Armenia After several years of double-digit economic growth, Armenia faced a severe economic recession with GDP declining more than 14% in 2009, despite large loans from multilateral institutions. Sharp declines in the construction sector and workers' remittances, particularly from Russia, were the main reasons for the downturn. The economy began to recover in 2010 with nearly 5% growth. Under the old Soviet central planning system, Armenia developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics, in exchange for raw materials and energy. Armenia has since switched to small-scale agriculture and away from the large agroindustrial complexes of the Soviet era. Armenia has managed to reduce poverty, slash inflation, stabilize its currency, and privatize most small- and medium-sized enterprises. Since the breakup of the Soviet Union in 1991, Armenia had made progress in implementing some economic reforms, including privatization, price reforms, and prudent fiscal policies, but geographic isolation, a narrow export base, and pervasive monopolies in important business sectors have made Armenia particularly vulnerable to the sharp deterioration in the global economy and the economic downturn in Russia. The conflict with Azerbaijan over the ethnic Armenian-dominated region of Nagorno-Karabakh contributed to a severe economic decline in the early 1990s and Armenia's borders with Turkey remain closed until 2010, when Turkey and Armenia signed an accord to reestablish diplomatic relations. Armenia is particularly dependent on Russian commercial and governmental support and most key Armenian infrastructure is Russian-owned and/or managed, especially in the energy sector. The electricity distribution system was privatized in 2002 and bought by Russia's RAO-UES in 2005. Construction of a pipeline to deliver natural gas from Iran to Armenia was completed in December 2008, and gas deliveries are slated to expand due to the April 2010 completion of the Yerevan Thermal Power Plant. Armenia has some mineral deposits (copper, gold, bauxite). Pig iron, unwrought copper, and other nonferrous metals are Armenia's highest valued exports. Armenia's severe trade imbalance has been offset somewhat by international aid, remittances from Armenians working abroad, and foreign direct investment. Armenia joined the WTO in January 2003. The government made some improvements in tax and customs administration in recent years, but anti-corruption measures have been ineffective and the current economic downturn has led to a sharp drop in tax revenue and forced the government to accept large loan packages from Russia, the IMF, and other international financial institutions. Armenia will need to pursue additional economic reforms in order to regain economic growth and improve economic competitiveness and employment opportunities, especially given its economic isolation from two of its nearest neighbors, Turkey and Azerbaijan.
ArubaTourism is the mainstay of the small open Aruban economy,together with offshore banking. Oil refining and storage ended in2009. The rapid growth of the tourism sector over the last decadehas resulted in a substantial expansion of other activities. Over1.5 million tourists per year visit Aruba with 75% of those from theUS. Construction continues to boom with hotel capacity five timesthe 1985 level. Tourist arrivals rebounded strongly following a dipafter the 11 September 2001 attacks. The government has made cuttingthe budget and trade deficits a high priority.
Ashmore and Cartier Islandsno economic activity
Atlantic OceanThe Atlantic Ocean provides some of the world's mostheavily trafficked sea routes, between and within the Eastern andWestern Hemispheres. Other economic activity includes theexploitation of natural resources, e.g., fishing, dredging ofaragonite sands (The Bahamas), and production of crude oil andnatural gas (Caribbean Sea, Gulf of Mexico, and North Sea).
AustraliaAustralia's abundant and diverse natural resources attracthigh levels of foreign investment and include extensive reserves ofcoal, iron ore, copper, gold, natural gas, uranium, and renewableenergy sources. A series of major investments, such as the US$40billion Gorgon Liquid Natural Gas project, will significantly expandthe resources sector. Australia also has a large services sector andis a significant exporter of natural resources, energy, and food.Key tenets of Australia's trade policy include support for opentrade and the successful culmination of the Doha Round ofmultilateral trade negotiations, particularly for agriculture andservices. The Australian economy grew for 17 consecutive yearsbefore the global financial crisis. Subsequently, the Ruddgovernment introduced a fiscal stimulus package worth over US$50billion to offset the effect of the slowing world economy, while theReserve Bank of Australia cut interest rates to historic lows. Thesepolicies - and continued demand for commodities, especially fromChina - helped the Australian economy rebound after just one quarterof negative growth. The economy grew by 1.2% during 2009 - the bestperformance in the OECD. Unemployment, originally expected to reach8-10%, peaked at 5.7% in late 2009 and fell to 5.1% in 2010. As aresult of an improved economy, the budget deficit is expected topeak below 4.2% of GDP and the government could return to budgetsurpluses as early as 2015. Australia was one of the first advancedeconomies to raise interest rates, with seven rate hikes betweenOctober 2009 and November 2010. The GILLARD government is focused onraising Australia's economic productivity to ensure thesustainability of growth, and continues to manage the symbiotic, butsometimes tense, economic relationship with China. Australia isengaged in the Trans-Pacific Partnership talks and ongoing freetrade agreement negotiations with China, Japan, and Korea.
AustriaAustria, with its well-developed market economy and highstandard of living, is closely tied to other EU economies,especially Germany's. Its economy features a large service sector, asound industrial sector, and a small, but highly developedagricultural sector. Following several years of solid foreign demandfor Austrian exports and record employment growth, the internationalfinancial crisis and global economic downturn in 2008 led to arecession that persisted until the third quarter of 2009. AustrianGDP contracted 3.8% in 2009 but saw positive growth of about 2% in2010. Unemployment has not risen as steeply in Austria as elsewherein Europe, partly because its government has subsidized reducedworking hour schemes to allow companies to retain employees. Suchstabilization measures, stimulus initiatives, and the government'sincome tax reforms pushed the budget deficit to 3.5% of GDP in 2009and about 5% in 2010, from only about 1.3% in 2008. Theinternational financial crisis caused difficulties for some ofAustria's largest banks whose extensive operations in central,eastern, and southeastern Europe faced large losses. The governmentprovided bank support - including in some instances, nationalization- to prevent insolvency and possible regional contagion. In themedium-term all large Austrian banks will need additional capital.Even after the global economic outlook improves, Austria will needto continue restructuring, emphasizing knowledge-based sectors ofthe economy, and encouraging greater labor flexibility and greaterlabor participation to offset growing unemployment and Austria'saging population and exceedingly low fertility rate.
