflation remains a difficult problem because of rising importprices, labor market rigidities, and fiscal deficits. Tax and publicexpenditure reforms will be necessary to close the budget gap. InOctober 2007, a national referendum voted in favor of the US-CentralAmerican Free Trade Agreement (CAFTA).
Cote d'IvoireCote d'Ivoire is the world's largest producer andexporter of cocoa beans and a significant producer and exporter ofcoffee and palm oil. Consequently, the economy is highly sensitiveto fluctuations in international prices for these products, and, toa lesser extent, in climatic conditions. Despite government attemptsto diversify the economy, it is still heavily dependent onagriculture and related activities, engaging roughly 68% of thepopulation. Since 2006, oil and gas production have become moreimportant engines of economic activity than cocoa. According to IMFstatistics, earnings from oil and refined products were $1.3 billionin 2006, while cocoa-related revenues were $1 billion during thesame period. Cote d'Ivoire's offshore oil and gas production hasresulted in substantial crude oil exports and provides sufficientnatural gas to fuel electricity exports to Ghana, Togo, Benin, Maliand Burkina Faso. Oil exploration by a number of consortiums ofprivate companies continues offshore, and President GBAGBO hasexpressed hope that daily crude output could reach 200,000 barrelsper day (b/d) by the end of the decade. Since the end of the civilwar in 2003, political turmoil has continued to damage the economy,resulting in the loss of foreign investment and slow economicgrowth. GDP grew by 1.8% in 2006 and 1.7% in 2007. Per capita incomehas declined by 15% since 1999.
CroatiaOnce one of the wealthiest of the Yugoslav republics,Croatia's economy suffered badly during the 1991-95 war as outputcollapsed and the country missed the early waves of investment inCentral and Eastern Europe that followed the fall of the BerlinWall. Since 2000, however, Croatia's economic fortunes have begun toimprove slowly, with moderate but steady GDP growth between 4% and6% led by a rebound in tourism and credit-driven consumer spending.Inflation over the same period has remained tame and the currency,the kuna, stable. Nevertheless, difficult problems still remain,including a stubbornly high unemployment rate, a growing tradedeficit and uneven regional development. The state retains a largerole in the economy, as privatization efforts often meet stiffpublic and political resistance. While macroeconomic stabilizationhas largely been achieved, structural reforms lag because of deepresistance on the part of the public and lack of strong support frompoliticians. The EU accession process should accelerate fiscal andstructural reform.