Chapter M: Major infectious diseases (127)

Cambodia
From 2004 to 2007, the economy grew about 10% per year,
driven largely by an expansion in the garment sector, construction,
agriculture, and tourism. Growth dropped to below 7% in 2008 as a
result of the global economic slowdown. With the January 2005
expiration of a WTO Agreement on Textiles and Clothing, Cambodian
textile producers were forced to compete directly with lower-priced
countries such as China, India, Vietnam, and Bangladesh. The garment
industry currently employs more than 320,000 people and contributes
more than 85% of Cambodia's exports. In 2005, exploitable oil
deposits were found beneath Cambodia's territorial waters,
representing a new revenue stream for the government if commercial
extraction begins. Mining also is attracting significant investor
interest, particularly in the northern parts of the country. The
government has said opportunities exist for mining bauxite, gold,
iron and gems. In 2006, a US-Cambodia bilateral Trade and Investment
Framework Agreement (TIFA) was signed, and several rounds of
discussions have been held since 2007. The tourism industry has
continued to grow rapidly, with foreign arrivals exceeding 2 million
per year in 2007-08, however, economic troubles abroad will dampen
growth in 2009. Rubber exports declined more than 15% in 2008 due to
falling world market prices. The global financial crisis is
weakening demand for Cambodian exports, and construction is
declining due to a shortage of credit. The long-term development of
the economy remains a daunting challenge. The Cambodian government
is working with bilateral and multilateral donors, including the
World Bank and IMF, to address the country's many pressing needs.
The major economic challenge for Cambodia over the next decade will
be fashioning an economic environment in which the private sector
can create enough jobs to handle Cambodia's demographic imbalance.
More than 50% of the population is less than 21 years old. The
population lacks education and productive skills, particularly in
the poverty-ridden countryside, which suffers from an almost total
lack of basic infrastructure.

Cameroon
Because of its modest oil resources and favorable
agricultural conditions, Cameroon has one of the best-endowed
primary commodity economies in sub-Saharan Africa. Still, it faces
many of the serious problems facing other underdeveloped countries,
such as stagnating per capita income, a relatively inequitable
distribution of income, a top-heavy civil service, and a generally
unfavorable climate for business enterprise. International oil and
cocoa prices have a significant impact on the economy. Since 1990,
the government has embarked on various IMF and World Bank programs
designed to spur business investment, increase efficiency in
agriculture, improve trade, and recapitalize the nation's banks. The
IMF is pressing for more reforms, including increased budget
transparency, privatization, and poverty reduction programs.

Canada
As an affluent, high-tech industrial society in the
trillion-dollar class, Canada resembles the US in its
market-oriented economic system, pattern of production, and affluent
living standards. Since World War II, the impressive growth of the
manufacturing, mining, and service sectors has transformed the
nation from a largely rural economy into one primarily industrial
and urban. The 1989 US-Canada Free Trade Agreement (FTA) and the
1994 North American Free Trade Agreement (NAFTA) (which includes
Mexico) touched off a dramatic increase in trade and economic
integration with the US, its principle trading partner. Canada
enjoys a substantial trade surplus with the US, which absorbs nearly
80% of Canadian exports each year. Canada is the US's largest
foreign supplier of energy, including oil, gas, uranium, and
electric power. Given its great natural resources, skilled labor
force, and modern capital plant, Canada has enjoyed solid economic
growth, and prudent fiscal management has produced consecutive
balanced budgets from 1997 to 2007. In 2008, growth slowed sharply
as a result of the global economic downturn, US housing slump,
plunging auto sector demand, and a drop in world commodity prices.
Public finances, too, are set to deteriorate for the first time in a
decade. Tight global credit conditions have further restrained
business and housing investment, despite the conservative lending
practices and strong capitalization that made Canada's major banks
among the most stable in the world.

Cape Verde
This island economy suffers from a poor natural resource
base, including serious water shortages exacerbated by cycles of
long-term drought. The economy is service-oriented, with commerce,
transport, tourism, and public services accounting for about
three-fourths of GDP. Although nearly 70% of the population lives in
rural areas, the share of food production in GDP is low. About 82%
of food must be imported. The fishing potential, mostly lobster and
tuna, is not fully exploited. Cape Verde annually runs a high trade
deficit, financed by foreign aid and remittances from emigrants;
remittances supplement GDP by more than 20%. Economic reforms are
aimed at developing the private sector and attracting foreign
investment to diversify the economy. Future prospects depend heavily
on the maintenance of aid flows, the encouragement of tourism,
remittances, and the momentum of the government's development
program. Cape Verde became a member of the WTO in July 2008.