AzerbaijanAzerbaijan's high economic growth during 2006-08 wasattributable to large and growing oil exports, but some non-exportsectors also featured double-digit growth, spurred by growth in theconstruction, banking, and real estate sectors. In 2009, economicgrowth remained above 9% even as oil prices moderated and growth inthe construction sector cooled. In 2010, economic growth slowed toapproximately 3.7%, although the impact of the global financialcrisis was less severe than in many other countries in the region.The current global economic slowdown presents some challenges forthe Azerbaijani economy as oil prices remain below their mid-2008highs, highlighting Azerbaijan's reliance on energy exports andlackluster attempts to diversify its economy. Azerbaijan's oilproduction increased dramatically in 1997, when Azerbaijan signedthe first production-sharing arrangement (PSA) with the AzerbaijanInternational Operating Company. Oil exports through theBaku-Tbilisi-Ceyhan Pipeline remain the main economic driver whileefforts to boost Azerbaijan's gas production are underway. However,Azerbaijan has made only limited progress on institutingmarket-based economic reforms. Pervasive public and private sectorcorruption and structural economic inefficiencies remain a drag onlong-term growth, particularly in non-energy sectors. Several otherobstacles impede Azerbaijan's economic progress: the need forstepped up foreign investment in the non-energy sector and thecontinuing conflict with Armenia over the Nagorno-Karabakh region.Trade with Russia and the other former Soviet republics is decliningin importance, while trade is building with Turkey and the nationsof Europe. Long-term prospects will depend on world oil prices, thelocation of new oil and gas pipelines in the region, andAzerbaijan's ability to manage its energy wealth to promotesustainable growth in non-energy sectors of the economy and spuremployment.
Bahamas, TheThe Bahamas is one of the wealthiest Caribbeancountries with an economy heavily dependent on tourism and offshorebanking. Tourism together with tourism-driven construction andmanufacturing accounts for approximately 60% of GDP and directly orindirectly employs half of the archipelago's labor force. Prior to2006, a steady growth in tourism receipts and a boom in constructionof new hotels, resorts, and residences led to solid GDP growth butsince then tourism receipts have begun to drop off. The globalrecession in 2009 took a sizeable toll on the Bahamas, resulting ina contraction in GDP and a widening budget deficit. The declinecontinued in 2010 as tourism from the US and sector investmentlagged. Financial services constitute the second-most importantsector of the Bahamian economy and, when combined with businessservices, account for about 36% of GDP. However, the financialsector currently is smaller than it has been in the past because ofthe enactment of new and more strict financial regulations in 2000that caused many international businesses to relocate elsewhere.Manufacturing and agriculture combined contribute approximately atenth of GDP and show little growth, despite government incentivesaimed at those sectors. Overall growth prospects in the short runrest heavily on the fortunes of the tourism sector.
BahrainBahrain is one of the most diversified economies in thePersian Gulf. Highly developed communication and transportfacilities make Bahrain home to numerous multinational firms withbusiness in the Gulf. As part of its diversification plans, Bahrainimplemented a Free Trade Agreement (FTA) with the US in August 2006,the first FTA between the US and a Gulf state. Bahrain's economy,however, continues to depend heavily on oil. Petroleum productionand refining account for more than 60% of Bahrain's export receipts,70% of government revenues, and 11% of GDP (exclusive of alliedindustries). Other major economic activities are production ofaluminum - Bahrain's second biggest export after oil - finance, andconstruction. Bahrain competes with Malaysia as a worldwide centerfor Islamic banking and continues to seek new natural gas suppliesas feedstock to support its expanding petrochemical and aluminumindustries. Unemployment, especially among the young, is a long-termeconomic problem Bahrain struggles to address. In 2009, to helplower unemployment among Bahraini nationals, Bahrain reducedsponsorship for expatriate workers, increasing the costs ofemploying foreign labor. The global financial crisis caused fundingfor many non-oil projects to dry up and resulted in slower economicgrowth for Bahrain. Other challenges facing Bahrain include the slowgrowth of government debt as a result of a large subsidy program,the financing of large government projects, and debt restructuring,such as the bailout of state-owned Gulf Air.
BangladeshThe economy has grown 5-6% per year since 1996 despitepolitical instability, poor infrastructure, corruption, insufficientpower supplies, and slow implementation of economic reforms.Bangladesh remains a poor, overpopulated, and inefficiently-governednation. Although more than half of GDP is generated through theservice sector, 45% of Bangladeshis are employed in the agriculturesector, with rice as the single-most-important product. Bangladesh'sgrowth was resilient during the 2008-09 global financial crisis andrecession. Garment exports, totaling $12.3 billion in FY09 andremittances from overseas Bangladeshis totaling $9.7 billion in FY09accounted for almost 25% of GDP.
BarbadosHistorically, the Barbadian economy was dependent onsugarcane cultivation and related activities. However, in recentyears the economy has diversified into light industry and tourismwith about three-quarters of GDP and 80% of exports being attributedto services. Growth has rebounded since 2003, bolstered by increasesin construction projects and tourism revenues, reflecting itssuccess in the higher-end segment, but the sector faced decliningrevenues in 2009 with the global economic downturn. The countryenjoys one of the highest per capita incomes in the region. Offshorefinance and information services are important foreign exchangeearners and thrive from having the same time zone as eastern USfinancial centers and a relatively highly educated workforce. Thegovernment continues its efforts to reduce unemployment, toencourage direct foreign investment, and to privatize remainingstate-owned enterprises. The public debt-to-GDP ratio rose to over100% in 2009, largely because a sharp slowdown in tourism andfinancial services led to a wide budget deficit.
BelarusBelarus has seen limited structural reform since 1995, whenPresident LUKASHENKO launched the country on the path of "marketsocialism." In keeping with this policy, LUKASHENKO reimposedadministrative controls over prices and currency exchange rates andexpanded the state's right to intervene in the management of privateenterprises. Since 2005, the government has re-nationalized a numberof private companies. In addition, businesses have been subjected topressure by central and local governments, including arbitrarychanges in regulations, numerous rigorous inspections, retroactiveapplication of new business regulations, and arrests of "disruptive"businessmen and factory owners. Continued state control overeconomic operations hampers market entry for businesses, bothdomestic and foreign. Government statistics indicate GDP growth wasstrong, surpassing 10% in 2008, despite the roadblocks of a tough,centrally directed economy with a high rate of inflation and a lowrate of unemployment. However, the global crisis pushed the countryinto recession in 2009, and GDP grew only 0.2% for the year.Slumping foreign demand hit the industrial sector hard. Minsk hasdepended on a standby-agreement with the IMF to assist with balanceof payments shortfalls. In line with IMF conditions, in 2009,Belarus devalued the ruble more than 40% and tightened some fiscaland monetary policies. On 1 January 2010, Russia, Kazakhstan andBelarus launched a customs union, with unified trade regulations andcustoms codes still under negotiation. In late January, Russia andBelarus amended their 2007 oil supply agreement. The new termsraised prices for above quota purchases, increasing Belarus' currentaccount deficit. GDP grew 4.8% in 2010, in part, on the strength ofrenewed export growth. In December 2010, Belarus, Russia andKazakhstan signed an agreement to form a Common Economic Space andRussia removed all Belarusian oil duties.
