Norfolk IslandTourism, the primary economic activity, has steadilyincreased over the years and has brought a level of prosperityunusual among inhabitants of the Pacific islands. The agriculturalsector has become self-sufficient in the production of beef,poultry, and eggs.
Northern Mariana IslandsThe economy benefits substantially fromfinancial assistance from the US. The rate of funding has declinedas locally generated government revenues have grown. The key touristindustry employs about 50% of the work force and accounts forroughly one-fourth of GDP. Japanese tourists predominate. Annualtourist entries have exceeded one-half million in recent years, butfinancial difficulties in Japan have caused a temporary slowdown.The agricultural sector is made up of cattle ranches and small farmsproducing coconuts, breadfruit, tomatoes, and melons. Garmentproduction is by far the most important industry with the employmentof 17,500 mostly Chinese workers and sizable shipments to the USunder duty and quota exemptions.
NorwayThe Norwegian economy is a prosperous bastion of welfarecapitalism, featuring a combination of free market activity andgovernment intervention. The government controls key areas, such asthe 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 onits oil production and international oil prices, with oil and gasaccounting for one-third of exports. Only Saudi Arabia and Russiaexport more oil than Norway. Norway opted to stay out of the EUduring a referendum in November 1994; nonetheless, as a member ofthe European Economic Area, it contributes sizably to the EU budget.The government has moved ahead with privatization. AlthoughNorwegian oil production peaked in 2000, natural gas production isstill rising. Norwegians realize that once their gas productionpeaks they will eventually face declining oil and gas revenues;accordingly, Norway has been saving its oil-and-gas-boosted budgetsurpluses in a Government Petroleum Fund, which is invested abroadand now is valued at more than $250 billion. After lackluster growthof less than 1% in 2002-03, GDP growth picked up to 3-5% in 2004-07,partly due to higher oil prices. Norway's economy remains buoyant.Domestic economic activity is, and will continue to be, the maindriver of growth, supported by high consumer confidence and stronginvestment spending in the offshore oil and gas sector. Norway'srecord high budget surplus and upswing in the labor market in 2007highlight the strength of its economic position going into 2008.
OmanOman is a middle-income economy that is heavily dependent ondwindling oil resources, but sustained high oil prices in recentyears have helped build Oman's budget and trade surpluses andforeign reserves. Oman joined the World Trade Organization inNovember 2000 and continues to liberalize its markets. It ratified afree trade agreement with the US in September 2006, and, through theGulf Cooperation Council, seeks similar agreements with the EU,China and Japan. As a result of its dwindling oil resources, Oman isactively pursuing a development plan that focuses ondiversification, industrialization, and privatization, with theobjective of reducing the oil sector's contribution to GDP to 9percent by 2020. Muscat is attempting to "Omanize" the labor forceby replacing foreign expatriate workers with local workers. Omanactively seeks private foreign investors, especially in theindustrial, information technology, tourism, and higher educationfields. Industrial development plans focus on gas resources, metalmanufacturing, petrochemicals, and international transshipment ports.
Pacific OceanThe Pacific Ocean is a major contributor to the worldeconomy 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. Exploitationof offshore oil and gas reserves is playing an ever-increasing rolein the energy supplies of the US, Australia, NZ, China, and Peru.The high cost of recovering offshore oil and gas, combined with thewide swings in world prices for oil since 1985, has led tofluctuations in new drillings.
PakistanPakistan, an impoverished and underdeveloped country, hassuffered from decades of internal political disputes, low levels offoreign investment, and a costly, ongoing confrontation withneighboring India. However, since 2001, IMF-approved reforms - mostnotably, privatization of the banking sector - bolstered by generousforeign assistance and renewed access to global markets, havegenerated macroeconomic recovery. Pakistan has experienced GDPgrowth in the 6-8% range in 2004-07, spurred by gains in theindustrial and service sectors. Poverty levels have decreased by 10%since 2001, and Islamabad has steadily raised development spendingin recent years, including a 52% real increase in the budgetallocation for development in FY07. In 2007 the fiscal deficit - aresult of chronically low tax collection and increased spending -exceeded Islamabad's target of 4% of GDP. Inflation remains the topconcern among the public, jumping from 7.7% in 2007 to more than 11%during the first few months of 2008, primarily because of risingworld commodity prices. The Pakistani rupee has depreciated sincethe proclamation of emergency rule in November 2007.
PalauThe economy consists primarily of tourism, subsistenceagriculture, and fishing. The government is the major employer ofthe work force relying heavily on financial assistance from the US.The Compact of Free Association with the US, entered into after theend of the UN trusteeship on 1 October 1994, provided Palau with upto $700 million in US aid for the following 15 years in return forfurnishing military facilities. Business and tourist arrivalsnumbered 63,000 in 2003. The population enjoys a per capita incomeroughly 50% higher than that of the Philippines and much ofMicronesia. Long-run prospects for the key tourist sector have beengreatly bolstered by the expansion of air travel in the Pacific, therising prosperity of leading East Asian countries, and thewillingness of foreigners to finance infrastructure development.
PanamaPanama's dollarized economy rests primarily on awell-developed services sector that accounts for two-thirds of GDP.Services include operating the Panama Canal, banking, the Colon FreeZone, insurance, container ports, flagship registry, and tourism.Economic growth will be bolstered by the Panama Canal expansionproject that began in 2007 and should be completed by 2014 at a costof $5.3 billion (about 30% of current GDP). The expansion projectwill more than double the Canal's capacity, enabling it toaccommodate ships that are now too large to transverse thetransoceanic crossway and should help to reduce the highunemployment rate. The government has implemented tax reforms, aswell as social security reforms, and backs regional trade agreementsand development of tourism. Not a CAFTA signatory, Panama inDecember 2006 independently negotiated a free trade agreement withthe US, which, when implemented, will help promote the country'seconomic growth.
Papua New GuineaPapua New Guinea is richly endowed with naturalresources, but exploitation has been hampered by rugged terrain andthe high cost of developing infrastructure. Agriculture provides asubsistence livelihood for 85% of the population. Mineral deposits,including copper, gold, and oil, account for nearly two-thirds ofexport earnings. The government of Prime Minister SOMARE hasexpended much of its energy remaining in power. He was the firstprime minister ever to serve a full five-year term. The governmentalso brought stability to the national budget, largely throughexpenditure control; however, it relaxed spending constraints in2006 and 2007 as elections approached. Numerous challenges stillface the government including regaining investor confidence,restoring integrity to state institutions, promoting economicefficiency by privatizing moribund state institutions, and balancingrelations with Australia, its former colonial ruler. Othersocio-cultural challenges could upend the economy including aworsening HIV/AIDS epidemic and chronic law and order and landtenure issues. Australia will supply more than $300 million in aidin FY07/08, which accounts for nearly 20% of the national budget.
Paracel IslandsChina announced plans in 1997 to open the islandsfor tourism.