Cayman Islands
With no direct taxation, the islands are a thriving
offshore financial center. More than 68,000 companies were
registered in the Cayman Islands as of 2003, including almost 500
banks, 800 insurers, and 5,000 mutual funds. A stock exchange was
opened in 1997. Tourism is also a mainstay, accounting for about 70%
of GDP and 75% of foreign currency earnings. The tourist industry is
aimed at the luxury market and caters mainly to visitors from North
America. Total tourist arrivals exceeded 2.1 million in 2003, with
about half from the US. About 90% of the islands' food and consumer
goods must be imported. The Caymanians enjoy one of the highest
outputs per capita and one of the highest standards of living in the
world.

Central African Republic
Subsistence agriculture, together with
forestry, remains the backbone of the economy of the Central African
Republic (CAR), with more than 70% of the population living in
outlying areas. The agricultural sector generates more than half of
GDP. Timber has accounted for about 16% of export earnings and the
diamond industry, for 40%. Important constraints to economic
development include the CAR's landlocked position, a poor
transportation system, a largely unskilled work force, and a legacy
of misdirected macroeconomic policies. Factional fighting between
the government and its opponents remains a drag on economic
revitalization. Distribution of income is extraordinarily unequal.
Grants from France and the international community can only
partially meet humanitarian needs.

Chad
Chad's primarily agricultural economy will continue to be
boosted by major foreign direct investment projects in the oil
sector that began in 2000. At least 80% of Chad's population relies
on 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 on
foreign assistance and foreign capital for most public and private
sector investment projects. A consortium led by two US companies has
been investing $3.7 billion to develop oil reserves - estimated at 1
billion barrels - in southern Chad. Chinese companies are also
expanding exploration efforts and plan to build a refinery. The
nation's total oil reserves are estimated at 1.5 billion barrels.
Oil production came on stream in late 2003. Chad began to export oil
in 2004. Cotton, cattle, and gum arabic provide the bulk of Chad's
non-oil export earnings.

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 40% 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 five years, foreign
direct investment inflows have quadrupled to some $17 billion in
2008. 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.

China
China's economy during the past 30 years has changed from a
centrally planned system that was largely closed to international
trade to a more market-oriented economy that has a rapidly growing
private sector and is a major player in the global economy. Reforms
started in the late 1970s with the phasing out of collectivized
agriculture, and expanded to include the gradual liberalization of
prices, fiscal decentralization, increased autonomy for state
enterprises, the foundation of a diversified banking system, the
development of stock markets, the rapid growth of the non-state
sector, and the opening to foreign trade and investment. Annual
inflows of foreign direct investment rose to nearly $84 billion in
2007. China has generally implemented reforms in a gradualist or
piecemeal fashion. In recent years, China has re-invigorated its
support for leading 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, China in July 2005
revalued its currency by 2.1% against the US dollar and moved to an
exchange rate system that references a basket of currencies.
Cumulative appreciation of the renminbi against the US dollar since
the end of the dollar peg was more than 20% by late 2008, but the
exchange rate has changed little since the onset of the global
financial crisis. 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 2008 stood as the
second-largest economy in the world after the US, although in per
capita terms the country is still lower middle-income. The Chinese
government faces numerous economic development challenges,
including: (a) strengthening its social safety net, including
pension and health system reform, to counteract a high domestic
savings rate and correspondingly low domestic demand; (b) sustaining
adequate job growth for tens of millions of migrants, new entrants
to the work force, and workers laid off from state-owned enterprises
deemed not worth saving; (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 been more rapid in coastal provinces than in the interior, and
approximately 200 million rural laborers and their dependents have
relocated to urban areas to find work - in recent years many have
returned to their villages. One demographic consequence of the "one
child" policy is that China is now one of the most rapidly aging
countries in the world. Deterioration in the environment - notably
air pollution, soil erosion, and the steady fall of the water table,
especially in the north - is another long-term problem. China
continues to lose arable land because of erosion and economic
development. In 2007 China intensified government efforts to improve
environmental conditions, tying the evaluation of local officials to
environmental targets, publishing a national climate change policy,
and establishing a high level leading group on climate change,
headed by Premier WEN Jiabao. The Chinese government seeks to add
energy production capacity from sources other than coal and oil. In
late 2008, as China commemorated the 30th anniversary of its
historic economic reforms, the global economic downturn began to
slow foreign demand for Chinese exports for the first time in many
years. The government vowed to continue reforming the economy and
emphasized the need to increase domestic consumption in order to
make China less dependent on foreign exports for GDP growth in the
future.