BelgiumThis modern, private-enterprise economy has capitalized onits central geographic location, highly developed transport network,and diversified industrial and commercial base. Industry isconcentrated mainly in the populous Flemish area in the north. Withfew natural resources, Belgium imports substantial quantities of rawmaterials and exports a large volume of manufactures, making itseconomy vulnerable to volatility in world markets. Roughlythree-quarters of Belgium's trade is with other EU countries. In2009 Belgian GDP contracted by 2.7%, the unemployment rate roseslightly, and the budget deficit worsened because of large-scalebail-outs in the financial sector. Belgium's budget deficit widenedto 4.8% of GDP in 2010, while public debt was just over 100% of GDP.Belgian banks have been severely affected by the internationalfinancial crisis with three major banks receiving capital injectionsfrom the government. An ageing population and rising socialexpenditures are also increasing pressure on public finances, makingit likely the government will need to implement unpopular austeritymeasures to assuage investor concerns about Belgium's ability torestore fiscal balance.
BelizeIn this small, essentially private-enterprise economy,tourism is the number one foreign exchange earner followed byexports of marine products, citrus, cane sugar, bananas, andgarments. The government's expansionary monetary and fiscalpolicies, initiated in September 1998, led to sturdy GDP growthaveraging nearly 4% in 1999-2007, though growth slipped to 3.8% in2008, 0% in 2009, and 1.5% in 2010 as a result of the globalslowdown, natural disasters, and the drop in the price of oil. Oildiscoveries in 2006 bolstered economic growth. Exploration effortscontinue and production increased a small amount in 2009. Majorconcerns continue to be the sizable trade deficit and heavy foreigndebt burden. In February 2007, the government restructured nearlyall of its public external commercial debt, which helped reduceinterest payments and relieved some of the country's liquidityconcerns. A key objective remains the reduction of poverty andinequality with the help of international donors.
BeninThe economy of Benin remains underdeveloped and dependent onsubsistence agriculture, cotton production, and regional trade.Growth in real output had averaged about 4% before the globalrecession, but fell to 2.5% in 2009 and 3% in 2010. Inflation hassubsided over the past several years. In order to raise growth,Benin plans to attract more foreign investment, place more emphasison tourism, facilitate the development of new food processingsystems and agricultural products, and encourage new information andcommunication technology. Specific projects to improve the businessclimate by reforms to the land tenure system, the commercial justicesystem, and the financial sector were included in Benin's $307million Millennium Challenge Account grant signed in February 2006.The 2001 privatization policy continues in telecommunications,water, electricity, and agriculture. As result of these reforms,Benin has become the most competitive country in the West AfricanEconomic and Monetary Union, according to the World Economic Forum.The Paris Club and bilateral creditors have eased the external debtsituation, with Benin benefiting from a G-8 debt reduction announcedin July 2005, while pressing for more rapid structural reforms. Aninsufficient electrical supply continues to adversely affect Benin'seconomic growth though the government recently has taken steps toincrease domestic power production.
BermudaBermuda enjoys the third highest per capita income in theworld, more than 50% higher than that of the US; the average cost ofa house by the mid-2000s exceeded $1,000,000. Its economy isprimarily based on providing financial services for internationalbusiness and luxury facilities for tourists. A number of reinsurancecompanies relocated to the island following the 11 September 2001attacks and again after Hurricane Katrina in August 2005contributing to the expansion of an already robust internationalbusiness sector. Bermuda's tourism industry - which derives over 80%of its visitors from the US - continues to struggle but remains theisland's number two industry. Most capital equipment and food mustbe imported. Bermuda's industrial sector is largely focused onconstruction and agriculture is limited, with only 20% of the landbeing arable.
BhutanThe economy, one of the world's smallest and least developed,is based on agriculture and forestry, which provide the mainlivelihood for more than 60% of the population. Agriculture consistslargely of subsistence farming and animal husbandry. Ruggedmountains dominate the terrain and make the building of roads andother infrastructure difficult and expensive. The economy is closelyaligned with India's through strong trade and monetary links anddependence on India's financial assistance. The industrial sector istechnologically backward, with most production of the cottageindustry type. Most development projects, such as road construction,rely on Indian migrant labor. Model education, social, andenvironment programs are underway with support from multilateraldevelopment organizations. Each economic program takes into accountthe government's desire to protect the country's environment andcultural traditions. For example, the government, in its cautiousexpansion of the tourist sector, encourages visits by upscale,environmentally conscientious tourists. Complicated controls anduncertain policies in areas such as industrial licensing, trade,labor, and finance continue to hamper foreign investment. Hydropowerexports to India have boosted Bhutan's overall growth. Newhydropower projects will be the driving force behind Bhutan'sability to create employment and sustain growth in the coming years.
BoliviaBolivia is one of the poorest and least developed countriesin Latin America. Following a disastrous economic crisis during theearly 1980s, reforms spurred private investment, stimulated economicgrowth, and cut poverty rates in the 1990s. The period 2003-05 wascharacterized by political instability, racial tensions, and violentprotests against plans - subsequently abandoned - to exportBolivia's newly discovered natural gas reserves to large northernhemisphere markets. In 2005, the government passed a controversialhydrocarbons law that imposed significantly higher royalties andrequired foreign firms then operating under risk-sharing contractsto surrender all production to the state energy company in exchangefor a predetermined service fee. After higher prices for mining andhydrocarbons exports produced a fiscal surplus in 2008, the globalrecession in 2009 slowed growth. A decline in commodity prices thatbegan in late 2008, a lack of foreign investment in the mining andhydrocarbon sectors, a poor infrastructure, and the suspension oftrade benefits with the United States will pose challenges for theBolivian economy.
Bosnia and HerzegovinaThe interethnic warfare in Bosnia andHerzegovina caused production to plummet by 80% from 1992 to 1995and unemployment to soar. With an uneasy peace in place, outputrecovered in 1996-99 at high percentage rates from a low base; butoutput growth slowed in 2000-02. Part of the lag in output was madeup in 2003-08 when GDP growth exceeded 5% per year. However, thecountry experienced negative GDP growth of almost 3% in 2009 due inlarge part to a reduction in exports caused by the global economiccrisis. One of Bosnia's main economic challenges in 2010 has been toreduce spending on public sector wages and social benefits to meetthe IMF's criteria for obtaining funding for budget shortfalls.Banking reform accelerated in 2001 as all the Communist-era paymentsbureaus were shut down; foreign banks, primarily from Austria andItaly, now control most of the banking sector. The konvertibilnamarka (convertible mark or BAM)- the national currency introduced in1998 - is pegged to the euro, and confidence in the currency and thebanking sector has increased. Bosnia's private sector is growing andforeign investment is slowly increasing, but government spending, atroughly 50% of GDP, remains high because of redundant governmentoffices at the state, entity and municipal level. Privatization ofstate enterprises, however, has been slow, particularly in theFederation where political division between ethnically-basedpolitical parties makes agreement on economic policy more difficult.A sizeable current account deficit and high unemployment rate remainthe two most serious macroeconomic problems. Successfulimplementation of a value-added tax in 2006 provided a predictablesource of revenue for the government and helped rein in gray marketactivity. National-level statistics have also improved over time buta large share of economic activity remains unofficial andunrecorded. Bosnia and Herzegovina became a full member of theCentral European Free Trade Agreement in September 2007.
