MoroccoMorocco's market economy benefits from the country'srelatively low labor costs and proximity to Europe, which aid keyareas of the economy such as agriculture, light manufacturing,tourism, and remittances. Morocco is also the world's largestexporter of phosphate, which has long provided a source of exportearnings and economic stability. Economic policies pursued since2003 by King MOHAMMED VI have brought macroeconomic stability to thecountry with generally low inflation, improved financialperformance, and steady progress in developing the service andindustrial sectors. In 2006, Morocco entered a Free Trade Agreement(FTA) with the US, and in 2008 entered into an advanced status inits 2000 Association Agreement with the EU. However, poverty,illiteracy, and unemployment rates remain high. In response to thesechallenges, King MOHAMMED in 2005 launched a National Initiative forHuman Development, a $2 billion program aimed at alleviating povertyand underdevelopment by expanding electricity to rural areas andreplacing urban slums with public and subsidized housing, amongother policies. Morocco's trade and budget deficits widened in 2010,and reducing govenment spending and adapting to sluggish economicgrowth in Europe will be challenges in 2011. Morocco's long-termchallenges include improving education and job prospects for youngMoroccans, closing the disparity in wealth between the rich and thepoor, confronting corruption, and expanding and diversifying exportsbeyond phosphates and low-value-added products.
MozambiqueAt independence in 1975, Mozambique was one of theworld's poorest countries. Socialist mismanagement and a brutalcivil war from 1977-92 exacerbated the situation. In 1987, thegovernment embarked on a series of macroeconomic reforms designed tostabilize the economy. These steps, combined with donor assistanceand with political stability since the multi-party elections in1994, have led to dramatic improvements in the country's growthrate. Fiscal reforms, including the introduction of a value-addedtax and reform of the customs service, have improved thegovernment's revenue collection abilities. In spite of these gains,Mozambique remains dependent upon foreign assistance for more thanhalf of its annual budget, and the majority of the populationremains below the poverty line. Subsistence agriculture continues toemploy the vast majority of the country's work force and smallholderagricultural productivity and productivity growth is weak. Asubstantial trade imbalance persists although the opening of theMozal aluminum smelter, the country's largest foreign investmentproject to date, has increased export earnings. At the end of 2007,and after years of negotiations, the government took over Portugal'smajority share of the Cahora Bassa Hydroelectricity (HCB) company, adam that was not transferred to Mozambique at independence becauseof the ensuing civil war and unpaid debts. More power is needed foradditional investment projects in titanium extraction and processingand garment manufacturing that could further close the import/exportgap. Mozambique's once substantial foreign debt has been reducedthrough forgiveness and rescheduling under the IMF's HeavilyIndebted Poor Countries (HIPC) and Enhanced HIPC initiatives, and isnow at a manageable level. In July 2007 the Millennium ChallengeCorporation (MCC) signed a Compact with Mozambique; the Compactentered into force in September 2008 and will continue for fiveyears. Compact projects will focus on improving sanitation, roads,agriculture, and the business regulation environment in an effort tospur economic growth in the four northern provinces of the country.Mozambique grew at an average annual rate of 9% in the decade up to2007, one of Africa's strongest performances. However, heavyreliance on aluminum, which accounts for about one-third of exports,subjects the economy to volatile international prices. The sharpdecline in aluminum prices during the global economic crisis loweredGDP growth by several percentage points. Despite 8.3% GDP growth in2010, the increasing cost of living prompted citizens to riot inSeptember 2010, after bread price increases were announced. In anattempt to contain the cost of living, the government implementedsubsidies, decreased taxes and tariffs, and instituted other fiscalmeasures.
NamibiaThe economy is heavily dependent on the extraction andprocessing of minerals for export. Mining accounts for 8% of GDP,but provides more than 50% of foreign exchange earnings. Richalluvial diamond deposits make Namibia a primary source forgem-quality diamonds. Namibia is the fourth-largest exporter ofnonfuel minerals in Africa, the world's fifth-largest producer ofuranium, and the producer of large quantities of lead, zinc, tin,silver, and tungsten. The mining sector employs only about 3% of thepopulation while about 35-40% of the population depends onsubsistence agriculture for its livelihood. Namibia normally importsabout 50% of its cereal requirements; in drought years foodshortages are a major problem in rural areas. A high per capita GDP,relative to the region, hides one of the world's most unequal incomedistributions, as shown by Namibia's GINI coefficient. The Namibianeconomy is closely linked to South Africa with the Namibian dollarpegged one-to-one to the South African rand. Until 2010, Namibiadrew 40% of its budget revenues from the Southern African CustomsUnion (SACU). Increased payments from SACU put Namibia's budget intosurplus in 2007 for the first time since independence. SACUallotments to Namibia increased in 2009, but will drop for 2010 and2011 because South Africa went into recession during the globaleconomic crisis, reducing overall SACU income. Increased fishproduction and mining of zinc, copper, uranium, and silver spurredgrowth in 2003-08, but growth in recent years was undercut by poorfish catches, higher costs of producing metals, and the globalrecession.
NauruRevenues of this tiny island have traditionally come fromexports of phosphates now significantly depleted. An Australiancompany in 2005 entered into an agreement intended to exploitremaining supplies. Few other resources exist with most necessitiesbeing imported, mainly from Australia its former occupier and latermajor source of support. The rehabilitation of mined land and thereplacement of income from phosphates are serious long-termproblems. Reserves of phosphates may only last until 2010 at currentmining rates. In anticipation of the exhaustion of Nauru's phosphatedeposits, substantial amounts of phosphate income were invested intrust funds to help cushion the transition and provide for Nauru'seconomic future. As a result of heavy spending from the trust funds,the government faces virtual bankruptcy. To cut costs the governmenthas frozen wages and reduced overstaffed public service departments.Nauru lost further revenue in 2008 with the closure of Australia'srefugee processing center, making it almost totally dependent onfood imports and foreign aid. Housing, hospitals, and other capitalplant is deteriorating. The cost to Australia of keeping thegovernment and economy afloat continues to climb. Few comprehensivestatistics on the Nauru economy exist with estimates of Nauru's GDPvarying widely.
Navassa IslandSubsistence fishing and commercial trawling occurwithin refuge waters.