Christmas Island
Phosphate mining had been the only significant
economic activity, but in December 1987 the Australian government
closed the mine. In 1991, the mine was reopened. With the support of
the government, a $34 million casino opened in 1993, but closed in
1998. The Australian government in 2001 agreed to support the
creation of a commercial space-launching site on the island expected
to begin operations in the near future.

Clipperton Island
Although 115 species of fish have been identified
in the territorial waters of Clipperton Island, the only economic
activity is tuna fishing.

Cocos (Keeling) Islands
Grown throughout the islands, coconuts are
the sole cash crop. Small local gardens and fishing contribute to
the food supply, but additional food and most other necessities must
be imported from Australia. There is a small tourist industry.

Colombia
Colombia has experienced accelerating growth between 2002
and 2007, with expansion above 7% in 2007, chiefly due to
advancements in domestic security, to rising commodity prices, and
to President URIBE's promarket economic policies. Colombia's
sustained growth helped reduce poverty by 20% and cut unemployment
by 25% since 2002. Additionally, investor friendly reforms to
Colombia's hydrocarbon sector and the US-Colombia Trade Promotion
Agreement (CTPA) negotiations have attracted record levels of
foreign investment. Inequality, underemployment,and narcotrafficking
remain significant challenges, and Colombia's infrastructure
requires significant updating in order to sustain expansion.
Economic growth slipped in 2008 as a result of the global financial
crisis and weakening demand for Colombia's exports. In response,
URIBE's administration has cut capital controls, arranged for
emergency credit lines from multilateral institutions, and promoted
investment incentives such as Colombia's modernized free trade zone
mechanism, legal stability contracts, and new bilateral investment
treaties and trade agreements. The government has also encouraged
exporters to diversify their customer base away from the United
States and Venezuela, Colombia's largest trading partners.
Nevertheless, the business sector continues to be concerned about
the impact of a global recession on Colombia's exports, as well as
the approval of the CTPA, which is stalled in the US Congress.

Comoros
One of the world's poorest countries, Comoros is made up of
three islands that have inadequate transportation links, a young and
rapidly increasing population, and few natural resources. The low
educational level of the labor force contributes to a subsistence
level of economic activity, high unemployment, and a heavy
dependence on foreign grants and technical assistance. Agriculture,
including fishing, hunting, and forestry, contributes 40% to GDP,
employs 80% of the labor force, and provides most of the exports.
The country is not self-sufficient in food production; rice, the
main staple, accounts for the bulk of imports. The government -
which is hampered by internal political disputes - is struggling to
upgrade education and technical training, privatize commercial and
industrial enterprises, improve health services, diversify exports,
promote tourism, and reduce the high population growth rate. The
political problems have inhibited growth, which has averaged only
about 1% in 2006-08. Remittances from 150,000 Comorans abroad help
supplement GDP.

Congo, Democratic Republic of the
The economy of the Democratic
Republic of the Congo - a nation endowed with vast potential wealth
- is slowly recovering from two decades of decline. Conflict that
began in August 1998 has dramatically reduced national output and
government revenue, increased external debt, and resulted in the
deaths of more than 5 million people from violence, famine, and
disease. Foreign businesses curtailed operations due to uncertainty
about the outcome of the conflict, lack of infrastructure, and the
difficult operating environment. Conditions began to improve in late
2002 with the withdrawal of a large portion of the invading foreign
troops. The transitional government reopened relations with
international financial institutions and international donors, and
President KABILA began implementing reforms, although progress has
been slow and the International Monetary Fund curtailed their
program for the DRC at the end of March 2006 because of fiscal
overruns. Much economic activity still occurs in the informal
sector, and is not reflected in GDP data. Renewed activity in the
mining sector, the source of most export income, boosted Kinshasa's
fiscal position and GDP growth from 2006-2008, however, renewed
strife in the second half of 2008, combined with a fall in world
market prices for the DRC's key mineral exports inflicted major
damage on the economy and halted growth. Government reforms may lead
to increased government revenues, outside budget assistance, and
foreign direct investment, although an uncertain legal framework,
corruption, a lack of transparency in government policy are
long-term problems. The DRC government has applied to the IMF for an
Exogenous Shock Facility in the amount of $200 million to help it
deal with its deteriorating financial situation, and the World Bank
will consider a separate $100 million in emergency funding. The
global recession probably will cut economic growth in 2009 to half
its 2008 level.