BotswanaBotswana has maintained one of the world's highest economicgrowth rates since independence in 1966, though growth fell below 5%in 2007-08, and turned sharply negative in 2009, with industryfalling nearly 30%. Through fiscal discipline and sound management,Botswana transformed itself from one of the poorest countries in theworld to a middle-income country with a per capita GDP of $13,100 in2010. Two major investment services rank Botswana as the best creditrisk in Africa. Diamond mining has fueled much of the expansion andcurrently accounts for more than one-third of GDP, 70-80% of exportearnings, and about half of the government's revenues. Botswana'sheavy reliance on a single luxury export was a critical factor inthe sharp economic contraction of 2009. Tourism, financial services,subsistence farming, and cattle raising are other key sectors.Although unemployment was 7.5% in 2007 according to officialreports, unofficial estimates place it closer to 40%. The prevalenceof HIV/AIDS is second highest in the world and threatens Botswana'simpressive economic gains. An expected leveling off in diamondmining production within the next two decades overshadows long-termprospects.
Bouvet Islandno economic activity; declared a nature reserve
BrazilCharacterized by large and well-developed agricultural,mining, manufacturing, and service sectors, Brazil's economyoutweighs that of all other South American countries, and Brazil isexpanding its presence in world markets. Since 2003, Brazil hassteadily improved its macroeconomic stability, building up foreignreserves, and reducing its debt profile by shifting its debt burdentoward real denominated and domestically held instruments. In 2008,Brazil became a net external creditor and two ratings agenciesawarded investment grade status to its debt. After record growth in2007 and 2008, the onset of the global financial crisis hit Brazilin September 2008. Brazil experienced two quarters of recession, asglobal demand for Brazil's commodity-based exports dwindled andexternal credit dried up. However, Brazil was one of the firstemerging markets to begin a recovery. Consumer and investorconfidence revived and GDP growth returned to positive in 2010,boosted by an export recovery. Brazil's strong growth and highinterest rates make it an attractive destination for foreigninvestors. Large capital inflows over the past year have contributedto the rapid appreciation of its currency and led the government toraise taxes on some foreign investments. President Dilma ROUSSEFFhas pledged to retain the previous administration's commitment toinflation targeting by the Central Bank, a floating exchange rate,and fiscal restraint.
British Indian Ocean Territory All economic activity is concentrated on the largest island of Diego Garcia, where a joint UK-US military facility is located. Construction projects and various services needed to support the military installation are performed by military and contract employees from the UK, Mauritius, the Philippines, and the US. There are no industrial or agricultural activities on the islands. The territory earns foreign exchange by selling fishing licenses and postage stamps.
British Virgin IslandsThe economy, one of the most stable andprosperous in the Caribbean, is highly dependent on tourismgenerating an estimated 45% of the national income. More than934,000 tourists, mainly from the US, visited the islands in 2008.In the mid-1980s, the government began offering offshoreregistration to companies wishing to incorporate in the islands, andincorporation fees now generate substantial revenues. Roughly400,000 companies were on the offshore registry by yearend 2000. Theadoption of a comprehensive insurance law in late 1994, whichprovides a blanket of confidentiality with regulated statutorygateways for investigation of criminal offenses, made the BritishVirgin Islands even more attractive to international business.Livestock raising is the most important agricultural activity; poorsoils limit the islands' ability to meet domestic food requirements.Because of traditionally close links with the US Virgin Islands, theBritish Virgin Islands has used the US dollar as its currency since1959.
BruneiBrunei has a small well-to-do economy that encompasses amixture of foreign and domestic entrepreneurship, governmentregulation, welfare measures, and village tradition. Crude oil andnatural gas production account for just over half of GDP and morethan 90% of exports. Per capita GDP is among the highest in Asia,and substantial income from overseas investment supplements incomefrom domestic production. The government provides for all medicalservices and free education through the university level andsubsidizes rice and housing. A new monetary authority wasestablished in January 2011 with responsibilities that includemonetary policy, monitoring of financial institutions, and currencytrading activities. Other plans for the future include upgrading thelabor force, reducing unemployment, strengthening the banking andtourist sectors, increasing agricultural production, and, ingeneral, further widening the economic base beyond oil and gas.
BulgariaBulgaria, a former Communist country that entered the EU on1 January 2007, averaged more than 6% growth from 2004 to 2008,driven by significant amounts of foreign direct investment andconsumption. Successive governments have demonstrated a commitmentto economic reforms and responsible fiscal planning, but the globaldownturn sharply reduced domestic demand, exports, capital inflows,and industrial production. GDP contracted by approximately 5% in2009, and stagnated in 2010, despite a significant recovery inexports. The economy is expected to grow modestly in 2011, however.Corruption in the public administration, a weak judiciary, and thepresence of organized crime remain significant challenges.
Burkina FasoBurkina Faso is a poor, landlocked country that reliesheavily on cotton and gold exports for revenue. The country has fewnatural resources and a weak industrial base. About 90% of thepopulation is engaged in subsistence agriculture, which isvulnerable to periodic drought. Cotton is the main cash crop. Since1998, Burkina Faso has embarked upon a gradual privatization ofstate-owned enterprises and in 2004 revised its investment code toattract foreign investment. As a result of this new code and otherlegislation favoring the mining sector, the country has seen anupswing in gold exploration and production. By 2010, gold had becomethe main source of export revenue.
Burma Burma, a resource-rich country, suffers from pervasive government controls, inefficient economic policies, corruption, and rural poverty. Despite Burma's emergence as a natural gas exporter, socio-economic conditions have deteriorated under the regime's mismanagement, leaving most of the public in poverty, while military leaders and their business cronies exploit the country's ample natural resources. The economy suffers from serious macroeconomic imbalances - including rising inflation, fiscal deficits, multiple official exchange rates that overvalue the Burmese kyat, a distorted interest rate regime, unreliable statistics, and an inability to reconcile national accounts to determine a realistic GDP figure. Burma's poor investment climate hampers the inflow of foreign investment; in recent years, foreign investors have shied away from nearly every sector except for natural gas, power generation, timber, and mining. The business climate is widely perceived as opaque, corrupt, and highly inefficient. Over 60% of the FY 2009-10 budget is allocated to state owned enterprises - most operating at a deficit. The government has recently privatized a number of state owned enterprises, but most of the benefits have accrued to regime insiders and cronies. The most productive sectors will continue to be in extractive industries - especially oil and gas, mining, and timber - with the latter two causing significant environmental degradation. Other areas, such as manufacturing, tourism and services, struggle in the face of inadequate infrastructure, unpredictable trade policies, neglected health and education systems, and endemic corruption. A major banking crisis in 2003 caused 20 private banks to close; private banks still operate under tight restrictions, limiting the private sector's access to credit. The United States, the European Union, Canada, and Australia have imposed financial and economic sanctions on Burma, prohibiting most financial transactions with Burmese entities, imposing travel bans on Burmese officials and others connected to the ruling regime, and banning imports of certain Burmese products. These sanctions affected the country's fledgling garment industry, isolated the struggling banking sector, and raised the costs of doing business with Burmese companies, particularly firms tied to Burmese regime leaders. The global crisis of 2008-09 caused exports and domestic consumer demand to drop. Remittances from overseas Burmese workers - who had provided significant financial support for their families - slowed or dried up as jobs were lost and migrant workers returned home. Though the Burmese government has good economic relations with its neighbors, better investment and business climates and an improved political situation are needed to promote serious foreign investment, exports, and tourism.