NepalNepal is among the poorest and least developed countries inthe world, with almost one-quarter of its population living belowthe poverty line. Agriculture is the mainstay of the economy,providing a livelihood for three-fourths of the population andaccounting for about one-third of GDP. Industrial activity mainlyinvolves the processing of agricultural products, including pulses,jute, sugarcane, tobacco, and grain. Nepal has considerable scopefor exploiting its potential in hydropower, with an estimated 42,000MW of feasible capacity, but political instability hampers foreigninvestment. Additional challenges to Nepal's growth include itslandlocked geographic location, civil strife and labor unrest, andits susceptibility to natural disaster.
NetherlandsThe Netherlands economy is noted for stable industrialrelations, moderate unemployment and inflation, a sizable currentaccount surplus, and an important role as a European transportationhub. Industrial activity is predominantly in food processing,chemicals, petroleum refining, and electrical machinery. A highlymechanized agricultural sector employs only 2% of the labor forcebut provides large surpluses for the food-processing industry andfor exports. The Netherlands, along with 11 of its EU partners,began circulating the euro currency on 1 January 2002. The countryhas been one of the leading European nations for attracting foreigndirect investment and is one of the four largest investors in theUS. After 26 years of uninterrupted economic growth, theNetherlands' economy - which is highly open and dependent on foreigntrade and financial services - was hard-hit by global economiccrisis. Dutch GDP contracted 3.9% in 2009, while exports declinednearly 25% due to a sharp contraction in world demand. The Dutchfinancial sector has also suffered, due in part to the high exposureof some Dutch banks to U.S. mortgage-backed securities. In responseto turmoil in financial markets, the government nationalized twobanks and injected billions of dollars into a third, to preventfurther systemic risk. The government also sought to boost thedomestic economy by accelerating infrastructure programs, offeringcorporate tax breaks for employers to retain workers, and expandingexport credit facilities. The stimulus programs and bank bailouts,however, resulted in a government budget deficit of nearly 4.6% ofGDP in 2009 and 5.6% in 2010 that contrasts sharply with a surplusof 0.7% of GDP in 2008. With unemployment weighing on private-sectorconsumption, the government of Prime Minister Mark RUTTE is likelyto come under increased pressure to keep the budget deficit in checkwhile promoting economic recovery.
New CaledoniaNew Caledonia has about 25% of the world's knownnickel resources. Only a small amount of the land is suitable forcultivation, and food accounts for about 20% of imports. In additionto nickel, substantial financial support from France - equal to morethan 15% of GDP - and tourism are keys to the health of the economy.Substantial new investment in the nickel industry, combined with therecovery of global nickel prices, brightens the economic outlook forthe next several years.
New ZealandOver the past 20 years the government has transformedNew Zealand from an agrarian economy dependent on concessionaryBritish market access to a more industrialized, free market economythat can compete globally. This dynamic growth has boosted realincomes - but left behind some at the bottom of the ladder - andbroadened and deepened the technological capabilities of theindustrial sector. Per capita income rose for ten consecutive yearsuntil 2007 in purchasing power parity terms, but fell in 2008-09.Debt-driven consumer spending drove robust growth in the first halfof the decade, helping fuel a large balance of payments deficit thatposed a challenge for economic managers. Inflationary pressurescaused the central bank to raise its key rate steadily from January2004 until it was among the highest in the OECD in 2007-08;international capital inflows attracted to the high rates furtherstrengthened the currency and housing market, however, aggravatingthe current account deficit. The economy fell into recession beforethe start of the global financial crisis and contracted for fiveconsecutive quarters in 2008-09. In line with global peers, thecentral bank cut interest rates aggressively and the governmentdeveloped fiscal stimulus measures. The economy posted a 1.7%decline in 2009, but pulled out of recession late in the year, andachieved 2.1% growth in 2010. Nevertheless, key trade sectors remainvulnerable to weak external demand. The government plans to raiseproductivity growth and develop infrastructure, while reining ingovernment spending.
NicaraguaNicaragua, the poorest country in Central America and thesecond poorest in the Hemisphere, has widespread underemployment andpoverty. The US-Central America Free Trade Agreement (CAFTA) hasbeen in effect since April 2006 and has expanded exportopportunities for many agricultural and manufactured goods. Textilesand apparel account for nearly 60% of Nicaragua's exports, butincreases in the minimum wage during the ORTEGA administration willlikely erode its comparative advantage in this industry. ORTEGA'spromotion of mixed business initiatives, owned by the Nicaraguan andVenezuelan state oil firms, together with the weak rule of law,could undermine the investment climate for domestic andinternational private firms in the near-term. Nicaragua relies oninternational economic assistance to meet internal- andexternal-debt financing obligations. Foreign donors have curtailedthis funding, however, in response to November 2008 electoral fraud.Managua has an IMF extended Credit Facility program, which couldhelp keep the government's fiscial deficit on target during the 2011election year and encourage transparency in the use of Venezuelanoff-budget loans and assistance. In early 2004, Nicaragua securedsome $4.5 billion in foreign debt reduction under the HeavilyIndebted Poor Countries (HIPC) initiative, however, Managua stillstruggles with a high public debt burden. Nicaragua is graduallyrecovering from the global economic crisis as increased exportsdrove positive growth in 2010. The economy is expected to grow at arate of about 3% in 2011.
NigerNiger is a landlocked, Sub-Saharan nation, whose economycenters on subsistence crops, livestock, and some of the world'slargest uranium deposits. Drought, desertification, and strongpopulation growth have undercut the economy. Niger shares a commoncurrency, the CFA franc, and a common central bank, the Central Bankof West African States (BCEAO), with seven other members of the WestAfrican Monetary Union. In December 2000, Niger qualified forenhanced debt relief under the International Monetary Fund programfor Highly Indebted Poor Countries (HIPC) and concluded an agreementwith the Fund on a Poverty Reduction and Growth Facility (PRGF).Debt relief provided under the enhanced HIPC initiativesignificantly reduces Niger's annual debt service obligations,freeing funds for expenditures on basic health care, primaryeducation, HIV/AIDS prevention, rural infrastructure, and otherprograms geared at poverty reduction. In December 2005, Nigerreceived 100% multilateral debt relief from the IMF, whichtranslates into the forgiveness of approximately US $86 million indebts to the IMF, excluding the remaining assistance under HIPC. In2010, the Niger economy was recovering from the effects of a 2009drought that reduced grain and cowpea production and decimatedlivestock herds. The economy was also hurt when the internationalcommunity cut off non-humanitarian aid in response to TANDJA's movesto extend his term as president. Nearly half of the government'sbudget is derived from foreign donor resources. Future growth may besustained by exploitation of oil, gold, coal, and other mineralresources.