Congo, Republic of the
The economy is a mixture of subsistence
agriculture, an industrial sector based largely on oil, and support
services, and a government characterized by budget problems and
overstaffing. Oil has supplanted forestry as the mainstay of the
economy, providing a major share of government revenues and exports.
In the early 1980s, rapidly rising oil revenues enabled the
government to finance large-scale development projects with GDP
growth averaging 5% annually, one of the highest rates in Africa.
The government has mortgaged a substantial portion of its oil
earnings through oil-backed loans that have contributed to a growing
debt burden and chronic revenue shortfalls. Economic reform efforts
have been undertaken with the support of international
organizations, notably the World Bank and the IMF. However, the
reform program came to a halt in June 1997 when civil war erupted.
Denis SASSOU-NGUESSO, who returned to power when the war ended in
October 1997, publicly expressed interest in moving forward on
economic reforms and privatization and in renewing cooperation with
international financial institutions. Economic progress was badly
hurt by slumping oil prices and the resumption of armed conflict in
December 1998, which worsened the republic's budget deficit. The
current administration presides over an uneasy internal peace and
faces difficult economic challenges of stimulating recovery and
reducing poverty. Recovery of oil prices has boosted the economy's
GDP and near-term prospects. In March 2006, the World Bank and the
International Monetary Fund (IMF) approved Heavily Indebted Poor
Countries (HIPC) treatment for Congo.

Cook Islands
Like many other South Pacific island nations, the Cook
Islands' economic development is hindered by the isolation of the
country from foreign markets, the limited size of domestic markets,
lack of natural resources, periodic devastation from natural
disasters, and inadequate infrastructure. Agriculture, employing
more than one-quarter of the working population, provides the
economic base with major exports made up of copra and citrus fruit.
Black pearls are the Cook Islands' leading export. Manufacturing
activities are limited to fruit processing, clothing, and
handicrafts. Trade deficits are offset by remittances from emigrants
and by foreign aid overwhelmingly from New Zealand. In the 1980s and
1990s, the country lived beyond its means, maintaining a bloated
public service and accumulating a large foreign debt. Subsequent
reforms, including the sale of state assets, the strengthening of
economic management, the encouragement of tourism, and a debt
restructuring agreement, have rekindled investment and growth.

Coral Sea Islands
no economic activity

Costa Rica
Costa Rica's basically stable economy depends on tourism,
agriculture, and electronics exports. Exports have become more
diversified in the past 10 years due to the growth of the high-tech
manufacturing sector, which is dominated by the microprocessor
industry and the production of medical devices. Tourism continues to
bring in foreign exchange, as Costa Rica's impressive biodiversity
makes it a key destination for ecotourism. Foreign investors remain
attracted by the country's political stability and relatively high
education levels, as well as the fiscal incentives offered in the
free-trade zones. Costa Rica has attracted one of the highest levels
of foreign direct investment per capita in Latin America. Poverty
has remained around 20% for nearly 20 years, and the strong social
safety net that had been put into place by the government has eroded
due to increased financial constraints on government expenditures.
Immigration from Nicaragua has increasingly become a concern for the
government. The estimated 300,000-500,000 Nicaraguans in Costa Rica
legally and illegally are an important source of - mostly unskilled
- labor, but also place heavy demands on the social welfare system.
Under the ARIAS administration, the government has made strides in
reducing internal and external debt - in 2007, Costa Rica had its
first budget surplus in 50 years. Reducing inflation remains a
difficult problem because of rising commodity import prices and
labor market rigidities, though lower oil prices will decrease
upward pressures. The Central Bank is moving towards a more flexible
exchange rate system to focus on inflation targeting by 2010. The
US-Central American Free Trade Agreement (CAFTA) entered into force
on 1 January 2009, after significant delays within the Costa Rican
legislature. Nevertheless, economic growth has slowed in 2009 as the
global downturn reduced export demand and invesment inflows.

Cote d'Ivoire
Cote d'Ivoire is the world's largest producer and
exporter of cocoa beans and a significant producer and exporter of
coffee and palm oil. Consequently, the economy is highly sensitive
to fluctuations in international prices for these products, and, to
a lesser extent, in climatic conditions. Despite government attempts
to diversify the economy, it is still heavily dependent on
agriculture and related activities, engaging roughly 68% of the
population. Since 2006, oil and gas production have become more
important engines of economic activity than cocoa. According to IMF
statistics, earnings from oil and refined products were $1.3 billion
in 2006, while cocoa-related revenues were $1 billion during the
same period. Cote d'Ivoire's offshore oil and gas production has
resulted in substantial crude oil exports and provides sufficient
natural gas to fuel electricity exports to Ghana, Togo, Benin, Mali
and Burkina Faso. Oil exploration by a number of consortiums of
private companies continues offshore, and President GBAGBO has
expressed hope that daily crude output could reach 200,000 barrels
per day (b/d) by the end of the decade. Since the end of the civil
war in 2003, political turmoil has continued to damage the economy,
resulting in the loss of foreign investment and slow economic
growth. GDP grew by nearly 2% in 2007 and 3% in 2008. Per capita
income has declined by 15% since 1999.