ParaguayLandlocked Paraguay has a market economy marked by a largeinformal sector. This sector features both reexport of importedconsumer goods to neighboring countries, as well as the activitiesof thousands of microenterprises and urban street vendors. Becauseof the importance of the informal sector, accurate economic measuresare difficult to obtain. A large percentage of the population,especially in rural areas, derives its living from agriculturalactivity, often on a subsistence basis. On a per capita basis, realincome has stagnated at 1980 levels. Most observers attributeParaguay's poor economic performance to political uncertainty,corruption, limited progress on structural reform, and deficientinfrastructure. The economy rebounded between 2003 and 2007, postingmodest growth each year, as growing world demand for commoditiescombined with high prices and favorable weather to supportParaguay's commodity-based export expansion.
PeruPeru's economy reflects its varied geography - an arid coastalregion, the Andes further inland, and tropical lands borderingColombia and Brazil. Abundant mineral resources are found in themountainous areas, and Peru's coastal waters provide excellentfishing grounds. However, overdependence on minerals and metalssubjects the economy to fluctuations in world prices, and a lack ofinfrastructure deters trade and investment. After several years ofinconsistent economic performance, the Peruvian economy grew by morethan 4% per year during the period 2002-06, with a stable exchangerate and low inflation. Growth jumped to 7.5% in 2007, driven byhigher world prices for minerals and metals. Risk premiums onPeruvian bonds on secondary markets reached historically low levelsin late 2004, reflecting investor optimism regarding thegovernment's prudent fiscal policies and openness to trade andinvestment. Despite the strong macroeconomic performance,underemployment and poverty have stayed persistently high. Growthprospects depend on exports of minerals, textiles, and agriculturalproducts, and by expectations for the Camisea natural gasmegaproject and for other promising energy projects. Upon takingoffice, President GARCIA announced Sierra Exportadora, a programaimed at promoting economic growth in Peru's southern and centralhighlands.
PhilippinesThe Philippine economy grew at its fastest pace in threedecades with real GDP growth exceeding 7% in 2007. Higher governmentspending contributed to the growth, but a resilient service sectorand large remittances from the millions of Filipinos who work abroadhave played an increasingly important role. Economic growth hasaveraged 5% since President MACAPAGAL-ARROYO took office in 2001.Nevertheless, the Philippines will need still higher, sustainedgrowth to make progress in alleviating poverty, given its highpopulation growth and unequal distribution of income.MACAPAGAL-ARROYO averted a fiscal crisis by pushing for new revenuemeasures and, until recently, tightening expenditures. Decliningfiscal deficits, tapering debt and debt service ratios, as well asrecent efforts to increase spending on infrastructure and socialservices have heightened optimism over Philippine economicprospects. Although the general macroeconomic outlook has improvedsignificantly, the Philippines continues to face importantchallenges and must maintain the reform momentum in order to catchup with regional competitors, improve employment opportunities, andalleviate poverty. Longer-term fiscal stability will require moresustainable revenue sources, rather than non-recurring revenues fromprivatization.
Pitcairn IslandsThe inhabitants of this tiny isolated economy existon fishing, subsistence farming, handicrafts, and postage stamps.The fertile soil of the valleys produces a wide variety of fruitsand vegetables, including citrus, sugarcane, watermelons, bananas,yams, and beans. Bartering is an important part of the economy. Themajor sources of revenue are the sale of postage stamps tocollectors and the sale of handicrafts to passing ships. In October2004, more than one-quarter of Pitcairn's small labor force wasarrested, putting the economy in a bind, since their services wererequired as lighter crew to load or unload passing ships.
PolandPoland has pursued a policy of economic liberalization since1990 and today stands out as a success story among transitioneconomies. In 2007, GDP grew an estimated 6.5%, based on risingprivate consumption, a jump in corporate investment, and EU fundsinflows. GDP per capita is still much below the EU average, but issimilar to that of the three Baltic states. Since 2004, EUmembership and access to EU structural funds have provided a majorboost to the economy. Unemployment is falling rapidly, though atroughly 12.8% in 2007, it remains well above the EU average.Tightening labor markets, and rising global energy and food prices,pose a risk to consumer price stability. In December 2007 inflationreached 4.1% on a year-over-year basis, or higher than the upperlimit of the National Bank of Poland's target range. Poland'seconomic performance could improve further if the country addressessome of the remaining deficiencies in its business environment. Aninefficient commercial court system, a rigid labor code,bureaucratic red tape, and persistent low-level corruption keep theprivate sector from performing up to its full potential. Risingdemands to fund health care, education, and the state pension systempresent a challenge to the Polish government's effort to hold theconsolidated public sector budget deficit under 3.0% of GDP, atarget which was achieved in 2007. The PO/PSL coalition governmentwhich came to power in November 2007 plans to further reduce thebudget deficit with the aim of eventually adopting the euro. The newgovernment has also announced its intention to enactbusiness-friendly reforms, reduce public sector spending growth,lower taxes, and accelerate privatization. However, the governmentdoes not have the necessary three-fifths majority needed to overridea presidential veto, and thus may have to water down initiatives inorder to garner enough support to pass its pro-business policies.
PortugalPortugal has become a diversified and increasinglyservice-based economy since joining the European Community in 1986.Over the past two decades, successive governments have privatizedmany state-controlled firms and liberalized key areas of theeconomy, including the financial and telecommunications sectors. Thecountry qualified for the European Monetary Union (EMU) in 1998 andbegan circulating the euro on 1 January 2002 along with 11 other EUmember economies. Economic growth had been above the EU average formuch of the 1990s, but fell back in 2001-07. GDP per capita standsat roughly two-thirds of the EU-27 average. A poor educationalsystem, in particular, has been an obstacle to greater productivityand growth. Portugal has been increasingly overshadowed bylower-cost producers in Central Europe and Asia as a target forforeign direct investment. The budget deficit surged to an all-timehigh of 6% of GDP in 2005, but the government reduced the deficit to2.6% in 2007 - a year ahead of Portugal's targeted schedule.Nonetheless, the government faces tough choices in its attempts toboost Portugal's economic competitiveness while keeping the budgetdeficit within the eurozone's 3%-of-GDP ceiling.
Puerto RicoPuerto Rico has one of the most dynamic economies in theCaribbean region. A diverse industrial sector has far surpassedagriculture as the primary locus of economic activity and income.Encouraged by duty-free access to the US and by tax incentives, USfirms have invested heavily in Puerto Rico since the 1950s. USminimum wage laws apply. Sugar production has lost out to dairyproduction and other livestock products as the main source of incomein the agricultural sector. Tourism has traditionally been animportant source of income, with estimated arrivals of nearly 5million tourists in 2004. Growth fell off in 2001-03, largely due tothe slowdown in the US economy, recovered in 2004-05, but declinedagain in 2006-07.