NigeriaOil-rich Nigeria has been hobbled by political instability,corruption, inadequate infrastructure, and poor macroeconomicmanagement but in 2008 began pursuing economic reforms. Nigeria'sformer military rulers failed to diversify the economy away from itsoverdependence on the capital-intensive oil sector, which provides95% of foreign exchange earnings and about 80% of budgetaryrevenues. Following the signing of an IMF stand-by agreement inAugust 2000, Nigeria received a debt-restructuring deal from theParis Club and a $1 billion credit from the IMF, both contingent oneconomic reforms. Nigeria pulled out of its IMF program in April2002, after failing to meet spending and exchange rate targets,making it ineligible for additional debt forgiveness from the ParisClub. In November 2005, Abuja won Paris Club approval for adebt-relief deal that eliminated $18 billion of debt in exchange for$12 billion in payments - a total package worth $30 billion ofNigeria's total $37 billion external debt. Since 2008 the governmenthas begun to show the political will to implement themarket-oriented reforms urged by the IMF, such as modernizing thebanking system, curbing inflation by blocking excessive wagedemands, and resolving regional disputes over the distribution ofearnings from the oil industry. GDP rose strongly in 2007-10 becauseof increased oil exports and high global crude prices in 2010.President JONATHAN has pledged to continue the economic reforms ofhis predecessor with emphasis on infrastructure improvements.Infrastructure is the main impediment to growth and in August 2010JONATHAN unveiled a power sector blueprint that includesprivatization of the state-run electricity generation anddistribution facilities. The government also is working towarddeveloping stronger public-private partnerships for roads. Nigeria'sfinancial sector was hurt by the global financial and economiccrises and the Central Bank governor has taken measures tostrengthen that sector.
NiueThe economy suffers from the typical Pacific island problems ofgeographic isolation, few resources, and a small population.Government expenditures regularly exceed revenues, and the shortfallis made up by critically needed grants from New Zealand that areused to pay wages to public employees. Niue has cut governmentexpenditures by reducing the public service by almost half. Theagricultural sector consists mainly of subsistence gardening,although some cash crops are grown for export. Industry consistsprimarily of small factories to process passion fruit, lime oil,honey, and coconut cream. The sale of postage stamps to foreigncollectors is an important source of revenue. The island in recentyears has suffered a serious loss of population because ofemigration to New Zealand. Efforts to increase GDP include thepromotion of tourism and financial services, although theInternational Banking Repeal Act of 2002 resulted in the terminationof all offshore banking licenses. Economic aid from New Zealand inFY08/09 was US$5.7 million. Niue suffered a devastating typhoon inJanuary 2004, which decimated nascent economic programs. While inthe process of rebuilding, Niue has been dependent on foreign aid.
Norfolk IslandTourism, the primary economic activity, has steadilyincreased over the years and has brought a level of prosperityunusual among inhabitants of the Pacific islands. The agriculturalsector has become self sufficient in the production of beef,poultry, and eggs.
Northern Mariana IslandsThe economy benefits substantially fromfinancial assistance from the US. The rate of funding has declinedas locally generated government revenues have grown. The key touristindustry employs about 50% of the work force and accounts forroughly one-fourth of GDP. Japanese tourists predominate. Annualtourist entries have exceeded one-half million in recent years, butfinancial difficulties in Japan have caused a temporary slowdown.The agricultural sector is made up of cattle ranches and small farmsproducing coconuts, breadfruit, tomatoes, and melons. Garmentproduction is by far the most important industry with the employmentof 17,500 mostly Chinese workers and sizable shipments to the USunder duty and quota exemptions.
NorwayThe Norwegian economy is a prosperous bastion of welfarecapitalism, featuring a combination of free market activity andgovernment intervention. The government controls key areas, such asthe vital petroleum sector, through large-scale state-majority-ownedenterprises. The country is richly endowed with natural resources -petroleum, hydropower, fish, forests, and minerals - and is highlydependent on the petroleum sector, which accounts for nearly half ofexports and over 30% of state revenue. Norway is the world'ssecond-largest gas exporter; its position as an oil exporter hasslipped to ninth-largest as production has begun to decline. Norwayopted to stay out of the EU during a referendum in November 1994;nonetheless, as a member of the European Economic Area, itcontributes sizably to the EU budget. In anticipation of eventualdeclines in oil and gas production, Norway saves almost all staterevenue from the petroleum sector in the world's second largestsovereign wealth fund, valued at over $500 billion in 2010. Afterlackluster growth of less than 1.5% in 2002-03, GDP growth picked upto 2.5-6.2% in 2004-07, partly due to higher oil prices. Growth fellto 1.8% in 2008, and the economy contracted by 1.4% in 2009 as aresult of the slowing world economy and the drop in oil prices.
OmanOman is a middle-income economy that is heavily dependent ondwindling oil resources. Because of declining reserves, Muscat hasactively pursued a development plan that focuses on diversification,industrialization, and privatization, with the objective of reducingthe oil sector's contribution to GDP to 9% by 2020. Tourism andgas-based industries are key components of the government'sdiversification strategy. By using enhanced oil recovery techniques,Oman succeeded in increasing oil production, giving the country moretime to diversify, and the increase in global oil prices thoughout2010 provides the government greater financial resources to investin non-oil sectors.
Pacific OceanThe Pacific Ocean is a major contributor to the worldeconomy and particularly to those nations its waters directly touch.It provides low-cost sea transportation between East and West,extensive fishing grounds, offshore oil and gas fields, minerals,and sand and gravel for the construction industry. In 1996, over 60%of the world's fish catch came from the Pacific Ocean. Exploitationof offshore oil and gas reserves is playing an ever-increasing rolein the energy supplies of the US, Australia, NZ, China, and Peru.The high cost of recovering offshore oil and gas, combined with thewide swings in world prices for oil since 1985, has led tofluctuations in new drillings.
