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 2007-08, driven in part by strong consumer demandand high wage growth, rising energy costs, a nation-wide droughtaffecting food prices, and a relaxation of fiscal discipline.Romania's strong GDP growth moderated markedly in the last quarterof 2008 as the country began to feel the effects of a globaldownturn in financial markets and trade, and growth is expected tobe much weaker in 2009. Romania hopes to adopt the euro by 2014.
Russia Russia ended 2008 with GDP growth of 5.6%, following 10 straight years of growth averaging 7% annually since the financial crisis of 1998. Over the last six years, fixed capital investment growth and personal income growth have averaged above 10%, but both grew at slower rates in 2008. Growth in 2008 was driven largely by non-tradable services and domestic manufacturing, rather than exports. During the past decade, poverty and unemployment declined steadily and the middle class continued to expand. Russia also improved its international financial position, running balance of payments surpluses since 2000. Foreign exchange reserves grew from $12 billion in 1999 to almost $600 billion by end July 2008, which include $200 billion in two sovereign wealth funds: a reserve fund to support budgetary expenditures in case of a fall in the price of oil and a national welfare fund to help fund pensions and infrastructure development. Total foreign debt is almost one-third of GDP. The state component of foreign debt has declined, but commercial short-term debt to foreigners has risen strongly. These positive trends began to reverse in the second half of 2008. Investor concerns over the Russia-Georgia conflict, corporate governance issues, and the global credit crunch in September caused the Russian stock market to fall by roughly 70%, primarily due to margin calls that were difficult for many Russian companies to meet. The global crisis also affected Russia's banking system, which faced liquidity problems. Moscow responded quickly in early October 2008, initiating a rescue plan of over $200 billion that was designed to increase liquidity in the financial sector, to help firms refinance foreign debt, and to support the stock market. The government also unveiled a $20 billion tax cut plan and other safety nets for society and industry. Meanwhile, a 70% drop in the price of oil since mid-July further exacerbated imbalances in external accounts and the federal budget. In mid-November, mini-devaluations of the currency by the Central Bank caused increased capital flight and froze domestic credit markets, resulting in growing unemployment, wage arrears, and a severe drop in production. Foreign exchange reserves dropped to around $435 billion by end 2008, as the Central Bank defended an overvalued ruble. In the first year of his term, President MEDVEDEV outlined a number of economic priorities for Russia including improving infrastructure, innovation, investment, and institutions; reducing the state's role in the economy; reforming the tax system and banking sector; developing one of the biggest financial centers in the world, combating corruption, and improving the judiciary. The Russian government needs to diversify the economy further, as energy and other raw materials still dominate Russian export earnings and federal budget receipts. Russia's infrastructure requires large investments and must be replaced or modernized if the country is to achieve broad-based economic growth. Corruption, lack of trust in institutions, and more recently, exchange rate uncertainty and the global economic crisis continue to dampen domestic and foreign investor sentiment. Russia has made some progress in building the rule of law, the bedrock of a modern market economy, but much work remains on judicial reform. Moscow continues to seek accession to the WTO and has made some progress, but its timeline for entry into the organization continues to slip, and the negotiating atmosphere has soured in the wake of the Georgia and global economic crises.
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 amounted to about $27 million in FY06/07 or morethan twice the level of annual budgetary revenues. The localpopulation earns income from fishing, raising livestock, and salesof handicrafts. Because there are few jobs, 25% of the work forcehas left to seek employment on Ascension Island, on the Falklands,and in the UK.
Saint Kitts and NevisThe economy of Saint Kitts and Nevis isheavily dependent upon tourism revenues, which has replaced sugar,the traditional mainstay of the economy until the 1970s. Followingthe 2005 harvest, the government closed the sugar industry afterdecades of losses of 3-4% of GDP annually. To compensate foremployment losses, the government has embarked on a program todiversify the agricultural sector and to stimulate other sectors ofthe economy, such as tourism, export-oriented manufacturing, andoffshore banking. Economic growth was above average for LatinAmerica from 2004 to 2006, but has since slowed. Like other touristdestinations in the Caribbean, the St. Kitts and Nevis is vulnerableto damage from natural disasters and shifts in tourism demand. Thecurrent government is constrained by a high public debt burdenequivalent to nearly 185% of GDP by the end of 2006, 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.Although crops such as bananas, mangos, and avocados continue to begrown for export, tourism provides Saint Lucia's main source ofincome and the industry is the island's biggest employer. Thetourism sector is likely to face declining revenues with the globaleconomic downturn as US and European travel declines. Themanufacturing sector is the most diverse in the Eastern Caribbeanarea, and the government is trying to revitalize the bananaindustry, although recent hurricanes have caused exports tocontract. Saint Lucia is vulnerable to a variety of external shocksincluding volatile tourism receipts, natural disasters, anddependence on foreign oil. The public debt-to-GDP ratio is about 70%and high debt servicing obligations constrain the KINGadministration's ability to respond to adverse external shocks.Economic fundamentals remain solid, even though unemployment needsto 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 in 2008 after reaching a 10-year high of nearly 7% in 2006, and will likely slow in 2009 with the global economic downturn, though it will be above average for Latin America. Success of the economy hinges upon seasonal variations in agriculture, tourism, and construction activity as well as remittance inflows. Much of the workforce is employed in banana production and tourism, but persistent high unemployment has prompted many to leave the islands. 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% of current revenues are directed towards debt servicing. An agreement with Italy to write-off debt reduced the public debt-to-GDP ratio to about 70%. The GONSALVES administration is directing government resources to infrastructure projects, including a new international airport that is expected to be completed in 2011.