QatarQatar is in the midst of an economic boom supported by itsexpanding production of natural gas and oil. Economic policy isfocused on development of Qatar's nonassociated natural gas reservesand increasing private and foreign investment in non-energy sectors.Oil and gas account for more than 60% of GDP, roughly 85% of exportearnings, and 70% of government revenues. Oil and gas have madeQatar the highest per-capita income country and one of the world'sfastest growing. Sustained high oil prices and increased natural gasexports in recent years have helped build Qatar's budget and tradesurpluses and foreign reserves. Proved oil reserves of more than 15billion barrels should ensure continued output at current levels for22 years. Qatar's proved reserves of natural gas are roughly 25trillion cubic meters, about 15% of the world total and thirdlargest in the world. Qatar has permitted substantial foreigninvestment in the development of its gas fields during the lastdecade and became the world's top liquefied natural gas (LNG)exporter in 2007.
RomaniaRomania, which joined the European Union on 1 January 2007,began the transition from Communism in 1989 with a largely obsoleteindustrial base and a pattern of output unsuited to the country'sneeds. The country emerged in 2000 from a punishing three-yearrecession thanks to strong demand in EU export markets. Domesticconsumption and investment have fueled strong GDP growth in recentyears, but have led to large current account imbalances. Romania'smacroeconomic gains have only recently started to spur creation of amiddle class and address Romania's widespread poverty. Corruptionand red tape continue to handicap its business environment.Inflation rose in 2007 for the first time in eight years, driven inpart by the depreciation of the currency, rising energy costs, anation-wide drought affecting food prices, and a relaxation offiscal discipline. Romania hopes to adopt the euro by 2014.
Russia Russia ended 2007 with its ninth straight year of growth, averaging 7% annually since the financial crisis of 1998. Although high oil prices and a relatively cheap ruble initially drove this growth, since 2003 consumer demand and, more recently, investment have played a significant role. Over the last six years, fixed capital investments have averaged real gains greater than 10% per year and personal incomes have achieved real gains more than 12% per year. 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. The federal budget has run surpluses since 2001 and ended 2007 with a surplus of about 3% of GDP. Over the past several years, Russia has used its stabilization fund based on oil taxes to prepay all Soviet-era sovereign debt to Paris Club creditors and the IMF. Foreign debt is approximately one-third of GDP. The state component of foreign debt has declined, but commercial debt to foreigners has risen strongly. Oil export earnings have allowed Russia to increase its foreign reserves from $12 billion in 1999 to some $470 billion at yearend 2007, the third largest reserves in the world. During President PUTIN's first administration, a number of important reforms were implemented in the areas of tax, banking, labor, and land codes. These achievements have raised business and investor confidence in Russia's economic prospects, with foreign direct investment rising from $14.6 billion in 2005 to approximately $45 billion in 2007. In 2007, Russia's GDP grew 8.1%, led by non-tradable services and goods for the domestic market, as opposed to oil or mineral extraction and exports. Rising inflation returned in the second half of 2007, driven largely by unsterilized capital inflows and by rising food costs, and approached 12% by year-end. In 2006, Russia signed a bilateral market access agreement with the US as a prelude to possible WTO entry, and its companies are involved in global merger and acquisition activity in the oil and gas, metals, and telecom sectors. Despite Russia's recent success, serious problems persist. Oil, natural gas, metals, and timber account for more than 80% of exports and 30% of government revenues, leaving the country vulnerable to swings in world commodity prices. Russia's manufacturing base is dilapidated and must be replaced or modernized if the country is to achieve broad-based economic growth. The banking system, while increasing consumer lending and growing at a high rate, is still small relative to the banking sectors of Russia's emerging market peers. Political uncertainties associated with this year's power transition, corruption, and lack of trust in institutions continue to dampen domestic and foreign investor sentiment. PUTIN has granted more influence to forces within his government that desire to reassert state control over the economy. Russia has made little progress in building the rule of law, the bedrock of a modern market economy. The government has promised additional legislative amendments to make its intellectual property protection WTO-consistent, but enforcement remains problematic.
RwandaRwanda is a poor rural country with about 90% of thepopulation engaged in (mainly subsistence) agriculture. It is themost densely populated country in Africa and is landlocked with fewnatural resources and minimal industry. Primary foreign exchangeearners are coffee and tea. The 1994 genocide decimated Rwanda'sfragile economic base, severely impoverished the population,particularly women, and eroded the country's ability to attractprivate and external investment. However, Rwanda has madesubstantial progress in stabilizing and rehabilitating its economyto pre-1994 levels, although poverty levels are higher now. GDP hasrebounded and inflation has been curbed. Despite Rwanda's fertileecosystem, food production often does not keep pace with populationgrowth, requiring food imports. Rwanda continues to receivesubstantial aid money and obtained IMF-World Bank Heavily IndebtedPoor Country (HIPC) initiative debt relief in 2005-06. Rwanda alsoreceived Millennium Challenge Account Threshold status in 2006. Thegovernment has embraced an expansionary fiscal policy to reducepoverty by improving education, infrastructure, and foreign anddomestic investment and pursuing market-oriented reforms, althoughenergy shortages, instability in neighboring states, and lack ofadequate transportation linkages to other countries continue tohandicap growth.
Saint BarthelemyThe economy of Saint Barthelemy is based uponhigh-end tourism and duty-free luxury commerce, serving visitorsprimarily from North America. The luxury hotels and villas host70,000 visitors each year with another 130,000 arriving by boat. Therelative isolation and high cost of living inhibits mass tourism.The construction and public sectors also enjoy significantinvestment in support of tourism. With limited fresh waterresources, all food must be imported, as must all energy resourcesand most manufactured goods. Employment is strong and attracts laborfrom Brazil and Portugal.
Saint HelenaThe economy depends largely on financial assistancefrom the UK, which will amount to about $27 million in FY06/07 oralmost 70% of annual budgetary revenues. The local population earnsincome from fishing, raising livestock, and sales of handicrafts.Because there are few jobs, 25% of the work force has left to seekemployment on Ascension Island, on the Falklands, and in the UK.
Saint Kitts and NevisSugar was the traditional mainstay of theSaint Kitts economy until the 1970s. Following the 2005 harvest, thegovernment closed the sugar industry after decades of losses of 3-4%of GDP annually. To compensate for employment losses, the governmenthas embarked on a program to diversify the agricultural sector andto stimulate other sectors of the economy. Activities such astourism, export-oriented manufacturing, and offshore banking haveassumed larger roles in the economy and have contributed to therecent robust growth. Tourism revenues are now the chief source ofthe islands' foreign exchange; about 341,800 tourists visited Nevisin 2005. The current government is constrained by a high debtburden, public debt reached 190% of GDP by the end of 2005, largelyattributable to public enterprise losses.
Saint LuciaThe island nation has been able to attract foreignbusiness and investment, especially in its offshore banking andtourism industries, with a surge in foreign direct investment in2006, attributed to the construction of several tourism projects.Tourism is the main source of foreign exchange, with almost 900,000arrivals in 2007. The manufacturing sector is the most diverse inthe Eastern Caribbean area, and the government is trying torevitalize the banana industry. Saint Lucia is vulnerable to avariety of external shocks including declines in European Unionbanana preferences, volatile tourism receipts, natural disasters,and dependence on foreign oil. High debt servicing obligationsconstrain the KING administration's ability to respond to adverseexternal shocks. Economic fundamentals remain solid, even thoughunemployment needs to be reduced.