PakistanPakistan, an impoverished and underdeveloped country, hassuffered from decades of internal political disputes and low levelsof foreign investment. Between 2001-07, however, poverty levelsdecreased by 10%, as Islamabad steadily raised development spending.Between 2004-07, GDP growth in the 5-8% range was spurred by gainsin the industrial and service sectors - despite severe electricityshortfalls - but growth slowed in 2008-09 and unemployment rose.Inflation remains the top concern among the public, climbing from7.7% in 2007 to more than 13% in 2010. In addition, the Pakistanirupee has depreciated since 2007 as a result of political andeconomic instability. The government agreed to an InternationalMonetary Fund Standby Arrangement in November 2008 in response to abalance of payments crisis, but during 2009-10 its current accountstrengthened and foreign exchange reserves stabilized - largelybecause of lower oil prices and record remittances from workersabroad. Record floods in July-August 2010 lowered agriculturaloutput and contributed to a jump in inflation, and reconstructioncosts will strain the limited resources of the government. Textilesaccount for most of Pakistan's export earnings, but Pakistan'sfailure to expand a viable export base for other manufactures hasleft the country vulnerable to shifts in world demand. Other longterm challenges include expanding investment in education,healthcare, and electricity production, and reducing dependence onforeign donors.
PalauThe economy consists primarily of tourism, subsistenceagriculture, and fishing. The government is the major employer ofthe work force relying heavily on financial assistance from the US.The Compact of Free Association with the US, entered into after theend of the UN trusteeship on 1 October 1994, provided Palau with upto $700 million in US aid for the following 15 years in return forfurnishing military facilities. Business and tourist arrivalsnumbered 85,000 in 2007. The population enjoys a per capita incomeroughly 50% higher than that of the Philippines and much ofMicronesia. Long-run prospects for the key tourist sector have beengreatly bolstered by the expansion of air travel in the Pacific, therising prosperity of leading East Asian countries, and thewillingness of foreigners to finance infrastructure development.
PanamaPanama's dollarized economy rests primarily on awell-developed services sector that accounts for three-quarters ofGDP. Services include operating the Panama Canal, banking, the ColonFree Zone, insurance, container ports, flagship registry, andtourism. Economic growth will be bolstered by the Panama Canalexpansion project that began in 2007 and is scheduled to becompleted by 2014 at a cost of $5.3 billion - about 25% of currentGDP. The expansion project will more than double the Canal'scapacity, enabling it to accommodate ships that are now too large totransverse the transoceanic crossway, and should help to reduce theunemployment rate. The United States and China are the top users ofthe Canal. Panama also plans to construct a metro system in PanamaCity, valued at $1.2 billion and scheduled to be completed by 2014.Panama's aggressive infrastructure development projects will likelylead the economy to continued growth in 2011. Strong economicperformance has not translated into broadly shared prosperity asPanama has the second worst income distribution in Latin America.About 30% of the population lives in poverty, however, duringTORRIJOS's term poverty was reduced from 40% to 30% and unemploymentdropped from 12% to 6%. Not a CAFTA signatory, Panama in December2006 independently negotiated a free trade agreement with the US,which, when implemented, will help promote the country's economicgrowth. Seeking removal from the Organization of EconomicDevelopment's gray-list of tax havens, Panama has also recentlysigned various double taxation treaties with other nations.
Papua New GuineaPapua New Guinea is richly endowed with naturalresources, but exploitation has been hampered by rugged terrain andthe high cost of developing infrastructure. Agriculture provides asubsistence livelihood for 85% of the population. Mineral deposits,including copper, gold, and oil, account for nearly two-thirds ofexport earnings. Natural gas reserves amount to an estimated 227billion cubic meters. A consortium led by a major American oilcompany is constructing a liquefied natural gas (LNG) productionfacility that could begin exporting in 2013 or 2014. As the largestinvestment project in the country's history, it has the potential todouble GDP in the near-term and triple Papua New Guinea's exportrevenue. The government faces the challenge of ensuring transparencyand accountability for revenues flowing from this and other largeLNG projects. The government of Prime Minister SOMARE has expendedmuch of its energy remaining in power. He was the first primeminister ever to serve a full five-year term. The government hasbrought stability to the national budget, largely throughexpenditure control; however, it relaxed spending constraints in2006 and 2007 as elections approached. Numerous challenges stillface the government, including providing physical security forforeign investors, regaining investor confidence, restoringintegrity to state institutions, promoting economic efficiency byprivatizing moribund state institutions, and balancing relationswith Australia, its former colonial ruler. Other socio-culturalchallenges could upend the economy including an HIV/AIDS epidemic,with the highest infection rate in all of East Asia and the Pacific,and chronic law and order and land tenure issues. The globalfinancial crisis had little impact because of continued high demandfor Papua New Guinea's commodities exports.
Paracel IslandsThe islands have the potential for oil and gasdevelopment. Waters around the islands support commercial fishing,but the islands themselves are not populated on a permanent basis.
ParaguayLandlocked Paraguay has a market economy distinguished by alarge informal sector, featuring re-export of imported consumergoods to neighboring countries, as well as the activities ofthousands of microenterprises and urban street vendors. A largepercentage of the population, especially in rural areas, derives itsliving from agricultural activity, often on a subsistence basis.Because of the importance of the informal sector, accurate economicmeasures are difficult to obtain. On a per capita basis, real incomehas stagnated at 1980 levels. The economy grew rapidly between 2003and 2008 as growing world demand for commodities combined with highprices and favorable weather to support Paraguay's commodity-basedexport expansion. Paraguay is the sixth largest soy producer in theworld. Drought hit in 2008, reducing agricultural exports andslowing the economy even before the onset of the global recession.The economy fell 3.8% in 2009, as lower world demand and commodityprices caused exports to contract. The government reacted byintroducing fiscal and monetary stimulus packages. Growth resumed ata 6.5% level in 2010. Political uncertainty, corruption, limitedprogress on structural reform, and deficient infrastructure are themain obstacles to growth.