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; 122,000 tourists visited the islands in 2007. 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 MarinoSan Marino's economy relies heavily on its tourism andbanking industries, as well as from the manufacture and export ofceramics, clothing, fabrics, furniture, paints, spirits, tiles, andwine. The economy also benefits from foreign investment due to itsrelatively low corporate taxes and low taxes on interest earnings.The San Marino government, sworn in on 3 December 2008, willcontinue to work towards an economic cooperation agreement withItaly - a longstanding priority - as well as harmonizing its fiscallaws with EU members. The per capita level of output and standard ofliving are comparable to those of the most prosperous regions ofItaly, which supplies much of 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. Potential exists for the development ofpetroleum resources in Sao Tome's territorial waters in the oil-richGulf of Guinea, which are being jointly developed in a 60-40 splitwith Nigeria, but any actual production is at least several yearsoff. The first production licenses were sold in 2004, though adispute over licensing with Nigeria delayed Sao Tome's receipt ofmore than $20 million in signing bonuses for almost a year. Real GDPgrowth averaged about 6% in 2006-08, as a result of increases inpublic 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 80% of budget revenues, 45% ofGDP, and 90% of export earnings. About 40% of GDP comes from theprivate sector. Roughly 6.4 million foreign workers play animportant role in the Saudi economy, particularly in the oil andservice sectors. High oil prices through mid-2008 have boostedgrowth, government revenues, and Saudi ownership of foreign assets,while enabling Riyadh to pay down domestic debt. The government isencouraging private 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. The last five years of high oilprices have given the Kingdom ample financial reserves to manage theimpact of the global financial crisis, but tight internationalcredit, falling oil prices, and the global economic slowdown willreduce Saudi economic growth in 2009.
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 during1995-2008. Annual inflation had been pushed down to the 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 international economic sanctions, and the damage toYugoslavia's infrastructure and industry during the NATO airstrikesin 1999 left the economy only half the size it was in 1990. Afterthe ousting of former Federal Yugoslav President MILOSEVIC inSeptember 2000, the Democratic Opposition of Serbia (DOS) coalitiongovernment implemented stabilization measures and embarked on amarket reform program. After renewing its membership in the IMF inDecember 2000, 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 progress in tradeliberalization and enterprise restructuring and privatization,including telecommunications and small- and medium-size firms. Ithas made halting progress towards EU membership despite signing aStabilization and Association Agreement with Brussels in May 2008.Serbia is also pursuing membership in the World Trade Organization.Unemployment and the large current account deficit remain ongoingpolitical and economic problems.
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. GDP grew about 7-8% per year in 2006-07, driven bytourism and a boom in tourism-related construction. The Seychellesrupee was allowed to depreciate in 2006 after being overvalued foryears and fell by 10% in the first 9 months of 2007. Despite theseactions, the Seychelles economy has struggled to maintain its gainsand in 2008 suffered from food and oil price shocks, a foreignexchange shortage, high inflation and large financing gaps, with GDPgrowth reduced to about 3% in 2008. In July 2008 the governmentdefaulted on a Euro amortizing note worth roughly US$80 million,leading to a downgrading of Seychelles credit rating. Seychellesrequested an IMF Stand-By Agreement in December 2008.
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 higher than that ofmost developed countries. The economy depends heavily on exports,particularly in consumer electronics, information technologyproducts, pharmaceuticals, and on a growing service sector. Real GDPgrowth averaged 7% between 2004 and 2007, but dropped to 1.1% in2008 as a result of the global financial crisis. The economycontracted in the last three quarters of 2008. Prime Minister LEEand other senior officials have dampened expectations for a quickrebound in 2009. Over the longer term, the government hopes toestablish a new growth path that will be less vulnerable to globaldemand cycles especially for information technology products. It hasattracted major investments in pharmaceuticals and medicaltechnology production and will continue efforts to establishSingapore as Southeast Asia's financial and high-tech hub.