Saint MartinThe economy of Saint Martin centers around tourism with85% of the labor force engaged in this sector. Over one millionvisitors come to the island each year with most arriving through thePrincess Juliana International Airport in Sint Maarten. Nosignificant agriculture and limited local fishing means that almostall food must be imported. Energy resources and manufactured goodsare also imported, primarily from Mexico and the United States.Saint Martin is reported to have the highest per capita income inthe Caribbean.
Saint Pierre and MiquelonThe inhabitants have traditionally earnedtheir livelihood by fishing and by servicing fishing fleetsoperating off the coast of Newfoundland. The economy has beendeclining, however, because of disputes with Canada over fishingquotas and a steady decline in the number of ships stopping at SaintPierre. In 1992, an arbitration panel awarded the islands anexclusive economic zone of 12,348 sq km to settle a longstandingterritorial dispute with Canada, although it represents only 25% ofwhat France had sought. France heavily subsidizes the islands to thegreat betterment of living standards. The government hopes anexpansion of tourism will boost economic prospects. Fish farming,crab fishing, and agriculture are being developed to diversify thelocal economy. Recent test drilling for oil may pave the way fordevelopment of the energy sector.
Saint Vincent and the Grenadines Economic growth slowed slightly in 2007 after reaching a 10 year high of nearly 7% in 2006, but is expected to remain robust, hinging upon seasonal variations in the agricultural and tourism sectors and a recent increase in construction activity. This lower-middle-income country is vulnerable to natural disasters - tropical storms wiped out substantial portions of crops in 1994, 1995, and 2002. In 2007, the islands had more than 200,000 tourist arrivals, mostly to the Grenadines. Saint Vincent is home to a small offshore banking sector and has moved to adopt international regulatory standards. The government's ability to invest in social programs and respond to external shocks is constrained by its high debt burden - 25 percent of current revenues are directed towards debt servicing.
SamoaThe economy of Samoa has traditionally been dependent ondevelopment aid, family remittances from overseas, agriculture, andfishing. 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. Thefish catch declined during the El Nino of 2002-03 but returned tonormal by mid-2005. The manufacturing sector mainly processesagricultural products. One factory in the Foreign Trade Zone employs3,000 people to make automobile electrical harnesses for an assemblyplant in Australia. Tourism is an expanding sector, accounting for25% of GDP; 116,000 tourists visited the islands in 2006. The SamoanGovernment has called for deregulation of the financial sector,encouragement of investment, and continued fiscal discipline, whileat the same time protecting the environment. Observers point to theflexibility of the labor market as a basic strength for futureeconomic advances. Foreign reserves are in a relatively healthystate, the external debt is stable, and inflation is low.
San MarinoThe tourist sector contributes over 50% of GDP. In 2006more than 2.1 million tourists visited San Marino. The keyindustries are banking, clothing and apparel, electronics, andceramics. Main agricultural products are wine and cheeses. The percapita level of output and standard of living are comparable tothose of the most prosperous regions of Italy, which supplies muchof its food.
Sao Tome and PrincipeThis small, poor island economy has becomeincreasingly dependent on cocoa since independence in 1975. Cocoaproduction has substantially declined in recent years because ofdrought and mismanagement. Sao Tome has to import all fuels, mostmanufactured goods, consumer goods, and a substantial amount offood. Over the years, it has had difficulty servicing its externaldebt and has relied heavily on concessional aid and debtrescheduling. Sao Tome benefited from $200 million in debt relief inDecember 2000 under the Highly Indebted Poor Countries (HIPC)program, which helped bring down the country's $300 million debtburden. In August 2005, Sao Tome signed on to a new 3-year IMFPoverty Reduction and Growth Facility (PRGF) program worth $4.3million. Considerable potential exists for development of a touristindustry, and the government has taken steps to expand facilities inrecent years. The government also has attempted to reduce pricecontrols and subsidies. Sao Tome is optimistic about the developmentof petroleum resources in its territorial waters in the oil-richGulf of Guinea, which are being jointly developed in a 60-40 splitwith Nigeria. The first production licenses were sold in 2004,though a dispute over licensing with Nigeria delayed Sao Tome'sreceipt of more than $20 million in signing bonuses for almost ayear. Real GDP growth exceeded 6% in 2007, as a result of increasesin public expenditures and oil-related capital investment.
Saudi ArabiaSaudi Arabia has an oil-based economy with stronggovernment controls over major economic activities. It possessesmore than 20% of the world's proven petroleum reserves, ranks as thelargest exporter of petroleum, and plays a leading role in OPEC. Thepetroleum sector accounts for roughly 75% of budget revenues, 45% ofGDP, and 90% of export earnings. About 40% of GDP comes from theprivate sector. Roughly 5.5 million foreign workers play animportant role in the Saudi economy, particularly in the oil andservice sectors. High oil prices have boosted growth, governmentrevenues, and Saudi ownership of foreign assets, while enablingRiyadh to pay down domestic debt. The government is encouragingprivate sector growth - especially in power generation,telecommunications, natural gas exploration, and petrochemicals - tolessen the kingdom's dependence on oil exports and to increaseemployment opportunities for the swelling Saudi population, nearly40% of which are youths under 15 years old. Unemployment is high,and the large youth population generally lacks the education andtechnical skills the private sector needs. Riyadh has substantiallyboosted spending on job training and education, infrastructuredevelopment, and government salaries. As part of its effort toattract foreign investment and diversify the economy, Saudi Arabiaacceded to the WTO in December 2005 after many years ofnegotiations. The government has announced plans to establish six"economic cities" in different regions of the country to promotedevelopment and diversification.
SenegalIn January 1994, Senegal undertook a bold and ambitiouseconomic reform program with the support of the international donorcommunity. This reform began with a 50% devaluation of Senegal'scurrency, the CFA franc, which was linked at a fixed rate to theFrench franc. Government price controls and subsidies have beensteadily dismantled. After seeing its economy contract by 2.1% in1993, Senegal made an important turnaround, thanks to the reformprogram, with real growth in GDP averaging over 5% annually during1995-2007. Annual inflation had been pushed down to the low singledigits. As a member of the West African Economic and Monetary Union(WAEMU), Senegal is working toward greater regional integration witha unified external tariff and a more stable monetary policy. Highunemployment, however, continues to prompt illegal migrants to fleeSenegal in search of better job opportunities in Europe. Senegal wasalso beset by an energy crisis that caused widespread blackouts in2006 and 2007. The phosphate industry has struggled for two years tosecure capital, and reduced output has directly impacted GDP. In2007, Senegal signed agreements for major new mining concessions foriron, zircon, and gold with foreign companies. Firms from Dubai haveagreed to manage and modernize Dakar's maritime port, and create anew special economic zone. Senegal still relies heavily upon outsidedonor assistance. Under the IMF's Highly Indebted Poor Countries(HIPC) debt relief program, Senegal has benefited from eradicationof two-thirds of its bilateral, multilateral, and private-sectordebt. In 2007, Senegal and the IMF agreed to a new, non-disbursing,Policy Support Initiative program.