BurundiBurundi is a landlocked, resource-poor country with anunderdeveloped manufacturing sector. The economy is predominantlyagricultural which accounts for about 35% of GDP and employs morethan 90% of the population. Burundi's primary exports are coffee andtea, which account for 90% of foreign exchange earnings, thoughexports are a relatively small share of GDP. Burundi's exportearning - and its ability to pay for imports - rests primarily onweather conditions and international coffee and tea prices. TheTutsi minority, 14% of the population, dominates the coffee trade.An ethnic-based war that lasted for over a decade resulted in morethan 200,000 deaths, forced more than 48,000 refugees into Tanzania,and displaced 140,000 others internally. Only one in two children goto school, and approximately one in 15 adults has HIV/AIDS. Food,medicine, and electricity remain in short supply. Burundi's GDP grewaround 4% annually in 2006-09. Political stability and the end ofthe civil war have improved aid flows and economic activity hasincreased, but underlying weaknesses - a high poverty rate, pooreducation rates, a weak legal system, and low administrativecapacity - risk undermining planned economic reforms. Burundi willcontinue to remain heavily dependent on aid from bilateral andmultilateral donors; the delay of funds after a corruption scandalcut off bilateral aid in 2007 reduced government's revenues and itsability to pay salaries. Burundi joined the East African Community,which should boost Burundi's regional trade ties, and received $700million in debt relief in 2009. Instability spilling over fromeastern Congo-Kinshasa and the ban on minerals smuggled acrossBurundi's border will be the main challenges to economic growth.
CambodiaFrom 2004 to 2007, the economy grew about 10% per year,driven largely by an expansion in the garment sector, construction,agriculture, and tourism. GDP contracted 1.5% in 2009 as a result ofthe global economic slowdown, but climbed more than 4% in 1010,driven by renewed exports. With the January 2005 expiration of a WTOAgreement on Textiles and Clothing, Cambodian textile producers wereforced to compete directly with lower-priced countries such asChina, India, Vietnam, and Bangladesh. The garment industrycurrently employs more than 280,000 people - about 5% of the workforce - and contributes more than 70% of Cambodia's exports. In2005, exploitable oil deposits were found beneath Cambodia'sterritorial waters, representing a new revenue stream for thegovernment if commercial extraction begins. Mining also isattracting significant investor interest, particularly in thenorthern parts of the country. The government has said opportunitiesexist for mining bauxite, gold, iron and gems. In 2006, aUS-Cambodia bilateral Trade and Investment Framework Agreement(TIFA) was signed, and several rounds of discussions have been heldsince 2007. Rubber exports increased about 25% in 2009 due to risingglobal demand. The tourism industry has continued to grow rapidly,with foreign arrivals exceeding 2 million per year in 2007-08,however, economic troubles abroad dampened growth in 2009. Theglobal financial crisis is weakening demand for Cambodian exports,and construction is declining due to a shortage of credit. Thelong-term development of the economy remains a daunting challenge.The Cambodian government is working with bilateral and multilateraldonors, including the World Bank and IMF, to address the country'smany pressing needs. The major economic challenge for Cambodia overthe next decade will be fashioning an economic environment in whichthe private sector can create enough jobs to handle Cambodia'sdemographic imbalance. More than 50% of the population is less than25 years old. The population lacks education and productive skills,particularly in the poverty-ridden countryside, which suffers froman almost total lack of basic infrastructure.
CameroonBecause of its modest oil resources and favorableagricultural conditions, Cameroon has one of the best-endowedprimary commodity economies in sub-Saharan Africa. Still, it facesmany of the serious problems facing other underdeveloped countries,such as stagnate per capita income, a relatively inequitabledistribution of income, a top-heavy civil service, and a generallyunfavorable climate for business enterprise. Since 1990, thegovernment has embarked on various IMF and World Bank programsdesigned to spur business investment, increase efficiency inagriculture, improve trade, and recapitalize the nation's banks. TheIMF is pressing for more reforms, including increased budgettransparency, privatization, and poverty reduction programs. Weakprices for oil and cocoa led to the significant slowdown in growthin 2009. The government is under pressure to reduce its budgetdeficit, which by the government's own forecast will hit 2.8% ofGDP, but the presidential election in 2011 may make fiscal austeritydifficult.
CanadaAs an affluent, high-tech industrial society in thetrillion-dollar class, Canada resembles the US in itsmarket-oriented economic system, pattern of production, and affluentliving standards. Since World War II, the impressive growth of themanufacturing, mining, and service sectors has transformed thenation from a largely rural economy into one primarily industrialand urban. The 1989 US-Canada Free Trade Agreement (FTA) and the1994 North American Free Trade Agreement (NAFTA) (which includesMexico) touched off a dramatic increase in trade and economicintegration with the US, its principal trading partner. Canadaenjoys a substantial trade surplus with the US, which absorbs aboutthree-fourths of Canadian exports each year. Canada is the US'slargest foreign supplier of energy, including oil, gas, uranium, andelectric power. Given its great natural resources, skilled laborforce, and modern capital plant, Canada enjoyed solid economicgrowth from 1993 through 2007. Buffeted by the global economiccrisis, the economy dropped into a sharp recession in the finalmonths of 2008, and Ottawa posted its first fiscal deficit in 2009after 12 years of surplus. Canada's major banks, however, emergedfrom the financial crisis of 2008-09 among the strongest in theworld, owing to the country's tradition of conservative lendingpractices and strong capitalization. During 2010, Canada's economygrew only 3%, because of weak exports.
Cape VerdeThis island economy suffers from a poor natural resourcebase, including serious water shortages exacerbated by cycles oflong-term drought and poor soil for agriculture on several of theislands. The economy is service oriented with commerce, transport,tourism, and public services accounting for about three-fourths ofGDP. Although nearly 70% of the population lives in rural areas, theshare of food production in GDP is low. About 82% of food must beimported. The fishing potential, mostly lobster and tuna, is notfully exploited. Cape Verde annually runs a high trade deficitfinanced by foreign aid and remittances from its large pool ofemigrants; remittances supplement GDP by more than 20%. Despite thelack of resources, sound economic management has produced steadilyimproving incomes. Continued economic reforms are aimed atdeveloping the private sector and attracting foreign investment todiversify the economy. Future prospects depend heavily on themaintenance of aid flows, the encouragement of tourism, remittances,and the momentum of the government's development program. Cape Verdebecame a member of the WTO in July 2008.