SlovakiaSlovakia has made significant economic reforms since itsseparation from the Czech Republic in 1993. Reforms to the taxation,healthcare, pension, and social welfare systems helped Slovakia toconsolidate its budget and get on track to join the EU in 2004 andto adopt the euro in January 2009. Major privatizations are nearlycomplete, the banking sector is almost entirely 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 andelectronic sectors has been strong. Slovakia's economic growthexceeded expectations in 2001-08 despite the general Europeanslowdown. Unemployment, at an unacceptable 18% in 2003-04, droppedto 8.4% in 2008 but remains the economy's Achilles heel. Despite its2006 pre-election promises to loosen fiscal policy and reverse theprevious DZURINDA government's pro-market reforms, FICO's cabinethas thus far been careful to keep a lid on spending in order to meeteuro adoption criteria and has focused on regulating energy and foodprices instead. The OECD expects Slovakia's GDP growth to bepositive in 2009.
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 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 transfer/remittance services have sprouted throughoutthe country, handling roughly $2 billion in remittances annually.Mogadishu's main market offers a variety of goods from food to thenewest electronic gadgets. Hotels continue to operate and aresupported with private-security militias. Somalia's arrears to theIMF continued to grow in 2008. Statistics on Somalia's GDP, growth,per capita income, and inflation should be viewed skeptically.
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 was robust from2004 to 2008 as South Africa reaped the benefits of macroeconomicstability and a global commodities boom, but began to slow in thesecond half of 2008 due to the global financial crisis' impact oncommodity prices and demand. However, unemployment remains high andoutdated infrastructure has constrained growth. At the end of 2007,South Africa began to experience an electricity crisis because statepower supplier Eskom suffered supply problems with aged plants,necessitating "load-shedding" cuts to residents and businesses inthe major cities. Daunting economic problems remain from theapartheid era - especially poverty, lack of economic empowermentamong 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 South Sandwich Islands Some fishing takes place in adjacent waters. There is a potential source of income from harvesting finfish and krill. The islands receive income from postage stamps produced in the UK, sale of fishing licenses, and harbor and landing fees from tourist vessels. Tourism from specialized cruise ships is increasing rapidly.
Southern OceanFisheries in 2006-07 landed 126,976 metric tons, ofwhich 82% (104,586 tons) was krill (Euphausia superba) and 9.5%(12,027 tons) Patagonian toothfish (Dissostichus eleginoides - alsoknown as Chilean sea bass), compared to 127,910 tons in 2005-06 ofwhich 83% (106,591 tons) was krill and 9.7% (12,396 tons) Patagoniantoothfish (estimated fishing from the area covered by the Conventionof the Conservation of Antarctic Marine Living Resources (CCAMLR),which extends slightly beyond the Southern Ocean area).International agreements were adopted in late 1999 to reduceillegal, unreported, and unregulated fishing, which in the 2000-01season landed, by one estimate, 8,376 metric tons of Patagonian andAntarctic toothfish. In the 2007-08 Antarctic summer, 45,213tourists visited the Southern Ocean, compared to 35,552 in2006-2007, and 29,799 in 2005-2006 (estimates provided to theAntarctic Treaty by the International Association of Antarctica TourOperators (IAATO), and does not include passengers on overflightsand those flying directly in and out of Antarctica).
SpainThe Spanish economy grew every year from 1994 through 2008before entering a recession that started in the third quarter of2008. Spain's mixed capitalist economy supports a GDP that on a percapita basis is approaching that of the largest West Europeaneconomies. The Socialist president, Jose Luis Rodriguez ZAPATERO, inoffice since 2004, has made mixed progress in carrying out keystructural reforms. The economy was greatly affected, especiallyafter Zapatero's second term began in April 2008, by the bursting ofthe housing bubble and construction boom that had fueled much of theeconomic growth between 2001 and 2007. The global financial crisisexacerbated the economic downturn. GDP growth in 2008 was 1.2%, wellbelow the 3% or higher growth the country enjoyed from 1997 through2007. The Spanish banking system is considered solid, thanks in partto conservative oversight by the European Central Bank, andgovernment intervention to rescue banks on the scale seen elsewherein Europe in 2008 was not necessary. After considerable successsince the mid-1990s in reducing unemployment to a 2007 low of 8%,Spain suffered a major spike in unemployment in the last few monthsof 2008, finishing the year with an unemployment rate over 13%.