Croatia
Once one of the wealthiest of the Yugoslav republics,
Croatia's economy suffered badly during the 1991-95 war as output
collapsed and the country missed the early waves of investment in
Central and Eastern Europe that followed the fall of the Berlin
Wall. Between 2000 and 2007, however, Croatia's economic fortunes
began to improve slowly, with moderate but steady GDP growth between
4% and 6% led by a rebound in tourism and credit-driven consumer
spending. Inflation over the same period has remained tame and the
currency, the kuna, stable. Nevertheless, difficult problems still
remain, including a stubbornly high unemployment rate, a growing
trade deficit and uneven regional development. The state retains a
large role in the economy, as privatization efforts often meet stiff
public and political resistance. While macroeconomic stabilization
has largely been achieved, structural reforms lag because of deep
resistance on the part of the public and lack of strong support from
politicians. The EU accession process should accelerate fiscal and
structural reform. While long term growth prospects for the economy
remain strong, Croatia will face significant pressure as a result of
the global financial crisis. Croatia's high foreign debt, anemic
export sector, strained state budget, and over-reliance on tourism
revenue will result in higher risk to economic stability over the
medium term.

Cuba
The government continues to balance the need for economic
loosening against a desire for firm political control. It has rolled
back limited reforms undertaken in the 1990s to increase enterprise
efficiency and alleviate serious shortages of food, consumer goods,
and services. The average Cuban's standard of living remains at a
lower level than before the downturn of the 1990s, which was caused
by the loss of Soviet aid and domestic inefficiencies. Since late
2000, Venezuela has been providing oil on preferential terms, and it
currently supplies about 100,000 barrels per day of petroleum
products. Cuba has been paying for the oil, in part, with the
services of Cuban personnel in Venezuela including some 30,000
medical professionals.

Cyprus
The area of the Republic of Cyprus under government control
has a market economy dominated by the service sector, which accounts
for 78% of GDP. Tourism, financial services, and real estate are the
most important sectors. Erratic growth rates over the past decade
reflect the economy's reliance on tourism, which often fluctuates
with political instability in the region and economic conditions in
Western Europe. Nevertheless, the economy in the area under
government control has grown at a rate well above the EU average
since 2000. Cyprus joined the European Exchange Rate Mechanism
(ERM2) in May 2005 and adopted the euro as its national currency on
1 January 2008. An aggressive austerity program in the preceding
years, aimed at paving the way for the euro, helped turn a soaring
fiscal deficit (6.3% in 2003) into a surplus of 1.2% in 2008, and
reduced inflation to 5.1%. This prosperity will come under pressure
in 2009, as construction and tourism slow in the face of reduced
foreign demand triggered by the ongoing global financial crisis.
Growth is expected to slow to less than 2%, which would be its
lowest level since 2003. As in the area administered by Turkish
Cypriots, water shortages are a perennial problem; a few
desalination plants have been added to existing plants over the last
year and are now on line. After 10 years of drought, the country
received substantial rainfall from 2001-04. Since then, rainfall has
been well below average, making water rationing a necessity.

Czech Republic
The Czech Republic is one of the most stable and
prosperous of the post-Communist states of Central and Eastern
Europe. Maintaining an open investment climate has been a key
element of the Czech Republic's transition from a communist,
centrally planned economy to a functioning market economy. As a
member of the European Union, with an advantageous location in the
center of Europe, a relatively low cost structure, and a
well-qualified labor force, the Czech Republic is an attractive
destination for foreign investment. Prior to its EU accession in
2004, the Czech government harmonized its laws and regulations with
those of the European Union. The government plans to meet the
criteria for joining the euro area around 2012. The small, open,
export-driven Czech economy grew by over 6% annually from 2005-2007
and strong growth continued throughout the first three quarters of
2008. Despite the global financial crisis, the conservative Czech
financial system has remained relatively healthy. The rate of Czech
economic growth, however, fell in the fourth quarter of 2008, mainly
due to a significant drop in demand for Czech exports in Western
Europe. This trend is expected to continue, with many analysts
predicting the Czech economy to contract slightly in 2009.