Cayman IslandsWith no direct taxation, the islands are a thrivingoffshore financial center. More than 93,000 companies wereregistered in the Cayman Islands as of 2008, including almost 300banks, 800 insurers, and 10,000 mutual funds. A stock exchange wasopened in 1997. Tourism is also a mainstay, accounting for about 70%of GDP and 75% of foreign currency earnings. The tourist industry isaimed at the luxury market and caters mainly to visitors from NorthAmerica. Total tourist arrivals exceeded 1.9 million in 2008, withabout half from the US. About 90% of the islands' food and consumergoods must be imported. The Caymanians enjoy one of the highestoutputs per capita and one of the highest standards of living in theworld.
Central African RepublicSubsistence agriculture, together withforestry, remains the backbone of the economy of the Central AfricanRepublic (CAR), with about 60% of the population living in outlyingareas. The agricultural sector generates more than half of GDP.Timber has accounted for about 16% of export earnings and thediamond industry, for 40%. Important constraints to economicdevelopment include the CAR's landlocked position, a poortransportation system, a largely unskilled work force, and a legacyof misdirected macroeconomic policies. Factional fighting betweenthe government and its opponents remains a drag on economicrevitalization. Distribution of income is extraordinarily unequal.Grants from France and the international community can onlypartially meet humanitarian needs.
ChadChad's primarily agricultural economy will continue to beboosted by major foreign direct investment projects in the oilsector that began in 2000. At least 80% of Chad's population relieson subsistence farming and livestock raising for its livelihood.Chad's economy has long been handicapped by its landlocked position,high energy costs, and a history of instability. Chad relies onforeign assistance and foreign capital for most public and privatesector investment projects. A consortium led by two US companies hasbeen investing $3.7 billion to develop oil reserves - estimated at 1billion barrels - in southern Chad. Chinese companies are alsoexpanding exploration efforts and are currently building a 300-kmpipleline and the country's first refinery. The nation's total oilreserves are estimated at 1.5 billion barrels. Oil production cameon stream in late 2003. Chad began to export oil in 2004. Cotton,cattle, and gum arabic provide the bulk of Chad's non-oil exportearnings.
Chile Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports account for more than one-fourth of GDP, with commodities making up some three-quarters of total exports. Copper alone provides one-third of government revenue. During the early 1990s, Chile's reputation as a role model for economic reform was strengthened when the democratic government of Patricio AYLWIN - which took over from the military in 1990 - deepened the economic reform initiated by the military government. Growth in real GDP averaged 8% during 1991-97, but fell to half that level in 1998 because of tight monetary policies implemented to keep the current account deficit in check and because of lower export earnings - the latter a product of the global financial crisis. A severe drought exacerbated the situation in 1999, reducing crop yields and causing hydroelectric shortfalls and electricity rationing, and Chile experienced negative economic growth for the first time in more than 15 years. In the years since then, growth has averaged 4% per year. Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, which took effect on 1 January 2004. Chile claims to have more bilateral or regional trade agreements than any other country. It has 57 such agreements (not all of them full free trade agreements), including with the European Union, Mercosur, China, India, South Korea, and Mexico. Over the past seven years, foreign direct investment inflows have quadrupled to some $15 billion in 2010, but FDI had dropped to about $7 billion in 2009 in the face of diminished investment throughout the world. The Chilean government conducts a rule-based countercyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high copper prices and economic growth, and allowing deficit spending only during periods of low copper prices and growth. As of September 2008, those sovereign wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to more than $20 billion. Chile used $4 billion from this fund to finance a fiscal stimulus package to fend off recession. In December 2009, the OECD invited Chile to become a full member, after a two year period of compliance with organization mandates. The economy started to show signs of a rebound in the fourth quarter, 2009, and GDP grew more than 5% in 2010. The magnitude 8.8 earthquake that struck Chile in February 2010 was one of the top ten strongest earthquakes on record. It caused considerable damage near the epicenter, located about 70 miles from Concepcion - and about 200 miles southwest of Santiago.
China China's economy since the late 1970s has changed from a closed, centrally planned system to a more market-oriented one that plays a major role in the global economy - in 2010 China became the world's largest exporter. Reforms began with the phasing out of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, creation of a diversified banking system, development of stock markets, rapid growth of the private sector, and opening to foreign trade and investment. China generally has implemented reforms in a gradualist fashion. In recent years, China has renewed its support for state-owned enterprises in sectors it considers important to "economic security," explicitly looking to foster globally competitive national champions. After keeping its currency tightly linked to the US dollar for years, in July 2005 China revalued its currency by 2.1% against the US dollar and moved to an exchange rate system that references a basket of currencies. From mid 2005 to late 2008 cumulative appreciation of the renminbi against the US dollar was more than 20%, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual appreciation. The restructuring of the economy and resulting efficiency gains have contributed to a more than tenfold increase in GDP since 1978. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2010 stood as the second-largest economy in the world after the US, having surpassed Japan in 2001. The dollar values of China's agricultural and industrial output each exceeded those of the US, although China was second to the US in the value of services it produced. Still, per capita income is below the world average. The Chinese government faces numerous economic development challenges, including: (a) reducing its high domestic savings rate and correspondingly low domestic demand; (b) sustaining adequate job growth for tens of millions of migrants and new entrants to the work force; (c) reducing corruption and other economic crimes; and (d) containing environmental damage and social strife related to the economy's rapid transformation. Economic development has progressed further in coastal provinces than in the interior, and approximately 200 million rural laborers and their dependents have relocated to urban areas to find work. One demographic consequence of the "one child" policy is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the north - is another long-term problem. China continues to lose arable land because of erosion and economic development. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on nuclear and alternative energy development. In 2009, the global economic downturn reduced foreign demand for Chinese exports for the first time in many years, but China rebounded quickly, outperforming all other major economies in 2010 with GDP growth around 10%. The economy appears set to remain on a strong growth trajectory in 2011, lending credibility to the stimulus policies the regime rolled out during the global financial crisis. The government vows to continue reforming the economy and emphasizes the need to increase domestic consumption in order to make the economy less dependent on exports for GDP growth in the future, but China likely will make only marginal progress toward these rebalancing goals in 2011. Two economic problems China currently faces are inflation - which, late in 2010, surpassed the government's target of 3% - and local government debt, which swelled as a result of stimulus policies, and is largely off-the-books and potentially low-quality.
Christmas IslandPhosphate mining had been the only significanteconomic activity, but in December 1987 the Australian governmentclosed the mine. In 1991, the mine was reopened. With the support ofthe government, a $34 million casino opened in 1993, but closed in1998.
Clipperton IslandAlthough 115 species of fish have been identifiedin the territorial waters of Clipperton Island, the only economicactivity is tuna fishing.
Cocos (Keeling) IslandsCoconuts, grown throughout the islands, arethe sole cash crop. Small local gardens and fishing contribute tothe food supply, but additional food and most other necessities mustbe imported from Australia. There is a small tourist industry.