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 on development and fighting the LTTEdrove GDP growth to about 7% per year in 2006-07 before the globalrecession slow growth in 2008, but high government spending and highoil and commodity prices also raised inflation to around 15% in2008. Sri Lanka's most dynamic sectors now are food processing,textiles and apparel, food and beverages, port construction,telecommunications, and insurance and banking. In 2008, plantationcrops made up only about 20% of exports (compared with more than 90%in 1970), while textiles and garments accounted for more than 40%.About 1.5 million Sri Lankans work abroad, 90% of them in the MiddleEast. They send home more than $2.5 billion a year. The 25-yearcivil conflict between LTTE and the government of Sri Lanka has beena serious impediment to economic activities. By mid February 2009,the LTTE remained in control of small and shrinking area in theNorth. The conflict continues to cast a shadow over the economy.
SudanUntil the second half of 2008, Sudan's economy boomed on theback of increases in oil production, high oil prices, and largeinflows of foreign direct investment. GDP growth registered morethan 10% per year in 2006 and 2007. From 1997 to date, Sudan hasbeen working with the IMF to implement macroeconomic reforms,including a managed float of the exchange rate. Sudan beganexporting crude oil in the last quarter of 1999. Agriculturalproduction remains important, because it employs 80% of the workforce and contributes a third of GDP. The Darfur conflict, theaftermath of two decades of civil war in the south, the lack ofbasic infrastructure in large areas, and a reliance by much of thepopulation on subsistence agriculture ensure much of the populationwill remain at or below the poverty line for years despite rapidrises in average per capita income. In January 2007, the governmentintroduced a new currency, the Sudanese Pound, at an initialexchange 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. Prospects for local onshoreoil production are good, and a drilling program is underway.Offshore oil drilling was given a boost in 2004 when the State OilCompany (Staatsolie) signed exploration agreements with severalWestern oil companies. Bidding on these new offshore blocks wascompleted in July 2006. The short-term economic outlook depends onthe government's ability to control inflation and on the developmentof projects in the bauxite and gold mining sectors, thoughinvestment in these projects may slow with the tightening of globalcredit markets. 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.The VENETIAAN administration also has created a stabilization fundto insulate future revenue from commodity shocks. These economicpolicies are likely to remain in effect during VENETIAAN's thirdterm.
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. In September 2003,Swedish voters turned down entry into the euro system concernedabout the impact on the economy and sovereignty. Timber, hydropower,and iron ore constitute the resource base of an economy heavilyoriented toward foreign trade. Privately owned firms account forabout 90% of industrial output, of which the engineering sectoraccounts for 50% of output and exports. Agriculture accounts foronly 1% of GDP and of employment. Until 2008, Sweden was in themidst of a sustained economic upswing, boosted by increased domesticdemand and strong exports. This and robust finances offered thecenter-right government considerable scope to implement its reformprogram aimed at increasing employment, reducing welfare dependence,and streamlining the state's role in the economy. Despite strongfinances and underlying fundamentals, the Swedish economy slid intorecession in the third quarter of 2008 and growth continued downwardin the fourth as deteriorating global conditions reduced exportdemand and consumption. On 3 February 2009, the Swedish Governmentannounced a $6 billon rescue package for the banking sector.
SwitzerlandSwitzerland is a peaceful, prosperous, and stable modernmarket economy with low unemployment, a highly skilled labor force,and a per capita GDP among the highest in the world. Switzerland'seconomy benefits from a highly developed service sector led byfinancial services and a manufacturing industry that specializes inhigh-technology, knowledge-based production. The Swiss in recentyears have brought their economic practices largely into conformitywith the EU's to enhance their international competitiveness, butsome trade protectionism remains, particularly for its smallagricultural sector. Switzerland remains a safehaven for investors,because it has maintained a degree of bank secrecy and has kept upthe franc's long-term external value. The global financial crisisand resulting economic downturn could, however, put Switzerland in arecession in 2009, particularly as global export demand stalls.Switzerland's largest banks suffered significant losses in 2008 andthe country's largest bank accepted a government rescue deal in late2008. The Swiss National Bank, beginning in October 2008, cutinterest rates on several consecutive occasions, effectivelyinstituting a zero-rate policy in a bid to boost the economy.
SyriaThe Syrian economy grew by an estimated 2.4% in real terms in2008 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%, then instituted 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 government guidance of investment and foreign trade. Inkeeping with this trend, some large, state-owned banks andindustrial firms have been privatized. Exports have provided theprimary impetus for industrialization. The island runs a large tradesurplus, and its foreign reserves are among the world's largest.Recently opened cross-strait travel, transportation, and tourismlinks are likely to increase Taiwan and China's economicinterdependence. In 2008 China overtook the US to become Taiwan'ssecond-largest source of imports, after Japan. China is also theisland's number one destination for foreign direct investment.Growth fell to 0.1% in 2008 because of the global slowdown.