SerbiaMILOSEVIC-era mismanagement of the economy, an extendedperiod of economic sanctions, and the damage to Yugoslavia'sinfrastructure and industry during the NATO airstrikes in 1999 leftthe economy only half the size it was in 1990. After the ousting offormer Federal Yugoslav President MILOSEVIC in September 2000, theDemocratic Opposition of Serbia (DOS) coalition governmentimplemented stabilization measures and embarked on a market reformprogram. After renewing its membership in the IMF in December 2000,a down-sized Yugoslavia continued to reintegrate into theinternational community by rejoining the World Bank (IBRD) and theEuropean Bank for Reconstruction and Development (EBRD). A WorldBank-European Commission sponsored Donors' Conference held in June2001 raised $1.3 billion for economic restructuring. In November2001, the Paris Club agreed to reschedule the country's $4.5 billionpublic debt and wrote off 66% of the debt. In July 2004, the LondonClub of private creditors forgave $1.7 billion of debt just overhalf the total owed. Belgrade has made only minimal progress inrestructuring and privatizing its holdings in major sectors of theeconomy, including energy and telecommunications. It has madehalting progress towards EU membership and is currently pursuing aStabilization and Association Agreement with Brussels. Serbia isalso pursuing membership in the World Trade Organization.Unemployment remains an ongoing political and economic problem.
SeychellesSince independence in 1976, per capita output in thisIndian Ocean archipelago has expanded to roughly seven times thepre-independence, near-subsistence level, moving the island into theupper-middle income group of countries. Growth has been led by thetourist sector, which employs about 30% of the labor force andprovides more than 70% of hard currency earnings, and by tunafishing. In recent years, the government has encouraged foreigninvestment to upgrade hotels and other services. At the same time,the government has moved to reduce the dependence on tourism bypromoting the development of farming, fishing, and small-scalemanufacturing. Sharp drops illustrated the vulnerability of thetourist sector in 1991-92 due largely to the Gulf War and once againfollowing the 11 September 2001 terrorist attacks on the US.Economic growth slowed in 1998-2002 and fell in 2003-04, due tosluggish tourist and tuna sectors, but resumed in 2005-07. Real GDPgrew by 5.8% in 2007, driven by tourism and a boom intourism-related construction. The Seychelles rupee was allowed todepreciate in 2006 after being overvalued for years and fell by 10%in the first 9 months of 2007.
Sierra LeoneSierra Leone is an extremely poor nation withtremendous inequality in income distribution. While it possessessubstantial mineral, agricultural, and fishery resources, itsphysical and social infrastructure is not well developed, andserious social disorders continue to hamper economic development.Nearly half of the working-age population engages in subsistenceagriculture. Manufacturing consists mainly of the processing of rawmaterials and of light manufacturing for the domestic market.Alluvial diamond mining remains the major source of hard currencyearnings accounting for nearly half of Sierra Leone's exports. Thefate of the economy depends upon the maintenance of domestic peaceand the continued receipt of substantial aid from abroad, which isessential to offset the severe trade imbalance and supplementgovernment revenues. The IMF has completed a Poverty Reduction andGrowth Facility program that helped stabilize economic growth andreduce inflation. A recent increase in political stability has ledto a revival of economic activity such as the rehabilitation ofbauxite and rutile mining.
SingaporeSingapore has a highly developed and successfulfree-market economy. It enjoys a remarkably open and corruption-freeenvironment, stable prices, and a per capita GDP equal to that ofthe four largest West European countries. The economy dependsheavily on exports, particularly in consumer electronics andinformation technology products. It was hard hit from 2001-03 by theglobal recession, by the slump in the technology sector, and by anoutbreak of Severe Acute Respiratory Syndrome (SARS) in 2003, whichcurbed tourism and consumer spending. Fiscal stimulus, low interestrates, a surge in exports, and internal flexibility led to vigorousgrowth in 2004-07 with real GDP growth averaging 7% annually. Thegovernment hopes to establish a new growth path that will be lessvulnerable to the global demand cycle for information technologyproducts - it has attracted major investments in pharmaceuticals andmedical technology production - and will continue efforts toestablish Singapore as Southeast Asia's financial and high-tech hub.
SlovakiaSlovakia has mastered much of the difficult transition froma centrally planned economy to a modern market economy. The DZURINDAgovernment made excellent progress during 2001-04 in macroeconomicstabilization and structural reform. Major privatizations are nearlycomplete, the banking sector is almost completely in foreign hands,and the government has helped facilitate a foreign investment boomwith business friendly policies such as labor market liberalizationand a 19% flat tax. Foreign investment in the automotive sector hasbeen strong. Slovakia's economic growth exceeded expectations in2001-07 despite the general European slowdown. Unemployment, at anunacceptable 18% in 2003-04, dropped to 8.6% in 2007 but remains theeconomy's Achilles heel. Slovakia joined the EU on 1 May 2004 andwill be the second of the new EU member states to adopt the euro in2009 if it continues to meet euro adoption criteria in 2008. Despiteits 2006 pre-election promises to loosen fiscal policy and reversethe previous DZURINDA government's pro-market reforms, FICO'scabinet has thus far been careful to keep a lid on spending in orderto meet euro adoption criteria. The FICO government is pursuing astate-interventionist economic policy, however, and has pushed toregulate energy and food prices.
SloveniaSlovenia, which on 1 January 2007 became the first 2004European Union entrant to adopt the euro, is a model of economicsuccess and stability for the region. With the highest per capitaGDP in Central Europe, Slovenia has excellent infrastructure, awell-educated work force, and a strategic location between theBalkans and Western Europe. Privatization has lagged since 2002, andthe economy has one of highest levels of state control in the EU.Structural reforms to improve the business environment have allowedfor somewhat greater foreign participation in Slovenia's economy andhave helped to lower unemployment. In March 2004, Slovenia becamethe first transition country to graduate from borrower status todonor partner at the World Bank. In December 2007, Slovenia wasinvited to begin the accession process for joining the OECD. Despiteits economic success, foreign direct investment (FDI) in Sloveniahas lagged behind the region average, and taxes remain relativelyhigh. Furthermore, the labor market is often seen as inflexible, andlegacy industries are losing sales to more competitive firms inChina, India, and elsewhere.
Solomon IslandsThe bulk of the population depends on agriculture,fishing, and forestry for at least part of its livelihood. Mostmanufactured goods and petroleum products must be imported. Theislands are rich in undeveloped mineral resources such as lead,zinc, nickel, and gold. Prior to the arrival of the RegionalAssistance Mission to the Solomon Islands (RAMSI), severe ethnicviolence, the closing of key businesses, and an empty governmenttreasury culminated in economic collapse. RAMSI's efforts to restorelaw and order and economic stability have led to modest growth asthe economy rebuilds.