Denmark
This thoroughly modern market economy features high-tech
agriculture, up-to-date small-scale and corporate industry,
extensive government welfare measures, an equitable distribution of
income, comfortable living standards, a stable currency, a stable
political system, and high dependence on foreign trade. Unemployment
is low and capacity constraints limit growth potential. Denmark is a
net exporter of food and energy and enjoys a comfortable balance of
payments surplus. The government has been successful in meeting, and
even exceeding, the economic convergence criteria for participating
in the third phase (a common European currency) of the European
Economic and Monetary Union (EMU), but so far Denmark has decided
not to join 16 other EU members in the euro. Nonetheless, the Danish
krone remains pegged to the euro. Denmark's fiscal position is among
the strongest in the EU. Economic growth gained momentum in 2004 and
the upturn continued through 2006. After a long consumption-driven
upswing, Denmark's economy began slowing in early 2007 with the end
of a housing boom. This cyclical slowdown has been exacerbated by
the global financial crisis through increased borrowing costs and
lower export demand, consumer confidence, and investment. The
slowing global economy cut GDP by 1.2% in 2008. A major long-term
issue will be the sharp decline in the ratio of workers to retirees.

Dhekelia
Economic activity is limited to providing services to the
military and their families located in Dhekelia. All food and
manufactured goods must be imported.

Djibouti
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
the Horn of Africa. Two-thirds of Djibouti's inhabitants live in the
capital city; the remainder are mostly nomadic herders. Scanty
rainfall limits crop production to fruits and vegetables, and most
food must be imported. Djibouti provides services as both a transit
port for the region and an international transshipment and refueling
center. Imports and exports from landlocked neighbor Ethiopia
represent 85% of port activity at Djibouti's container terminal.
Djibouti has few natural resources and little industry. The nation
is, therefore, heavily dependent on foreign assistance to help
support its balance of payments and to finance development projects.
An unemployment rate of nearly 60% in urban areas continues to be a
major problem. While inflation is not a concern, due to the fixed
tie of the Djiboutian franc to the US dollar, the artificially high
value of the Djiboutian franc adversely affects Djibouti's balance
of payments. Per capita consumption dropped an estimated 35% between
1999 and 2006 because of recession, civil war, and a high population
growth rate (including immigrants and refugees). Faced with a
multitude of economic difficulties, the government has fallen in
arrears on long-term external debt and has been struggling to meet
the stipulations of foreign aid donors.

Dominica
The Dominican economy depends on agriculture, primarily
bananas, and remains highly vulnerable to climatic conditions and
international economic developments. Tourism has increased as the
government seeks to promote Dominica as an "ecotourism" destination
and has developed a new tourism development plan with assistance
from the EU. Hurricane Dean struck the island in August 2007 causing
damages equivalent to 20% of GDP. In 2003, the government began a
comprehensive restructuring of the economy - including elimination
of price controls, privatization of the state banana company, and
tax increases - to address Dominica's economic and financial crisis
of 2001-02 and to meet IMF targets. This restructuring paved the way
for the current economic recovery - real growth for 2006 reached a
two-decade high - and will help to reduce the debt burden, which
remains at about 100% of GDP. In order to diversify the island's
production base, the government is attempting to develop an offshore
financial sector and has signed an agreement with the EU to develop
geothermal energy resources.

Dominican Republic
The Dominican Republic has enjoyed strong GDP
growth since 2005 and continued to post sound gains through
mid-2008. The global recession, however, had a significant impact on
GDP growth in the latter half of the year as tourism and
remittances, two of the Dominican Republic's most important economic
contributors, showed signs of slowing. The economy is highly
dependent upon the US, the destination for about two-thirds of
exports. Remittances from the US amount to about a tenth of GDP,
equivalent to almost half of exports and three-quarters of tourism
receipts. The country has long been viewed primarily as an exporter
of sugar, coffee, and tobacco but in recent years the service sector
has overtaken agriculture as the economy's largest employer due to
growth in tourism and free trade zones. Although 2007 saw inflation
around 6%, the rate grew to over 12% in 2008. High food prices,
driven by the effects of consecutive tropical storms on agricultural
products, and education prices were significant contributors to the
jump. The effects of the global financial crisis and the US
recession are projected to negatively affect GDP growth in 2009 with
a rebound expected in 2010. Although the economy is growing at a
respectable rate, high unemployment and underemployment remains an
important challenge. The country suffers from marked income
inequality; the poorest half of the population receives less than
one-fifth of GNP, while the richest 10% enjoys nearly 40% of
national income. The Central America-Dominican Republic Free Trade
Agreement (CAFTA-DR) came into force in March 2007, which should
boost investment and exports and reduce losses to the Asian garment
industry.