PeruPeru's economy reflects its varied geography - an arid coastalregion, the Andes further inland, and tropical lands borderingColombia and Brazil. Abundant mineral resources are found in themountainous areas, and Peru's coastal waters provide excellentfishing grounds. The Peruvian economy grew by more than 4% per yearduring the period 2002-06, with a stable exchange rate and lowinflation. Growth jumped to 9% per year in 2007 and 2008, driven byhigher world prices for minerals and metals and the government'saggressive trade liberalization strategies, but then fell to lessthan 1% in 2009 in the face of the world recession and lowercommodity export prices. Growth resumed in 2010 at nearly 8%, duepartly to increased exports. Peru's rapid expansion has helped toreduce the national poverty rate by about 15% since 2002, thoughunderemployment remains high; inflation has trended downward in2009, to below the Central Bank's 1-3% target. Despite Peru's strongmacroeconomic performance, overdependence on minerals and metalssubjects the economy to fluctuations in world prices, and poorinfrastructure precludes the spread of growth to Peru's non-coastalareas. Not all Peruvians therefore have shared in the benefits ofgrowth and despite President GARCIA's pursuit of sound trade andmacroeconomic policies, persistent inequality has cost him politicalsupport. Nevertheless, he remains committed to Peru's free-tradepath. Since 2006, Peru has signed trade deals with the UnitedStates, Canada, Singapore, and China, concluded negotiations withthe European Union, and begun trade talks with Korea, Japan, andothers. The US-Peru Trade Promotion Agreement (PTPA) entered intoforce 1 February 2009, opening the way to greater trade andinvestment between the two economies.
PhilippinesPhilippine GDP grew nearly 7% in 2010. The economyweathered the 2008-09 global recession better than its regionalpeers due to minimal exposure to securities issued by troubledglobal financial institutions; lower dependence on exports;relatively resilient domestic consumption, supported by largeremittances from four-to five-million overseas Filipino workers; anda growing business process outsourcing industry. Economic growth inthe Philippines has averaged 4.5% per year since 2001, when formerPresident MACAPAGAL-ARROYO took office. Despite this growth, povertyworsened during the term of MACAPAGAL-ARROYO, because of a highpopulation growth rate and inequitable distribution of income.MACAPAGAL-ARROYO averted a fiscal crisis by pushing for new revenuemeasures and, until recently, tightening expenditures to address thegovernment's yawning budget deficit and to reduce high debt and debtservice ratios. But the government abandoned its 2008balanced-budget goal in order to help the economy weather the globalfinancial and economic storm. The economy under AQUINO faces budgetshortfalls in the near term, but has had little difficulty issuingdebt both locally and internationally to finance the deficits.AQUINO's first budget emphasizes education and other social spendingprograms, relying on the private sector to finance importantinfrastructure projects. Weak tax collection in recent years limitsthe government's ability to address major challenges.
Pitcairn IslandsThe inhabitants of this tiny isolated economy existon fishing, subsistence farming, handicrafts, and postage stamps.The fertile soil of the valleys produces a wide variety of fruitsand vegetables, including citrus, sugarcane, watermelons, bananas,yams, and beans. Bartering is an important part of the economy. Themajor sources of revenue are the sale of postage stamps tocollectors and the sale of handicrafts to passing ships. In October2004, more than one-quarter of Pitcairn's small labor force wasarrested, putting the economy in a bind, since their services wererequired as lighter crew to load or unload passing ships.
PolandPoland has pursued a policy of economic liberalization since1990 and today stands out as a success story among transitioneconomies. Before 2009, GDP had grown about 5% annually, based onrising private consumption, a jump in corporate investment, and EUfunds inflows. GDP per capita is still much below the EU average,but is similar to that of the three Baltic states. Since 2004, EUmembership and access to EU structural funds have provided a majorboost to the economy. Unemployment fell rapidly to 6.4% in October2008, but climbed back to 11.8% for the year 2010, exceeding the EUaverage by more than 2%. In 2008 inflation reached 4.2%, more thanthe upper limit of the National Bank of Poland's target range, butfell to 2.4% in 2010 due to global economic slowdown. Poland'seconomic performance could improve over the longer term if thecountry addresses some of the remaining deficiencies in its road andrail infrastructure and its business environment. An inefficientcommercial court system, a rigid labor code, bureaucratic red tape,burdensome tax system, and persistent low-level corruption keep theprivate sector from performing up to its full potential. Risingdemands to fund health care, education, and the state pension systemcaused the public sector budget deficit to rise to 7.9% of GDP in2010. The PO/PSL coalition government, which came to power inNovember 2007, plans to reduce the budget deficit in 2011 and hasalso announced its intention to enact business-friendly reforms,increase workforce participation, reduce public sector spendinggrowth, lower taxes, and accelerate privatization. The government,however, has moved slowly on major reforms. The legislature passed alaw significantly limiting early retirement benefits. A health-carebill also passed through the legislature, but the legislature failedto overturn a presidential veto.
PortugalPortugal has become a diversified and increasinglyservice-based economy since joining the European Community in 1986.Over the past two decades, successive governments have privatizedmany state-controlled firms and liberalized key areas of theeconomy, including the financial and telecommunications sectors. Thecountry qualified for the European Monetary Union (EMU) in 1998 andbegan circulating the euro on 1 January 2002 along with 11 other EUmember economies. Economic growth had been above the EU average formuch of the 1990s, but fell back in 2001-08, shrank 2.6% in 2009,before growing 1% in 2010. GDP per capita stands at roughlytwo-thirds of the EU-27 average. A poor educational system and arigid labor market have been obstacles to greater productivity andgrowth. Portugal also has been increasingly overshadowed bylower-cost producers in Central Europe and Asia as a target forforeign direct investment. Portugal's competitiveness problems, lowgrowth prospects, and high levels of public debt have made itvulnerable to bond market turbulence. Lisbon is implementingausterity measures to reduce the budget deficit from 9.4% of GDP in2009 to 4.6% of GDP in 2011, but some investors have expressedconcern about Portugal's ability to achieve these targets and coverits sovereign debt. Without the option for stimulus measures, thegovernment is focusing instead on boosting exports and implementinglabor market reforms to try to raise GDP growth and tacklePortugal's competitiveness problems, which may help mitigateinvestor concerns over time.