SomaliaDespite the lack of effective national governance, Somaliahas maintained a healthy informal economy, largely based onlivestock, remittance/money transfer companies, andtelecommunications. Agriculture is the most important sector, withlivestock normally accounting for about 40% of GDP and about 65% ofexport earnings. Nomads and semi-pastoralists, who are dependentupon livestock for their livelihood, make up a large portion of thepopulation. Livestock, hides, fish, charcoal, and bananas areSomalia's principal exports, while sugar, sorghum, corn, qat, andmachined goods are the principal imports. Somalia's small industrialsector, based on the processing of agricultural products, haslargely been looted and sold as scrap metal. Somalia's servicesector also has grown. Telecommunication firms provide wirelessservices in most major cities and offer the lowest internationalcall rates on the continent. In the absence of a formal bankingsector, money exchange services have sprouted throughout thecountry, handling between $500 million and $1 billion in remittancesannually. Mogadishu's main market offers a variety of goods fromfood to the newest electronic gadgets. Hotels continue to operateand are supported with private-security militias. Somalia's arrearsto the IMF continued to grow in 2006-07. Statistics on Somalia'sGDP, growth, per capita income, and inflation should be viewedskeptically. In late December 2004, a major tsunami caused anestimated 150 deaths and resulted in destruction of property incoastal areas.
South AfricaSouth Africa is a middle-income, emerging market withan abundant supply of natural resources; well-developed financial,legal, communications, energy, and transport sectors; a stockexchange that is 17th largest in the world; and moderninfrastructure supporting an efficient distribution of goods tomajor urban centers throughout the region. Growth has been robustsince 2004, as South Africa has reaped the benefits of macroeconomicstability and a global commodities boom. However, unemploymentremains high and outdated infrastructure has constrained growth. Atthe end of 2007, South Africa began to experience an electricitycrisis because state power supplier Eskom suffered supply problemswith aged plants, necessitating "load-shedding" cuts to residentsand businesses in the major cities. Daunting economic problemsremain from the apartheid era - especially poverty, lack of economicempowerment among the disadvantaged groups, and a shortage of publictransportation. South African economic policy is fiscallyconservative but pragmatic, focusing on controlling inflation,maintaining a budget surplus, and using state-owned enterprises todeliver basic services to low-income areas as a means to increasejob growth and household income.
South Georgia and the South Sandwich IslandsSome fishing takesplace in adjacent waters. There is a potential source of income fromharvesting finfish and krill. The islands receive income frompostage stamps produced in the UK, sale of fishing licenses, andharbor and landing fees from tourist vessels. Tourism fromspecialized cruise ships is increasing rapidly.
Southern OceanFisheries in 2005-06 landed 128,081 metric tons, ofwhich 83% (106,591 tons) was krill (Euphausia superba) and 9.7%(12,364 tons) Patagonian toothfish (Dissostichus eleginoides),compared to 147,506 tons in 2004-05 of which 86% (127,035 tons) waskrill and 8% (11,821 tons) Patagonian toothfish (estimated fishingfrom the area covered by the Convention of the Conservation ofAntarctic Marine Living Resources (CCAMLR), which extends slightlybeyond the Southern Ocean area). International agreements wereadopted in late 1999 to reduce illegal, unreported, and unregulatedfishing, which in the 2000-01 season landed, by one estimate, 8,376metric tons of Patagonian and Antarctic toothfish. In the 2006-07Antarctic summer, 35,552 tourists visited the Southern Ocean,compared to 29,799 in 2005-2006 (estimates provided to the AntarcticTreaty by the International Association of Antarctica Tour Operators(IAATO), and does not include passengers on overflights and thoseflying directly in and out of Antarctica).
SpainThe Spanish economy boomed from 1986 to 1990 averaging 5%annual growth. After a European-wide recession in the early 1990s,the Spanish economy resumed moderate growth starting in 1994.Spain's mixed capitalist economy supports a GDP that on a per capitabasis is equal to that of the leading West European economies. Thecenter-right government of former President Jose Maria AZNARsuccessfully worked to gain admission to the first group ofcountries launching the European single currency (the euro) on 1January 1999. The AZNAR administration continued to advocateliberalization, privatization, and deregulation of the economy andintroduced some tax reforms to that end. Unemployment fell steadilyunder the AZNAR administration but remains high at 7.6%. Growthaveraging more than 3% annually during 2003-07 was satisfactorygiven the background of a faltering European economy. The Socialistpresident, Jose Luis Rodriguez ZAPATERO, has made mixed progress incarrying out key structural reforms, which need to be acceleratedand deepened to sustain Spain's economic growth. Despite theeconomy's relative solid footing significant downside risks remainincluding Spain's continued loss of competitiveness, the potentialfor a housing market collapse, the country's changing demographicprofile, and a decline in EU structural funds.
Spratly IslandsEconomic activity is limited to commercial fishing.The proximity to nearby oil- and gas-producing sedimentary basinssuggests the potential for oil and gas deposits, but the region islargely unexplored. There are no reliable estimates of potentialreserves. Commercial exploitation has yet to be developed.
Sri LankaIn 1977, Colombo abandoned statist economic policies andits import substitution trade policy for more market-orientedpolicies, export-oriented trade, and encouragement of foreigninvestment. Recent changes in government, however, have brought somepolicy reversals. Currently, the ruling Sri Lanka Freedom Party hasa more statist economic approach, which seeks to reduce poverty bysteering investment to disadvantaged areas, developing small andmedium enterprises, promoting agriculture, and expanding the alreadyenormous civil service. The government has halted privatizations.Although suffering a brutal civil war that began in 1983, Sri Lankasaw GDP growth average 4.5% in the last 10 years with the exceptionof a recession in 2001. In late December 2004, a major tsunami tookabout 31,000 lives, left more than 6,300 missing and 443,000displaced, and destroyed an estimated $1.5 billion worth ofproperty. Government spending and reconstruction drove growth tomore than 7% in 2006 but reduced agriculture output probably slowedgrowth to about 6 percent in 2007. Government spending and loosemonetary policy drove inflation to nearly 16% in 2007. Sri Lanka'smost dynamic sectors now are food processing, textiles and apparel,food and beverages, port construction, telecommunications, andinsurance and banking. In 2006, plantation crops made up only about15% of exports (compared with more than 90% in 1970), while textilesand garments accounted for more than 60%. About 800,000 Sri Lankanswork abroad, 90% of them in the Middle East. They send home morethan $1 billion a year. The struggle by the Tamil Tigers of thenorth and east for an independent homeland continues to cast ashadow over the economy.
SudanSudan's economy is booming on the back of increases in oilproduction, high oil prices, and large inflows of foreign directinvestment. GDP growth registered more than 10% per year in 2006 and2007. From 1997 to date, Sudan has been working with the IMF toimplement macroeconomic reforms, including a managed float of theexchange rate. Sudan began exporting crude oil in the last quarterof 1999. Agricultural production remains important, because itemploys 80% of the work force and contributes a third of GDP. TheDarfur conflict, the aftermath of two decades of civil war in thesouth, the lack of basic infrastructure in large areas, and areliance by much of the population on subsistence agriculture ensuremuch of the population will remain at or below the poverty line foryears despite rapid rises in average per capita income. In January2007, the government introduced a new currency, the Sudanese Pound,at an initial exchange rate of $1.00 equals 2 Sudanese Pounds.