Ecuador
Ecuador is substantially dependent on its petroleum
resources, which have accounted for more than half of the country's
export earnings and one-fourth of public sector revenues in recent
years. In 1999/2000, Ecuador suffered a severe economic crisis, with
GDP contracting by more than 6%. Poverty increased significantly,
the banking system collapsed, and Ecuador defaulted on its external
debt later that year. In March 2000, Congress approved a series of
structural reforms that also provided for the adoption of the US
dollar as legal tender. Dollarization stabilized the economy, and
positive growth returned in the years that followed, helped by high
oil prices, remittances, and increased non-traditional exports. From
2002-06 the economy grew 5.5%, the highest five-year average in 25
years. The poverty rate declined but remained high at 38% in 2006.
In 2006 the government imposed a windfall revenue tax on foreign oil
companies, leading to the suspension of free trade negotiations with
the US. These measures led to a drop in petroleum production in
2007. President Rafael CORREA raised the specter of debt default and
followed through on those threats in December 2008 by defaulting on
some commercial bond obligations. He also decreed a higher windfall
revenue tax on private oil companies, then renegotiated their
contracts to overcome the debilitating effect of the tax. This
generated economic uncertainty; private investment has dropped and
economic growth has slowed.

Egypt
Occupying the northeast corner of the African continent, Egypt
is bisected by the highly fertile Nile valley, where most economic
activity takes place. Egypt's economy was highly centralized during
the rule of former President Gamal Abdel NASSER but has opened up
considerably under former President Anwar EL-SADAT and current
President Mohamed Hosni MUBARAK. Cairo has aggressively pursued
economic reforms to encourage inflows of foreign investment and
facilitate GDP growth. In 2005, Prime Minister Ahmed NAZIF's
government reduced personal and corporate tax rates, reduced energy
subsidies, and privatized several enterprises. The stock market
boomed, and GDP grew about 7% each year since 2006. Despite these
achievements, the government has failed to raise living standards
for the average Egyptian, and has had to continue providing
subsidies for basic necessities. The subsidies have contributed to a
sizeable budget deficit - roughly 7% of GDP in 2007-08 - and
represent a significant drain on the economy. Foreign direct
investment has increased significantly in the past two years, but
the NAZIF government will need to continue its aggressive pursuit of
reforms in order to sustain the spike in investment and growth and
begin to improve economic conditions for the broader population.
Egypt's export sectors - particularly natural gas - have bright
prospects.

El Salvador
The smallest country in Central America, El Salvador has
the third largest economy, but growth has been modest in recent
years. Economic growth will decelerate in 2009 due to the global
slowdown and to El Salvador's dependence on exports to the US and
remittances from the US. El Salvador leads the region in remittances
per capita with inflows equivalent to nearly all export income. In
2006 El Salvador was the first country to ratify the Central
America-Dominican Republic Free Trade Agreement (CAFTA). CAFTA has
bolstered the export of processed foods, sugar, and ethanol, and
supported investment in the maquila sector. The SACA administration
has sought to diversify the economy, focusing on regional
transportation and tourism. El Salvador has promoted an open trade
and investment environment, and has embarked on a wave of
privatizations extending to telecom, electricity distribution,
banking, and pension funds. In late 2006, the government and the
Millennium Challenge Corporation signed a five-year, $461 million
compact to stimulate economic growth and reduce poverty in the
country's northern region through investments in education, public
services, enterprise development, and transportation infrastructure.
With the adoption of the US dollar as its currency in 2001, El
Salvador lost control over monetary policy and must concentrate on
maintaining a disciplined fiscal policy.

Equatorial Guinea
The discovery and exploitation of large oil
reserves have contributed to dramatic economic growth in recent
years. Forestry, farming, and fishing are also major components of
GDP. Subsistence farming predominates. Although pre-independence
Equatorial Guinea counted on cocoa production for hard currency
earnings, the neglect of the rural economy under successive regimes
has diminished potential for agriculture-led growth (the government
has stated its intention to reinvest some oil revenue into
agriculture). A number of aid programs sponsored by the World Bank
and the IMF have been cut off since 1993, because of corruption and
mismanagement. No longer eligible for concessional financing because
of large oil revenues, the government has been trying to agree on a
"shadow" fiscal management program with the World Bank and IMF.
Government officials and their family members own most businesses.
Undeveloped natural resources include titanium, iron ore, manganese,
uranium, and alluvial gold. Growth remained strong in 2008, led by
oil.