Puerto RicoPuerto Rico has one of the most dynamic economies in theCaribbean region. A diverse industrial sector has far surpassedagriculture as the primary locus of economic activity and income.Encouraged by duty-free access to the US and by tax incentives, USfirms have invested heavily in Puerto Rico since the 1950s. USminimum wage laws apply. Sugar production has lost out to dairyproduction and other livestock products as the main source of incomein the agricultural sector. Tourism has traditionally been animportant source of income with estimated arrivals of more than 3.6million tourists in 2008.
QatarDespite the global financial crisis, Qatar has prospered inthe last several years - in 2010 Qatar had the world's highestgrowth rate. Qatari authorities throughout the crisis sought toprotect the local banking sector with direct investments intodomestic banks. GDP rebounded in 2010 largely due to the increase inoil prices. Economic policy is focused on developing Qatar'snonassociated natural gas reserves and increasing private andforeign investment in non-energy sectors, but oil and gas stillaccount for more than 50% of GDP, roughly 85% of export earnings,and 70% of government revenues. Oil and gas have made Qatar thesecond highest per-capita income country - following Liechtenstein -and likely the country with the lowest unemployment. Proved oilreserves of 15 billion barrels should enable continued output atcurrent levels for 37 years. Qatar's proved reserves of natural gasexceed 25 trillion cubic meters, about 14% of the world total andthird largest in the world. Qatar's successful 2022 world cup bidwill likely accelerate large-scale infrastructure projects such asQatar's metro system and the Qatar-Bahrain causeway.
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 GDP contracted markedly in the last quarter of 2008 as thecountry began to feel the effects of a global downturn in financialmarkets and trade, and GDP fell more than 7% in 2009, promptingBucharest to seek a $26 billion emergency assistance package fromthe IMF, the EU, and other international lenders. Drastic austeritymeasures, as part of Romania's IMF-led agreement led to a further1.9% GDP contraction in 2010. The economy is expected to return topositive growth in 2011.
RussiaRussia has undergone significant changes since the collapseof the Soviet Union, moving from a globally-isolated,centrally-planned economy to a more market-based andglobally-integrated economy. Economic reforms in the 1990sprivatized most industry, with notable exceptions in the energy anddefense-related sectors. The protection of property rights is stillweak and the private sector remains subject to heavy stateinterference. Russian industry is primarily split betweenglobally-competitive commodity producers - in 2009 Russia was theworld's largest exporter of natural gas, the second largest exporterof oil, and the third largest exporter of steel and primary aluminum- and other less competitive heavy industries that remain dependenton the Russian domestic market. This reliance on commodity exportsmakes Russia vulnerable to boom and bust cycles that follow thehighly volatile swings in global commodity prices. The governmentsince 2007 has embarked on an ambitious program to reduce thisdependency and build up the country's high technology sectors, butwith few results so far. The economy had averaged 7% growth sincethe 1998 Russian financial crisis, resulting in a doubling of realdisposable incomes and the emergence of a middle class. The Russianeconomy, however, was one of the hardest hit by the 2008-09 globaleconomic crisis as oil prices plummeted and the foreign credits thatRussian banks and firms relied on dried up. The Central Bank ofRussia spent one-third of its $600 billion international reserves,the world's third largest, in late 2008 to slow the devaluation ofthe ruble. The government also devoted $200 billion in a rescue planto increase liquidity in the banking sector and aid Russian firmsunable to roll over large foreign debts coming due. The economicdecline bottomed out in mid-2009 and the economy began to grow inthe first quarter of 2010. However, a severe drought and fires incentral Russia reduced agricultural output, prompting a ban on grainexports for part of the year, and slowed growth in other sectorssuch as manufacturing and retail trade. Russia's long-termchallenges include a shrinking workforce, a high level ofcorruption, difficulty in accessing capital for smaller, non-energycompanies, and poor infrastructure in need of large investments.
RwandaRwanda is a poor rural country with about 90% of thepopulation engaged in (mainly subsistence) agriculture and somemineral and agro-processing. In 2008, minerals overtook coffee andtea as Rwanda's primary foreign exchange earner. The 1994 genocidedecimated Rwanda's fragile economic base, severely impoverished thepopulation, particularly women, and temporarily stalled thecountry's ability to attract private and external investment.However, Rwanda has made substantial progress in stabilizing andrehabilitating its economy to pre-1994 levels. GDP has rebounded andinflation has been curbed. Nonetheless, a majority still live belowthe poverty line of 250 Rwandan francs per day (about US$0.43).Despite Rwanda's fertile ecosystem, food production often does notkeep pace with demand, requiring food imports. Rwanda continues toreceive substantial aid money and obtained IMF-World Bank HeavilyIndebted Poor Country (HIPC) initiative debt relief in 2005-06.Rwanda also received a Millennium Challenge Account Compact in 2008.Africa's most densely populated country is trying to overcome thelimitations of its small, landlocked economy by leveraging regionaltrade. Rwanda joined the East African Community and is aligning itsbudget, trade, and immigration policies with its regional partners.The government 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. The global downturn hurt export demand and tourism,but economic growth is recovering, driven in large part by theservices sector, and inflation has been contained. On the back ofthis growth, government is gradually ending its fiscal stimuluspolicy while protecting aid to the poor.
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 Helena, Ascension, and Tristan da CunhaThe economy dependslargely on financial assistance from the UK, which amounted to about$27 million in FY06/07 or more than twice the level of annualbudgetary revenues. The local population earns income from fishing,raising livestock, and sales of handicrafts. Because there are fewjobs, 25% of the work force has left to seek employment on AscensionIsland, 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. More than 200,000 tourists visited the islands in2009. Like other tourist destinations in the Caribbean, St. Kittsand Nevis is vulnerable to damage from natural disasters and shiftsin tourism demand. The current government is constrained by one ofthe world's highest public debt burdens equivalent to roughly 185%of GDP, largely attributable 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. Tourism isthe main source of foreign exchange, although tourism sectorrevenues declined with the global economic downturn as US andEuropean travel dropped in 2009. The manufacturing sector is themost diverse in the Eastern Caribbean area, and the government istrying to revitalize the banana industry, although recent hurricaneshave caused exports to contract. Saint Lucia is vulnerable to avariety of external shocks including volatile tourism receipts,natural disasters, and dependence on foreign oil. The publicdebt-to-GDP ratio is about 77% and high debt servicing obligationsconstrain the KING administration's ability to respond to adverseexternal shocks. Economic fundamentals remain solid, even thoughunemployment needs to be reduced.