SurinameThe economy is dominated by the mining industry, withexports of alumina, gold, and oil accounting for about 85% ofexports and 25% of government revenues, making the economy highlyvulnerable to mineral price volatility. The short-term economicoutlook depends on the government's ability to control inflation andon the development of projects in the bauxite and gold miningsectors. Suriname has received aid for these projects fromNetherlands, Belgium, and the European Development Fund. Suriname'seconomic prospects for the medium term will depend on continuedcommitment to responsible monetary and fiscal policies and to theintroduction of structural reforms to liberalize markets and promotecompetition. In 2000, the government of Ronald VENETIAAN, returnedto office and inherited an economy with inflation of over 100% and agrowing fiscal deficit. He quickly implemented an austerity program,raised taxes, attempted to control spending, and tamed inflation.These economic policies are likely to remain in effect duringVENETIAAN's third term. Prospects for local onshore oil productionare good as a drilling program is underway. Offshore oil drillingwas given a boost in 2004 when the State Oil Company (Staatsolie)signed exploration agreements with Repsol, Maersk, and Occidental.Bidding on these new offshore blocks was completed in July 2006.
SvalbardCoal mining is the major economic activity on Svalbard. Thetreaty of 9 February 1920 gave the 41 signatories equal rights toexploit mineral deposits, subject to Norwegian regulation. AlthoughUS, UK, Dutch, and Swedish coal companies have mined in the past,the only companies still mining are Norwegian and Russian. Thesettlements on Svalbard are essentially company towns. The Norwegianstate-owned coal company employs nearly 60% of the Norwegianpopulation on the island, runs many of the local services, andprovides most of the local infrastructure. There is also somehunting of seal, reindeer, and fox.
SwazilandIn this small, landlocked economy, subsistence agricultureoccupies approximately 70% of the population. The manufacturingsector has diversified since the mid-1980s. Sugar and wood pulpremain important foreign exchange earners. In 2007, the sugarindustry increased efficiency and diversification efforts, inresponse to a 17% decline in EU sugar prices. Mining has declined inimportance in recent years with only coal and quarry stone minesremaining active. Surrounded by South Africa, except for a shortborder with Mozambique, Swaziland is heavily dependent on SouthAfrica from which it receives more than nine-tenths of its importsand to which it sends 60% of its exports. Swaziland's currency ispegged to the South African rand, subsuming Swaziland's monetarypolicy to South Africa. Customs duties from the Southern AfricanCustoms Union, which may equal as much as 70% of government revenuethis year, and worker remittances from South Africa substantiallysupplement domestically earned income. Swaziland is not poor enoughto merit an IMF program; however, the country is struggling toreduce the size of the civil service and control costs at publicenterprises. The government is trying to improve the atmosphere forforeign investment. With an estimated 40% unemployment rate,Swaziland's need to increase the number and size of small and mediumenterprises and attract foreign direct investment is acute.Overgrazing, soil depletion, drought, and sometimes floods persistas problems for the future. More than one-fourth of the populationneeded emergency food aid in 2006-07 because of drought, and nearlytwo-fifths of the adult population has been infected by HIV/AIDS.
SwedenAided by peace and neutrality for the whole of the 20thcentury, Sweden has achieved an enviable standard of living under amixed system of high-tech capitalism and extensive welfare benefits.It has a modern distribution system, excellent internal and externalcommunications, and a skilled labor force. Timber, hydropower, andiron ore constitute the resource base of an economy heavily orientedtoward foreign trade. Privately owned firms account for about 90% ofindustrial output, of which the engineering sector accounts for 50%of output and exports. Agriculture accounts for only 1% of GDP and2% of employment. Sweden is in the midst of a sustained economicupswing, boosted by increased domestic demand and strong exports.This and robust finances have offered the center-right governmentconsiderable scope to implement its reform program aimed atincreasing employment, reducing welfare dependence, and streamliningthe state's role in the economy. The government plans to sell $31billion in state assets during the next three years to furtherstimulate growth and raise revenue to pay down the federal debt. InSeptember 2003, Swedish voters turned down entry into the eurosystem concerned about the impact on the economy and sovereignty.
SwitzerlandSwitzerland is a peaceful, prosperous, and stable modernmarket economy with low unemployment, a highly skilled labor force,and a per capita GDP larger than that of the big Western Europeaneconomies. The Swiss in recent years have brought their economicpractices largely into conformity with the EU's to enhance theirinternational competitiveness. Switzerland remains a safehaven forinvestors, because it has maintained a degree of bank secrecy andhas kept up the franc's long-term external value. Reflecting theanemic economic conditions of Europe, GDP growth stagnated duringthe 2001-03 period, improved during 2004-05, and jumped to 2.9% in2006, and 2.6% in 2007. Unemployment has remained at less than halfthe EU average.
SyriaThe Syrian economy grew by an estimated 3.3% in real terms in2007 led by the petroleum and agricultural sectors, which togetheraccount for about one-half of GDP. Higher crude oil prices countereddeclining oil production and led to higher budgetary and exportreceipts. Damascus has implemented modest economic reforms in thepast few years, including cutting lending interest rates, openingprivate banks, consolidating all of the multiple exchange rates,raising prices on some subsidized items, most notably gasoline andcement, and establishing the Damascus Stock Exchange - which is setto begin operations in 2009. In October 2007, for example, Damascusraised the price of subsidized gasoline by 20%, and may institute arationing system in 2008. In addition, President ASAD signedlegislative decrees to encourage corporate ownership reform, and toallow the Central Bank to issue Treasury bills and bonds forgovernment debt. Nevertheless, the economy remains highly controlledby the government. Long-run economic constraints include decliningoil production, high unemployment and inflation, rising budgetdeficits, and increasing pressure on water supplies caused by heavyuse in agriculture, rapid population growth, industrial expansion,and water pollution.
TaiwanTaiwan has a dynamic capitalist economy with graduallydecreasing guidance of investment and foreign trade by theauthorities. In keeping with this trend, some large, state-ownedbanks and industrial firms are being privatized. Exports haveprovided the primary impetus for industrialization. The island runsa large trade surplus, and its foreign reserves are among theworld's largest. Despite restrictions on cross-strait links, Chinahas overtaken the US to become Taiwan's largest export market andits second-largest source of imports after Japan. China is also theisland's number one destination for foreign direct investment.Strong trade performance in 2007 pushed Taiwan's GDP growth rateabove 5%, and unemployment is below 4%.