TajikistanTajikistan has one of the lowest per capita GDPs amongthe 15 former Soviet republics. Because of a lack of employmentopportunities in Tajikistan, nearly half of the labor force worksabroad, primarily in Russia, supporting families in Tajikistanthrough remittances. The exact number of labor migrants is unknown,but estimated at around 1 million. Less than 7% of the land area isarable. Cotton is the most important crop, but this sector isburdened with debt and obsolete infrastructure. Mineral resourcesinclude silver, gold, uranium, and tungsten. Industry consists onlyof a large 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. Tajikistan's economic situation remainsfragile due to uneven implementation of structural reforms,corruption, weak governance, widespread unemployment, seasonal powershortages, and the external debt burden. A debt restructuringagreement was reached with Russia in December 2002 including a $250million write-off of Tajikistan's $300 million debt. Completion ofthe Sangtuda I hydropower dam - built with Russian investment - andthe Sangtuda II and Rogun dams will add substantially to electricityoutput. If finished according to Tajik plans, Rogun will be theworld's tallest dam. Tajikistan has also received substantialinfrastructure development loans from the Chinese government toimprove roads and an electricity transmission network. To helpincrease north-south trade, the US funded a $36 million bridge whichopened in August 2007 and links Tajikistan and Afghanistan. While,Tajikistan has experienced steady economic growth since 1997, nearlytwo-thirds of the population continues to live in poverty. Economicgrowth reached 10.6% in 2004, but dropped below 8% in 2005-08, asthe effects of higher oil prices and then the internationalfinancial crisis began to register - mainly in the form of lowerprices for key commodities and lower remittances from Tajiks workingin Russia, due to the declining economic conditions in that country.
TanzaniaTanzania is in the bottom ten percent of the world'seconomies in terms of per capita income. The economy depends heavilyon agriculture, which accounts for more than 40% of GDP, provides85% of exports, and employs 80% of the work force. Topography andclimatic conditions, however, limit cultivated crops to only 4% ofthe land area. Industry traditionally featured the processing ofagricultural products and light consumer goods. The World Bank, theIMF, and bilateral donors have provided funds to rehabilitateTanzania's out-of-date economic infrastructure and to alleviatepoverty. Long-term growth through 2005 featured a pickup inindustrial 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 7.1% in2008.
ThailandWith a well-developed infrastructure, a free-enterpriseeconomy, and generally pro-investment policies, Thailand was one ofEast Asia's best performers from 2002-04, averaging more than 6%annual real GDP growth. However, overall economic growth has fallensharply - averaging 4.9% from 2005 to 2007 - as persistent politicalcrisis stalled infrastructure mega-projects, eroded investor andconsumer confidence, and damaged the country's international image.The growth rate fell to 2.6% in 2008. Exports were the key economicdriver as foreign investment and consumer demand stalled. Exportgrowth from January 2005 to November 2008 averaged 17.5% annually.Business uncertainty escalated, however, following the September2006 coup when the military-installed government imposed capitalcontrols and considered far-reaching changes to foreign investmentrules and other business legislation. Although controversial capitalcontrols have since been lifted and business rules largely remainunchanged, investor sentiment has not recovered. Moreover, the 2008global financial crisis further darkened Thailand's economichorizon. Continued political uncertainty will hamper resumption ofinfrastructure mega-projects.
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 technology-intensive industry, however,has done little to create jobs for the unemployed because there areno production facilities in Timor. Gas is piped to Australia. InJune 2005, the National Parliament unanimously approved the creationof a Petroleum Fund to serve as a repository for all petroleumrevenues and preserve the value of Timor-Leste's petroleum wealthfor future generations. The Fund held assets of US$3.9 billion as ofOctober 2008. The economy is recovering from the mid-2006 outbreakof violence and civil unrest, which disrupted both private andpublic sector economic activity. The government in 2008 resettledtens of thousands of an estimated 100,000 internally displacedpersons (IDPs) and planned for all IDPs to return home by early2009. The underlying economic policy challenge the country facesremains how best to use oil-and-gas wealth to lift the non-oileconomy onto a higher growth path and to reduce poverty.
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. Agricultural exports, including fish,make up two-thirds of total exports. The country must import a highproportion of its food, mainly from New Zealand. The country remainsdependent on external aid and remittances from Tongan communitiesoverseas to offset its trade deficit. Tourism is the second-largestsource of hard currency earnings following remittances. Tonga had41,000 visitors in 2004. The government is emphasizing thedevelopment of the private sector, especially the encouragement ofinvestment, and is committing increased funds for health andeducation. Tonga has a reasonably sound basic infrastructure andwell developed social services. High unemployment among the young, acontinuing upturn in inflation, pressures for democratic reform, andrising civil service expenditures are major issues facing thegovernment.