Saint MartinThe economy of Saint Martin centers around tourism with85% of the labor force engaged in this sector. Over one millionvisitors come to the island each year with most arriving through thePrincess Juliana International Airport in Sint Maarten. Nosignificant agriculture and limited local fishing means that almostall food must be imported. Energy resources and manufactured goodsare also imported, primarily from Mexico and the United States.Saint Martin is reported to have the highest per capita income inthe Caribbean.
Saint Pierre and MiquelonThe inhabitants have traditionally earnedtheir livelihood by fishing and by servicing fishing fleetsoperating off the coast of Newfoundland. The economy has beendeclining, however, because of disputes with Canada over fishingquotas and a steady decline in the number of ships stopping at SaintPierre. In 1992, an arbitration panel awarded the islands anexclusive economic zone of 12,348 sq km to settle a longstandingterritorial dispute with Canada, although it represents only 25% ofwhat France had sought. France heavily subsidizes the islands to thegreat betterment of living standards. The government hopes anexpansion of tourism will boost economic prospects. Fish farming,crab fishing, and agriculture are being developed to diversify thelocal economy. Recent test drilling for oil may pave the way fordevelopment of the energy sector.
Saint Vincent and the Grenadines 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 2008, the islands had more than 200,000 tourist arrivals, mostly to the Grenadines, a drop of nearly 20% from 2007. 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 public debt burden, which was over 90% of GDP at the end of 2010. Following the global downturn, St. Vincent and the Grenadines saw an economic decline in 2009, after slowing since 2006, when GDP growth reached a 10-year high of nearly 7%. 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. Themanufacturing sector mainly processes agricultural products. Onefactory in the Foreign Trade Zone employs 3,000 people to makeautomobile electrical harnesses for an assembly plant in Australia.Tourism is an expanding sector accounting for 25% of GDP; 122,000tourists visited the islands in 2007. In late September 2009, anearthquake and the resulting tsunami severely damaged Samoa, andnearby American Samoa, disrupting transportation and powergeneration, and resulting in about 200 deaths. The Samoan Governmenthas called for deregulation of the financial sector, encouragementof investment, and continued fiscal discipline, while at the sametime protecting the environment. Observers point to the flexibilityof the labor market as a basic strength for future economicadvances. Foreign reserves are in a relatively healthy state, theexternal debt is stable, and inflation is low.
San MarinoSan Marino's economy relies heavily on its tourism andbanking industries, as well as on the manufacture and export ofceramics, clothing, fabrics, furniture, paints, spirits, tiles, andwine. The per capita level of output and standard of living arecomparable to those of the most prosperous regions of Italy, whichsupplies much of its food. San Marino boasts the world's longestlife expectancy for men with 80 years. The economy benefits fromforeign investment due to its relatively low corporate taxes and lowtaxes on interest earnings. San Marino has recently faced increasedinternational pressure to improve cooperation with foreign taxauthorities and transparency within its own banking sector, whichgenerates about one-fifth of the country's tax revenues. Italy'simplementation in October 2009 of a tax amnesty to repatriateuntaxed funds held abroad has resulted in financial outflows fromSan Marino to Italy worth more than $4.5 billion. Such outflows,combined with a money-laundering scandal at San Marino's largestfinancial institution and the recent global economic downturn, havecontributed to a deep recession and growing budget deficit. However,San Marino has no national debt, and an unemployment rate half thesize of Italy's. The San Marino government has adopted measures tocounter the downturn, including subsidized credit to businesses. SanMarino also continues to work towards harmonizing its fiscal lawswith EU members and international standards. In September 2009, theOECD removed San Marino from its list of tax havens that have yet tofully implement global tax standards.
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 and Principe has to import allfuels, most manufactured goods, consumer goods, and a substantialamount of food. Over the years, it has had difficulty servicing itsexternal debt and has relied heavily on concessional aid and debtrescheduling. Sao Tome and Principe benefited from $200 million indebt relief in December 2000 under the Highly Indebted PoorCountries (HIPC) program, which helped bring down the country's $300million debt burden. In August 2005, the government signed on to anew 3-year IMF Poverty Reduction and Growth Facility (PRGF) programworth $4.3 million. Considerable potential exists for development ofa tourist industry, and the government has taken steps to expandfacilities in recent years. The government also has attempted toreduce price controls and subsidies. Potential exists for thedevelopment of petroleum resources in Sao Tome and Principe'sterritorial waters in the oil-rich Gulf of Guinea, which are beingjointly developed in a 60-40 split with Nigeria, but any actualproduction is at least several years off. The first productionlicenses were sold in 2004, though a dispute over licensing withNigeria delayed the country's receipt of more than $20 million insigning bonuses for almost a year.
Saudi ArabiaSaudi Arabia has an oil-based economy with stronggovernment controls over major economic activities. It possessesabout 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. Saudi Arabia is encouraging thegrowth of the private sector in order to diversify its economy andto employ more Saudi nationals. Diversification efforts are focusingon power generation, telecommunications, natural gas exploration,and petrochemical sectors. Almost 6 million foreign workers play animportant role in the Saudi economy, particularly in the oil andservice sectors, while Riyadh is struggling to reduce unemploymentamong its own nationals. Saudi officials are particularly focused onemploying its large youth population, which generally lacks theeducation and technical skills the private sector needs. Riyadh hassubstantially boosted spending on job training and education, mostrecently with the opening of the King Abdallah University of Scienceand Technology - Saudi Arabia's first co-educational university. Aspart of its effort to attract foreign investment, Saudi Arabiaacceded to the WTO in December 2005 after many years ofnegotiations. The government has begun establishing six "economiccities" in different regions of the country to promote foreigninvestment and plans to spend $373 billion between 2010 and 2014 onsocial development and infrastructure projects to advance SaudiArabia's economic development.