ColombiaColombia experienced accelerating growth between 2002 and2007, chiefly due to improvements in domestic security, risingcommodity prices, and to President URIBE's promarket economicpolicies. Foreign direct investment reached a record $10 billion in2008, and continues to flow in, especially in the oil sector. Aseries of policies enhanced Colombia's investment climate:pro-business reforms in the oil and gas sectors and export-ledgrowth fueled mainly by the Andean Trade Promotion and DrugEradication Act. Inequality, underemployment, and narcotraffickingremain significant challenges, and Colombia's infrastructurerequires major improvements to sustain economic expansion. Becauseof the global financial crisis and weakening demand for Colombia'sexports, Colombia's economy grew only 2.7% in 2008, and 0.8% in 2009but rebounded to around 4.5% in 2010. The government has encouragedexporters to diversify their customer base beyond the United Statesand Venezuela, traditionally Colombia's largest trading partners;the SANTOS administration continues to pursue free trade agreementswith Asian and South American partners and awaits the approval of aCanadian trade accord by Canada's and EU's parliaments. The businesssector remains concerned about Venezuela's trade restrictions onColombian exports, an appreciating domestic currency, and thepending US Congressional approval of the US-Colombia Trade PromotionAgreement.
ComorosOne of the world's poorest countries, Comoros is made up ofthree islands that have inadequate transportation links, a young andrapidly increasing population, and few natural resources. The loweducational level of the labor force contributes to a subsistencelevel of economic activity, high unemployment, and a heavydependence on foreign grants and technical assistance. Agriculture,including fishing, hunting, and forestry, contributes 40% to GDP,employs 80% of the labor force, and provides most of the exports.Export income is heavily reliant on the three main crops of vanilla,cloves, and ylang-ylang and Comoros' export earnings are easilydisrupted by disasters such as fires. The country is notself-sufficient in food production; rice, the main staple, accountsfor the bulk of imports. The government - which is hampered byinternal political disputes - lacks a comprehensive strategy toattract foreign investment and is struggling to upgrade educationand technical training, privatize commercial and industrialenterprises, improve health services, diversify exports, promotetourism, and reduce the high population growth rate. Politicalproblems have inhibited growth, which has averaged only about 1% in2006-09. Remittances from 150,000 Comorans abroad help supplementGDP. In September 2009 the IMF approved Comoros for a three-year $21million loan. The IMF gave generally positive reports of thecountry's program performance as of October 2010. The AfricanDevelopment Bank approved a $34.6 million debt-relief package loanfor Comoros in September 2010, and Comoros will attempt to qualifryfor debt relief in 2012 under the IMF and World Bank's HeavilyIndebted Poor Countries (HIPC) initiative.
Congo, Democratic Republic of theThe economy of the DemocraticRepublic of the Congo - a nation endowed with vast potential wealth- is slowly recovering from decades of decline. Systemic corruptionsince independence in 1960 and conflict that began in May 1997 hasdramatically reduced national output and government revenue,increased external debt, and resulted in the deaths of more than 5million people from violence, famine, and disease. Foreignbusinesses curtailed operations due to uncertainty about the outcomeof the conflict, lack of infrastructure, and the difficult operatingenvironment. Conditions began to improve in late 2002 with thewithdrawal of a large portion of the invading foreign troops. Thetransitional government reopened relations with internationalfinancial institutions and international donors, and PresidentKABILA began implementing reforms. Progress has been slow and theInternational Monetary Fund curtailed their program for the DRC atthe end of March 2006 because of fiscal overruns. Much economicactivity still occurs in the informal sector, and is not reflectedin GDP data. Renewed activity in the mining sector, the source ofmost export income, boosted Kinshasa's fiscal position and GDPgrowth from 2006-2008, however, the government's review of miningcontracts that began in 2006, combined with a fall in world marketprices for the DRC's key mineral exports temporarily weakened outputin 2009, leading to a balance of payments crisis. The recovery inmineral prices beginning in mid 2009 boosted mineral exports, andemergency funds from the IMF boosted foreign reserves. An uncertainlegal framework, corruption, a lack of transparency in governmentpolicy are long-term problems for the mining sector and the economyas a whole. The global recession cut economic growth in 2009 to lessthan half its 2008 level, but growth returned to 3% in 2010. The DRCsigned a Poverty Reduction and Growth Facility with the IMF in 2009and received $12 billion in multilateral and bilateral debt reliefin 2010.
Congo, Republic of theThe economy is a mixture of subsistenceagriculture, an industrial sector based largely on oil and supportservices, and government spending. Oil has supplanted forestry asthe mainstay of the economy, providing a major share of governmentrevenues and exports. In the early 1980s, rapidly rising oilrevenues enabled the government to finance large-scale developmentprojects with GDP growth averaging 5% annually, one of the highestrates in Africa. Characterized by budget problems and overstaffing,the government has mortgaged a substantial portion of its oilearnings through oil-backed loans that have contributed to a growingdebt burden and chronic revenue shortfalls. Economic reform effortshave been undertaken with the support of internationalorganizations, notably the World Bank and the IMF. However, thereform program came to a halt in June 1997 when civil war erupted.Denis SASSOU-NGUESSO, who returned to power when the war ended inOctober 1997, publicly expressed interest in moving forward oneconomic reforms and privatization and in renewing cooperation withinternational financial institutions. Economic progress was badlyhurt by slumping oil prices and the resumption of armed conflict inDecember 1998, which worsened the republic's budget deficit. Thecurrent administration presides over an uneasy internal peace andfaces difficult economic challenges of stimulating recovery andreducing poverty. The drop in oil prices during the global crisisreduced oil revenue by about 30%, but the subsequent recovery of oilprices has boosted the economy's GDP and near-term prospects. InMarch 2006, the World Bank and the International Monetary Fund (IMF)approved Heavily Indebted Poor Countries (HIPC) treatment for Congo,receiving $1.9 billion in debt relief under the program in 2010.
Cook IslandsLike many other South Pacific island nations, the CookIslands' economic development is hindered by the isolation of thecountry from foreign markets, the limited size of domestic markets,lack of natural resources, periodic devastation from naturaldisasters, and inadequate infrastructure. Agriculture, employingmore than one-quarter of the working population, provides theeconomic base with major exports made up of copra and citrus fruit.Black pearls are the Cook Islands' leading export. Manufacturingactivities are limited to fruit processing, clothing, andhandicrafts. Trade deficits are offset by remittances from emigrantsand by foreign aid overwhelmingly from New Zealand. In the 1980s and1990s, the country lived beyond its means, maintaining a bloatedpublic service and accumulating a large foreign debt. Subsequentreforms, including the sale of state assets, the strengthening ofeconomic management, the encouragement of tourism, and a debtrestructuring agreement, have rekindled investment and growth.