Trinidad and TobagoTrinidad and Tobago has earned a reputation asan excellent investment site for international businesses and hasone of the highest growth rates and per capita incomes in LatinAmerica. Economic growth for the past seven years has averagedslightly over 8%, significantly above the regional average of about3.7% for that same period; however, it has slowed down this year toabout 5% and is expected to slow further with the global downturn.Growth has been fueled by investments in liquefied natural gas(LNG), petrochemicals, and steel. Additional petrochemical,aluminum, and plastics projects are in various stages of planning.Trinidad and Tobago is the leading Caribbean producer of oil andgas, and its economy is heavily dependent upon these resources butit also supplies manufactured goods, notably food and beverages, aswell as cement to the Caribbean region. Oil and gas account forabout 40% of GDP and 80% of exports, but only 5% of employment. Thecountry is also a regional financial center, and tourism is agrowing sector, although it is not proportionately as important asin many other Caribbean islands. The economy benefits from a growingtrade surplus. The MANNING administration has benefited from fiscalsurpluses fueled by the dynamic export sector; however, declines inoil and gas prices have reduced government revenues which willchallenge his government's commitment to maintaining high levels ofpublic investment.
TunisiaTunisia has a diverse economy, with important agricultural,mining, tourism, and manufacturing sectors. Governmental control ofeconomic affairs while still heavy has gradually lessened over thepast decade with increasing privatization, simplification of the taxstructure, and a prudent approach to debt. Progressive socialpolicies also have helped raise living conditions in Tunisiarelative to the region. Real growth, which averaged almost 5% overthe past decade, declined to 4.7% in 2008 and probably will declinefurther in 2009 because of economic contraction and slowing ofimport demand in Europe - Tunisia's largest export market. However,development of non-textile manufacturing, a recovery in agriculturalproduction, and strong growth in the services sector somewhatmitigated the economic effect of slowing exports. Tunisia will needto reach even higher growth levels to create sufficient employmentopportunities for an already large number of unemployed as well asthe growing population of university graduates. The challenges aheadinclude: privatizing industry, liberalizing the investment code toincrease foreign investment, improving government efficiency,reducing the trade deficit, and reducing socioeconomic disparitiesin the impoverished south and west.
TurkeyTurkey's dynamic economy is a complex mix of modern industryand commerce along with a traditional agriculture sector that stillaccounts for about 30% of employment. It has a strong and rapidlygrowing private sector, yet the state remains a major participant inbasic industry, banking, transport, and communication. The largestindustrial sector is textiles and clothing, which accounts forone-third of industrial employment; it faces stiff competition ininternational markets with the end of the global quota system.However, other sectors, notably the automotive and electronicsindustries, are rising in importance within Turkey's export mix.Real GDP growth has exceeded 6% in many years, but this strongexpansion has been interrupted by sharp declines in output in 1994,1999, and 2001. Due to global contractions, annual growth isestimated to have fallen to 1.1% in 2008. Inflation fell to 7.7% in2005 - a 30-year low - but climbed to over 10% in 2008. Despite thestrong economic gains from 2002-07, which were largely due torenewed investor interest in emerging markets, IMF backing, andtighter fiscal policy, the economy is still burdened by a highcurrent account deficit and high external debt. Further economic andjudicial reforms and prospective EU membership are expected to boostforeign direct investment. The stock value of FDI stood at nearly$130 billion at year-end 2008. Privatization sales are currentlyapproaching $21 billion. Oil began to flow through theBaku-Tblisi-Ceyhan pipeline in May 2006, marking a major milestonethat will bring up to 1 million barrels per day from the Caspian tomarket. In 2007 and 2008, Turkish financial markets weatheredsignificant domestic political turmoil, including turbulence sparkedby controversy over the selection of former Foreign MinisterAbdullah GUL as Turkey's 11th president and the possible closure ofthe Justice and Development Party (AKP). Economic fundamentals aresound, marked by moderate economic growth and foreign directinvestment. Nevertheless, the Turkish economy may be faced with morenegative economic indicators in 2009 as a result of the globaleconomic slowdown. In addition, Turkey's high current accountdeficit leaves the economy vulnerable to destabilizing shifts ininvestor confidence.