TajikistanTajikistan has one of the lowest per capita GDPs amongthe 15 former Soviet republics. Only 7% of the land area is arable.Cotton is the most important crop, but this sector is burdened withdebt and an obsolete infrastructure. Mineral resources includesilver, gold, uranium, and tungsten. Industry consists only of alarge aluminum plant, hydropower facilities, and small obsoletefactories mostly in light industry and food processing. The civilwar (1992-97) severely damaged the already weak economicinfrastructure and caused a sharp decline in industrial andagricultural production. While Tajikistan has experienced steadyeconomic growth since 1997, nearly two-thirds of the populationcontinues to live in abject poverty. Economic growth reached 10.6%in 2004, but dropped to 8% in 2005, 7% in 2006, and 7.8% in 2007.Tajikistan's economic situation remains fragile due to unevenimplementation of structural reforms, corruption, weak governance,widespread unemployment, seasonal power shortages, and the externaldebt burden. Continued privatization of medium and large state-ownedenterprises could increase productivity. A debt restructuringagreement was reached with Russia in December 2002 including a $250million write-off of Tajikistan's $300 million debt. Tajikistanranks third in the world in terms of water resources per head, butsuffers winter power shortages due to poor management of waterlevels in rivers and reservoirs. Completion of the Sangtuda Ihydropower dam - built with Russian investment - and the Sangtuda IIand Rogun dams will add substantially to electricity output. Iffinished according to Tajik plans, Rogun will be the world's tallestdam. Tajikistan has also received substantial infrastructuredevelopment loans from the Chinese government to improve roads andan electricity transmission network. To help increase north-southtrade, the US funded a $36 million bridge which opened in August2007 and links Tajikistan and Afghanistan.
TanzaniaTanzania is one of the poorest countries in the world. Theeconomy depends heavily on agriculture, which accounts for more than40% of GDP, provides 85% of exports, and employs 80% of the workforce. Topography and climatic conditions, however, limit cultivatedcrops to only 4% of the land area. Industry traditionally featuredthe processing of agricultural products and light consumer goods.The World Bank, the IMF, and bilateral donors have provided funds torehabilitate Tanzania's out-of-date economic infrastructure and toalleviate poverty. Long-term growth through 2005 featured a pickupin industrial production and a substantial increase in output ofminerals led by gold. Recent banking reforms have helped increaseprivate-sector growth and investment. Continued donor assistance andsolid macroeconomic policies supported real GDP growth of nearly 7%in 2007.
ThailandWith a well-developed infrastructure, a free-enterpriseeconomy, and generally pro-investment policies, Thailand appears tohave fully recovered from the 1997-98 Asian Financial Crisis. Thecountry was one of East Asia's best performers from 2002-04. Boostedby strong export growth, the Thai economy grew 4.5% in 2007. Bangkokhas pursued preferential trade agreements with a variety of partnersin an effort to boost exports and to maintain high growth. By 2007,the tourism sector had largely recovered from the major 2004tsunami. Following the military coup in September 2006, investmentand consumer confidence stagnated due to the uncertain politicalclimate that lasted through the December 2007 elections. Foreigninvestor sentiment was further tempered by a 30% reserve requirementon capital inflows instituted in December 2006, and discussion ofamending Thailand's rules governing foreign-owned businesses.Economic growth in 2007 was due almost entirely to robust exportperformance - despite the pressure of an appreciating currency.Exports have performed at record levels, rising nearly 17% in 2006and 12% in 2007. Export-oriented manufacturing - in particularautomobile production - and farm output are driving these gains.
Timor-LesteIn late 1999, about 70% of the economic infrastructureof Timor-Leste was laid waste by Indonesian troops andanti-independence militias. Three hundred thousand people fledwestward. Over the next three years a massive international program,manned by 5,000 peacekeepers (8,000 at peak) and 1,300 policeofficers, led to substantial reconstruction in both urban and ruralareas. By the end of 2005, refugees had returned or had settled inIndonesia. The country continues to face great challenges inrebuilding its infrastructure, strengthening the civiladministration, and generating jobs for young people entering thework force. The development of oil and gas resources in offshorewaters has begun to supplement government revenues ahead of scheduleand above expectations - the result of high petroleum prices. Thetechnology-intensive industry, however, has done little to createjobs for the unemployed because there are no production facilitiesin Timor. Gas is piped to Australia. In June 2005 the NationalParliament unanimously approved the creation of a Petroleum Fund toserve as a repository for all petroleum revenues and preserve thevalue of Timor-Leste's petroleum wealth for future generations. TheFund held assets of US$1.8 billion as of September 2007. Themid-2006 outbreak of violence and civil unrest disrupted bothprivate and public sector economic activity and created 100,000internally displaced persons - about 10 percent of the population.While real non-oil GDP growth in 2006 was negative, the economyprobably rebounded in 2007. The underlying economic policy challengethe country faces remains how best to use oil-and-gas wealth to liftthe non-oil economy onto a higher growth path and reduce poverty. Inlate 2007, the new government announced plans aimed at increasingspending, reducing poverty, and improving the country'sinfrastructure, but it continues to face capacity constraints. Inthe short term, the government must also address continuing problemsrelated to the crisis of 2006, especially the displaced Timorese.
TogoThis small, sub-Saharan economy is heavily dependent on bothcommercial and subsistence agriculture, which provides employmentfor 65% of the labor force. Some basic foodstuffs must still beimported. Cocoa, coffee, and cotton generate about 40% of exportearnings with cotton being the most important cash crop. Togo is theworld's fourth-largest producer of phosphate. The government'sdecade-long effort, supported by the World Bank and the IMF, toimplement economic reform measures, encourage foreign investment,and bring revenues in line with expenditures has moved slowly.Progress depends on follow through on privatization, increasedopenness in government financial operations, progress towardlegislative elections, and continued support from foreign donors.Togo is working with donors to write a Poverty Reduction and GrowthFacility (PRGF) that could eventually lead to a debt reduction plan.Economic growth remains marginal due to declining cotton production,underinvestment in phosphate mining, and strained relations withdonors.
TokelauTokelau's small size (three villages), isolation, and lackof resources greatly restrain economic development and confineagriculture to the subsistence level. The people rely heavily on aidfrom New Zealand - about $4 million annually - to maintain publicservices with annual aid being substantially greater than GDP. Theprincipal sources of revenue come from sales of copra, postagestamps, souvenir coins, and handicrafts. Money is also remitted tofamilies from relatives in New Zealand.
TongaTonga has a small, open, South Pacific island economy. It hasa narrow export base in agricultural goods. Squash, vanilla beans,and yams are the main crops, and agricultural exports, includingfish, make up two-thirds of total exports. The country must import ahigh proportion of its food, mainly from New Zealand. The countryremains dependent on external aid and remittances from Tongancommunities overseas to offset its trade deficit. Tourism is thesecond-largest source of hard currency earnings followingremittances. The government is emphasizing the development of theprivate sector, especially the encouragement of investment, and iscommitting increased funds for health and education. Tonga has areasonably sound basic infrastructure and well-developed socialservices. High unemployment among the young, a continuing upturn ininflation, pressures for democratic reform, and rising civil serviceexpenditures are major issues facing the government.