Coral Sea Islandsno economic activity
Costa RicaPrior to the global economic crisis, Costa Rica enjoyedstable economic growth. The economy contracted 0.7% in 2009, butresumed growth at more than 3% in 2010. While the traditionalagricultural exports of bananas, coffee, sugar, and beef are stillthe backbone of commodity export trade, a variety of industrial andspecialized agricultural products have broadened export trade inrecent years. High value added goods and services, includingmicrochips, have further bolstered exports. Tourism continues tobring in foreign exchange, as Costa Rica's impressive biodiversitymakes it a key destination for ecotourism. Foreign investors remainattracted by the country's political stability and relatively higheducation levels, as well as the fiscal incentives offered in thefree-trade zones; and Costa Rica has attracted one of the highestlevels of foreign direct investment per capita in Latin America.However, many business impediments, such as high levels ofbureaucracy, difficulty of enforcing contracts, and weak investorprotection, remain. Poverty has remained around 15-20% for nearly 20years, and the strong social safety net that had been put into placeby the government has eroded due to increased financial constraintson government expenditures. Unlike the rest of Central America,Costa Rica is not highly dependent on remittances as they onlyrepresent about 2% of GDP. Immigration from Nicaragua hasincreasingly become a concern for the government. The estimated300,000-500,000 Nicaraguans in Costa Rica legally and illegally arean important source of - mostly unskilled - labor, but also placeheavy demands on the social welfare system. The US-CentralAmerican-Dominican Republic Free Trade Agreement (CAFTA-DR) enteredinto force on 1 January 2009, after significant delays within theCosta Rican legislature. CAFTA-DR will likely lead to increasedforeign direct investment in key sectors of the economy, includingthe insurance and telecommunications sectors recently opened toprivate investors. President CHINCHILLA is likely to push for fiscalreform in the coming year, seeking to boost revenue, possiblythrough revised tax legislation, to fund an increase in securityservices and education.
Cote d'IvoireCote d'Ivoire is heavily dependent on agriculture andrelated activities, which engage roughly 68% of the population. Coted'Ivoire is the world's largest producer and exporter of cocoa beansand a significant producer and exporter of coffee and palm oil.Consequently, the economy is highly sensitive to fluctuations ininternational prices for these products, and, to a lesser extent, inclimatic conditions. Cocoa, oil, and coffee are the country's topexport revenue earners, but the country is also producing gold.Since the end of the civil war in 2003, political turmoil hascontinued to damage the economy, resulting in the loss of foreigninvestment and slow economic growth. GDP grew by more than 2% in2008 and around 4% per year in 2009-10. Per capita income hasdeclined by 15% since 1999, but registered a slight improvement in2009-10. Power cuts caused by a turbine failure in early 2010 slowedeconomic activity. Cote d'Ivoire in 2010 signed agreements torestructure its Paris Club bilateral, other bilateral, and LondonClub debt. Cote d'Ivoire's long term challenges include politicalinstability and degrading infrastructure.
CroatiaOnce one of the wealthiest of the Yugoslav republics,Croatia's economy suffered badly during the 1991-95 war as outputcollapsed and the country missed the early waves of investment inCentral and Eastern Europe that followed the fall of the BerlinWall. Between 2000 and 2007, however, Croatia's economic fortunesbegan to improve slowly, with moderate but steady GDP growth between4% and 6% led by a rebound in tourism and credit-driven consumerspending. Inflation over the same period has remained tame and thecurrency, the kuna, stable. Nevertheless, difficult problems stillremain, including a stubbornly high unemployment rate, a growingtrade deficit and uneven regional development. The state retains alarge role in the economy, as privatization efforts often meet stiffpublic and political resistance. While macroeconomic stabilizationhas largely been achieved, structural reforms lag because of deepresistance on the part of the public and lack of strong support frompoliticians. The EU accession process should accelerate fiscal andstructural reform. While long term growth prospects for the economyremain strong, Croatia will face significant pressure as a result ofthe global financial crisis. Croatia's high foreign debt, anemicexport sector, strained state budget, and over-reliance on tourismrevenue will result in higher risk to economic stability over themedium term.
CubaThe government continues to balance the need for economicloosening against a desire for firm political control. Thegovernment announced it would eliminate 500,000 state jobs by March2011 and has expanded opportunities for self-employment. PresidentCASTRO said such changes were needed to update the economic model toensure the survival of socialism. It has rolled back limited reformsundertaken in the 1990s to increase enterprise efficiency andalleviate serious shortages of food, consumer goods, and services.The average Cuban's standard of living remains at a lower level thanbefore the downturn of the 1990s, which was caused by the loss ofSoviet aid and domestic inefficiencies. Since late 2000, Venezuelahas been providing oil on preferential terms, and it currentlysupplies about 100,000 barrels per day of petroleum products. Cubahas been paying for the oil, in part, with the services of Cubanpersonnel in Venezuela including some 30,000 medical professionals.
CuracaoTourism, petroleum refining, and offshore finance are themainstays of this small economy, which is closely tied to theoutside world. Although GDP grew slightly during the past decade,the island enjoys a high per capita income and a well-developedinfrastructure compared with other countries in the region. Curacaohas an excellent natural harbor that can accommodate large oiltankers. The Venezuelan state oil company leases the single refineryon the island from the government; most of the oil for the refineryis imported from Venezuela; most of the refined products areexported to the US. Almost all consumer and capital goods areimported, with the US, Brazil, Italy, and Mexico being the majorsuppliers. The government is attempting to diversify its industryand trade and has signed an Association Agreement with the EU toexpand business there. Poor soils and inadequate water supplieshamper the development of agriculture. Budgetary problems complicatereform of the health and pension systems for an aging population.
CyprusThe area of the Republic of Cyprus under government controlhas a market economy dominated by the service sector, which accountsfor nearly four-fifths of GDP. Tourism, financial services, and realestate are the most important sectors. Erratic growth rates over thepast decade reflect the economy's reliance on tourism, which oftenfluctuates with political instability in the region and economicconditions in Western Europe. Nevertheless, the economy in the areaunder government control has grown at a rate well above the EUaverage since 2000. Cyprus joined the European Exchange RateMechanism (ERM2) in May 2005 and adopted the euro as its nationalcurrency on 1 January 2008. An aggressive austerity program in thepreceding years, aimed at paving the way for the euro, helped turn asoaring fiscal deficit (6.3% in 2003) into a surplus of 1.2% in2008, and reduced inflation to 4.7%. This prosperity came underpressure in 2009, as construction and tourism slowed in the face ofreduced foreign demand triggered by the ongoing global financialcrisis. Although Cyprus lagged its EU peers in showing signs ofstress from the global crisis, the economy tipped into recession inmid 2009 and contracted 1.8% for the year. In addition, the budgetdeficit is on the rise and reached 5.7% of GDP in 2010, a violationof the EU's budget deficit criteria of no more than 3% of GDP. Inresponse to the country's deteriorating finances, Nicosia ispromising to implement measures to cut the cost of the statepayroll, curb tax evasion, and revamp social benefits. However, ithas been slow to act, lacking a consensus in parliament and amongthe social partners for its proposed measures.