TurkmenistanTurkmenistan is largely a desert country with intensiveagriculture in irrigated oases and sizeable gas and oil resources.One-half of its irrigated land is planted in cotton; formerly it wasthe world's 10th-largest producer. Poor harvests in recent yearshave led to an almost 50% decline in cotton exports. With anauthoritarian ex-Communist regime in power and a tribally basedsocial structure, Turkmenistan has taken a cautious approach toeconomic reform, hoping to use gas and cotton sales to sustain itsinefficient economy. Privatization goals remain limited. From1998-2005, Turkmenistan suffered from the continued lack of adequateexport routes for natural gas and from obligations on extensiveshort-term external debt. At the same time, however, total exportsrose by an average of roughly 15% per year from 2003-08, largelybecause of higher international oil and gas prices. A new pipelineto China, set to come online in late 2009 or early 2010, will giveTurkmenistan an additional export route for its gas. Overallprospects in the near future are discouraging because of widespreadinternal poverty, a poor educational system, government misuse ofoil and gas revenues, and Ashgabat's reluctance to adoptmarket-oriented reforms. In the past, Turkmenistan's economicstatistics were state secrets. The new government has established aState Agency for Statistics, but GDP numbers and other figures aresubject to wide margins of error. In particular, the rate of GDPgrowth is uncertain. Since his election, President BERDIMUHAMEDOWhas sought to improve the health and education systems, unified thecountry's dual currency exchange rate, ordered the redenomination ofthe manat, reduced state subsidies for gasoline, increased Internetaccess both in schools and Internet cafes, ordered an independentaudit of Turkmenistan's gas resources, and created a special tourismzone on the Caspian Sea. Although foreign investment is encouraged,numerous bureaucratic obstacles from the NYYZOW-era remain.
Turks and Caicos IslandsThe Turks and Caicos economy is based ontourism, offshore financial services, and fishing. Most capitalgoods and food for domestic consumption are imported. The US is theleading source of tourists, accounting for more than three-quartersof the 175,000 visitors that arrived in 2004. Major sources ofgovernment revenue also include fees from offshore financialactivities and customs receipts.
TuvaluTuvalu consists of a densely populated, scattered group ofnine coral atolls with poor soil. The country has no known mineralresources and few exports and is almost entirely dependent uponimported food and fuel. Subsistence farming and fishing are theprimary economic activities. Fewer than 1,000 tourists, on average,visit Tuvalu annually. Job opportunities are scarce and publicsector workers make up most of those employed. About 15% of theadult male population work as seamen on merchant ships abroad, andremittances are a vital source of income contributing around $4million in 2006. Substantial income is received annually from theTuvalu Trust Fund (TTF) an international trust fund established in1987 by Australia, NZ, and the UK and supported also by Japan andSouth Korea. Thanks to wise investments and conservativewithdrawals, this fund grew from an initial $17 million to anestimated value of $77 million in 2006. The TFF contributed nearly$9 million towards the government budget in 2006 and is an importantcushion for meeting shortfalls in the government's budget. The USGovernment is also a major revenue source for Tuvalu because ofpayments from a 1988 treaty on fisheries. In an effort to ensurefinancial stability and sustainability, the government is pursuingpublic sector reforms, including privatization of some governmentfunctions and personnel cuts. Tuvalu also derives royalties from thelease of its ".tv" Internet domain name with revenue of more than $2million in 2006. A minor source of government revenue comes from thesale of stamps and coins. With merchandise exports only a fractionof merchandise imports, continued reliance must be placed on fishingand telecommunications license fees, remittances from overseasworkers, official transfers, and income from overseas investments.Growing income disparities and the vulnerability of the country toclimatic change are among leading concerns for the nation.
UgandaUganda has substantial natural resources, including fertilesoils, regular rainfall, sizable mineral deposits of copper, cobalt,gold, and other minerals, and recently discovered oil. Agricultureis the most important sector of the economy, employing over 80% ofthe work force. Coffee accounts for the bulk of export revenues.Since 1986, the government - with the support of foreign countriesand international agencies - has acted to rehabilitate and stabilizethe economy by undertaking currency reform, raising producer priceson export crops, increasing prices of petroleum products, andimproving civil service wages. The policy changes are especiallyaimed at dampening inflation and boosting production and exportearnings. During 1990-2001, the economy turned in a solidperformance based on continued investment in the rehabilitation ofinfrastructure, improved incentives for production and exports,reduced inflation, gradually improved domestic security, and thereturn of exiled Indian-Ugandan entrepreneurs. Growth continues tobe solid, despite variability in the price of coffee, Uganda'sprincipal export, and a consistent upturn in Uganda's exportmarkets. In 2000, Uganda qualified for enhanced Highly Indebted PoorCountries (HIPC) debt relief worth $1.3 billion and Paris Club debtrelief worth $145 million. These amounts combined with the originalHIPC debt relief added up to about $2 billion.