SenegalSenegal relies heavily on donor assistance. The country'skey export industries are phosphate mining, fertilizer production,and commercial fishing. The country is also working on iron ore andoil exploration projects. In January 1994, Senegal undertook a boldand ambitious economic reform program with the support of theinternational donor community. Government price controls andsubsidies have been steadily dismantled. After seeing its economycontract by 2.1% in 1993, Senegal made an important turnaround,thanks to the reform program, with real growth in GDP averaging over5% annually during 1995-2008. Annual inflation had been pushed downto the single digits. The country was adversely affected by theglobal economic downturn in 2009 and GDP growth fell below 2%. As amember of the West African Economic and Monetary Union (WAEMU),Senegal is working toward greater regional integration with aunified 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. Under theIMF's Highly Indebted Poor Countries (HIPC) debt relief program,Senegal benefited from eradication of two-thirds of its bilateral,multilateral, and private-sector debt. In 2007, Senegal and the IMFagreed to a new, non-disbursing, Policy Support Initiative programwhich was completed in 2010. Senegal received its first disbursementfrom the $540 million Millennium Challenge Account compact it signedin September 2009 for infrastructure and agriculture development. In2010, the Senegalese people protested against frequent power cuts.The government pledged to expand capacity by 2012 and to promoterenewable energy but until Senegal has more capacity, more protestsare likely and economic activity will be hindered. During the year,bakers protested government price controls on bread. Foreigninvestment in Senegal is constrained by Senegal's businessenvironment, which has slipped in recent years, and by perceptionsof corruption.
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). Belgradehas made progress in trade liberalization and enterpriserestructuring and privatization, including telecommunications andsmall- and medium-size firms. It has made some progress towards EUmembership, signing a Stabilization and Association Agreement withBrussels in May 2008, and with full implementation of the InterimTrade Agreement with the EU in February 2010. Serbia is alsopursuing membership in the World Trade Organization. Reforms neededto ensure the country's long-term viability have largely stalledsince the onset of the global financial crisis. Serbia is grapplingwith fallout from crisis, which has led to a sharp drop in exportsto Western Europe and a decline in manufacturing output.Unemployment and limited export earnings remain ongoing politicaland economic problems. Serbia signed an augmented $4 billion StandBy Arrangement with the IMF in May 2009. IMF conditions on Serbiaconstrain the use of stimulus efforts to revive the economy, whileSerbia's concerns about inflation and exchange rate stabilitypreclude the use of expansionary monetary policy. Serbia's economygrew by 1.8% in 2010 after a 3% contraction in 2009 as a recovery inWestern Europe began.
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, large financing gaps, and theglobal recession. In July 2008 the government defaulted on a Euroamortizing note worth roughly US$80 million, leading to adowngrading of Seychelles credit rating, but in October 2010 the EUapproved a $2.9 million grant as part of a larger four-year programfor Seychelles. In response to Seychelles successful implementationof tighter monetary and fiscal policies, the IMF upgraded Seychellesto a three-year exteneded fund facility (EFF) of $31 million inDecember 2009. In 2008, GDP fell more than 1% due to decliningtourism, but the economy recovered in 2009-10 with a notableincrease in tourist numbers for 2010.
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 has yet to recover from the civilwar, and serious social disorders continue to hamper economicdevelopment. Nearly half of the working-age population engages insubsistence agriculture. Manufacturing consists mainly of theprocessing of raw materials and of light manufacturing for thedomestic market. Alluvial diamond mining remains the major source ofhard currency earnings accounting for nearly half of Sierra Leone'sexports. The fate of the economy depends upon the maintenance ofdomestic peace and the continued receipt of substantial aid fromabroad, which is essential to offset the severe trade imbalance andsupplement government revenues. The IMF has completed a PovertyReduction and Growth Facility program that helped stabilize economicgrowth and reduce inflation and in 2010 approved a new program worth$45 million over three years. Political stability has led to arevival of economic activity such as the rehabilitation of bauxiteand rutile mining, which are set to benefit from planned taxincentives. A number of offshore oil discoveries were announced in2009 and 2010. The development on these reserves, which could besignificant, is still several years away.
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 financial servicessector. Real GDP growth averaged 6.9% between 2004 and 2008. Theeconomy contracted 1.3% in 2009 as a result of the global financialcrisis, but rebounded nearly 15% in 2010, on the strength of renewedexports. Over the longer term, the government hopes to establish anew growth path that focuses on raising productivity growth, whichhas sunk to 1% per year in the last decade. Singapore has attractedmajor investments in pharmaceuticals and medical technologyproduction and will continue efforts to establish Singapore asSoutheast Asia's financial and high-tech hub.
Sint MaartenThe economy of Sint Maarten centers around tourism withnearly four-fifths of the labor force engaged in this sector. Overone million visitors come to the island each year - 1.3 million in2008 - with most arriving through the Princess Juliana InternationalAirport. Cruise ships and yachts also call on Sint Maarten'snumerous ports and harbors. No significant agriculture and limitedlocal fishing means that almost all food must be imported. Energyresources and manufactured goods are also imported. Sint Maarten hadthe highest per capita income among the five islands that formerlycomprised the Netherlands Antilles.
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 7.7% in 2008 but remains the economy's Achilles heel. FICO'scabinet was careful to keep a lid on spending in order to meet euroadoption criteria and has focused on regulating energy and foodprices instead. To maintain a stable operating environment forinvestors, the European Bank for Reconstruction and Developmentadvised the Slovak government to refrain from intervening inimportant sectors of the economy. However, Bratislava's approach tomitigating the economic slowdown has included substantial governmentintervention and the option to nationalize strategic companies.Slovakia was admitted to the euro zone in January 2009. RADICOVA'sgovernment, in power since July 2010, has allowed the budget deficitto rise slightly, to 8.2% of GDP in 2010. GDP fell nearly 5% in 2009before gaining back 4% in 2010, and unemployment rose above 12% in2010, as the global recession impacted many segments of the economy.
SloveniaSlovenia became the first 2004 European Union entrant toadopt the euro (on 1 January 2007) and has become a model ofeconomic success and stability for the region. With the highest percapita GDP in Central Europe, Slovenia has excellent infrastructure,a well-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. In 2009, the world recession caused theeconomy to contract - through falling exports and industrialproduction - by more than 8%, and unemployment to rise above 9%.Although growth resumed in 2010, the unemployment rate continued torise, topping 10%.