UkraineAfter Russia, the Ukrainian republic was far and away themost important economic component of the former Soviet Union,producing about four times the output of the next-ranking republic.Its fertile black soil generated more than one-fourth of Sovietagricultural output, and its farms provided substantial quantitiesof meat, milk, grain, and vegetables to other republics. Likewise,its diversified heavy industry supplied the unique equipment (forexample, large diameter pipes) and raw materials to industrial andmining sites (vertical drilling apparatus) in other regions of theformer USSR. Shortly after independence was ratified in December1991, the Ukrainian Government liberalized most prices and erected alegal framework for privatization, but widespread resistance toreform within the government and the legislature soon stalled reformefforts and led to some backtracking. Output by 1999 had fallen toless than 40% of the 1991 level. Ukraine's dependence on Russia forenergy supplies and the lack of significant structural reform havemade the Ukrainian economy vulnerable to external shocks. Ukrainedepends on imports to meet about three-fourths of its annual oil andnatural gas requirements. Ukraine concluded a deal with Russia inJanuary 2006 that almost doubled the price Ukraine pays for Russiangas. Disputes with Russia over pricing have led to periodic gascut-offs. Outside institutions - particularly the IMF - haveencouraged Ukraine to quicken the pace and scope of reforms.Ukrainian Government officials eliminated most tax and customsprivileges in a March 2005 budget law, bringing more economicactivity out of Ukraine's large shadow economy, but moreimprovements are needed, including fighting corruption, developingcapital markets, and improving the legislative framework. Ukraine'seconomy was buoyant despite political turmoil between the primeminister and president until mid-2008. Real GDP growth exceeded 7%in 2006-07, fueled by high global prices for steel - Ukraine's topexport - and by strong domestic consumption, spurred by risingpensions and wages. The drop in steel prices and Ukraine's exposureto the global financial crisis due to aggressive foreign borrowinghas lowered growth in 2008 and the economy probably will contract in2009. Ukraine reached an agreement with the IMF for a $16.5 billionstandby arrangement in November 2008 to deal with the economiccrisis. However, political turmoil in Ukraine as well asdeteriorating external conditions are likely to hamper efforts foreconomic recovery.
United Arab EmiratesThe UAE has an open economy with a high percapita income and a sizable annual trade surplus. Successful effortsat economic diversification have reduced the portion of GDP based onoil and gas output to 25%. Since the discovery of oil in the UAEmore than 30 years ago, the UAE has undergone a profoundtransformation from an impoverished region of small desertprincipalities to a modern state with a high standard of living. Thegovernment has increased spending on job creation and infrastructureexpansion and is opening up utilities to greater private sectorinvolvement. In April 2004, the UAE signed a Trade and InvestmentFramework Agreement with Washington and in November 2004 agreed toundertake negotiations toward a Free Trade Agreement with the US.The country's Free Trade Zones - offering 100% foreign ownership andzero taxes - are helping to attract foreign investors. Higher oilrevenue, strong liquidity, housing shortages, and cheap credit in2005-07 led to a surge in asset prices (shares and real estate) andconsumer inflation. The global financial crisis and the resultingtight international credit market and falling oil prices havealready begun to deflate asset prices and will result in slowereconomic growth for 2009. Dependence on oil and a large expatriateworkforce are significant long-term challenges. The UAE's strategicplan for the next few years focuses on diversification and creatingmore opportunities for nationals through improved education andincreased private sector employment.
United KingdomThe UK, a leading trading power and financial center,is one of the quintet of trillion dollar economies of WesternEurope. Over the past two decades, the government has greatlyreduced public ownership and contained the growth of social welfareprograms. Agriculture is intensive, highly mechanized, and efficientby European standards, producing about 60% of food needs with lessthan 2% of the labor force. The UK has large coal, natural gas, andoil resources, but its oil and natural gas reserves are decliningand the UK became a net importer of energy in 2005; energyindustries now contribute about 4% to GDP. Services, particularlybanking, insurance, and business services, account by far for thelargest proportion of GDP while industry continues to decline inimportance. Since emerging from recession in 1992, Britain's economyenjoyed the longest period of expansion on record during which timegrowth outpaced most of Western Europe. The global economicslowdown, tight credit, and falling home prices, however, pushedBritain back into recession in the latter half of 2008 and promptedthe BROWN government to implement a number of new measures tostimulate the economy and stabilize the financial markets; theseinclude part-nationalizing the banking system, cutting taxes,suspending public sector borrowing rules, and bringing forwardpublic spending on capital projects. The Bank of Englandperiodically coordinates interest rate moves with the EuropeanCentral Bank, but Britain remains outside the European Economic andMonetary Union (EMU), and opinion polls show a majority of Britonsoppose joining the euro.