Eritrea
Since independence from Ethiopia in 1993, Eritrea has faced
the economic problems of a small, desperately poor country,
accentuated by the recent implementation of restrictive economic
policies. Eritrea has a command economy under the control of the
sole political party, the People's Front for Democracy and Justice
(PFDJ). Like the economies of many African nations, the economy is
largely based on subsistence agriculture, with 80% of the population
involved in farming and herding. The Ethiopian-Eritrea war in
1998-2000 severely hurt Eritrea's economy. GDP growth fell to zero
in 1999 and to -12.1% in 2000. The May 2000 Ethiopian offensive into
northern Eritrea caused some $600 million in property damage and
loss, including losses of $225 million in livestock and 55,000
homes. The attack prevented planting of crops in Eritrea's most
productive region, causing food production to drop by 62%. Despite
the fighting, Eritrea developed its transportation infrastructure,
asphalting new roads, improving its ports, and repairing war-damaged
roads and bridges. Since the war's conclusion, the government has
maintained a firm grip on the economy, expanding the use of the
military and party-owned businesses to complete Eritrea's
development agenda. The government strictly controls the use of
foreign currency by limiting access and availability. Few private
enterprises remain in Eritrea. Eritrea's economy depends heavily on
taxes paid by members of the diaspora. Erratic rainfall and the
delayed demobilization of agriculturalists from the military
continue to interfere with agricultural production, and Eritrea's
recent harvests have been unable to meet the food needs of the
country. The Government continues to place its hope for additional
revenue on the development of several international mining projects.
Despite difficulties for international companies in working with the
Eritrean Government, a Canadian mining company signed a contract
with the Government in 2007 and plans to begin mineral extraction in
2010. Eritrea also opened a free trade zone at the port of Massawa
in 2008. Eritrea's economic future depends upon its ability to
master social problems such as illiteracy, unemployment, and low
skills, and more importantly, on the government's willingness to
support a true market economy.

Estonia
Estonia, a 2004 European Union entrant, has a modern
market-based economy and one of the highest per capita income levels
in Central Europe. Estonia's successive governments have pursued a
free market, pro-business economic agenda and have wavered little in
their commitment to pro-market reforms. Tallinn's priority has been
to sustain high growth rates - on average 8% per year from 2003 to
2007. The economy benefits from strong electronics and
telecommunications sectors and strong trade ties with Finland,
Sweden, and Germany. The current government has pursued relatively
sound fiscal policies, resulting in balanced budgets and low public
debt. Rapid growth, however, has made it difficult to keep inflation
and large current-account deficits from soaring, putting downward
pressure on the country's currency. The government has not given up
on adopting the euro, but has repeatedly postponed its target date.
Estonia's economy slowed down markedly and fell sharply into
recession in mid-2008, primarily as a result of an investment and
consumption slump following the bursting of the real estate market
bubble.

Ethiopia
Ethiopia's poverty-stricken economy is based on
agriculture, accounting for almost half of GDP, 60% of exports, and
80% of total employment. The agricultural sector suffers from
frequent drought and poor cultivation practices. Coffee is critical
to the Ethiopian economy with exports of some $350 million in 2006,
but historically low prices have seen many farmers switching to qat
to supplement income. The war with Eritrea in 1998-2000 and
recurrent drought have buffeted the economy, in particular coffee
production. In November 2001, Ethiopia qualified for debt relief
from the Highly Indebted Poor Countries (HIPC) initiative, and in
December 2005 the IMF forgave Ethiopia's debt. Under Ethiopia's
constitution, the state owns all land and provides long-term leases
to the tenants; the system continues to hamper growth in the
industrial sector as entrepreneurs are unable to use land as
collateral for loans. Drought struck again late in 2002, leading to
a 3.3% decline in GDP in 2003. Normal weather patterns helped
agricultural and GDP growth recover during 2004-08.

European Union
Internally, the EU is attempting to lower trade
barriers, adopt a common currency, and move toward convergence of
living standards. Internationally, the EU aims to bolster Europe's
trade position and its political and economic power. Because of the
great differences in per capita income among member states (from
$7,000 to $69,000) and historic national animosities, the EU faces
difficulties in devising and enforcing common policies. For example,
since 2003 Germany and France have flouted the member states' treaty
obligation to prevent their national budgets from running more than
a 3% deficit. Between 2004 and 2007, the EU admitted 12 countries
that are, in general, less advanced technologically and economically
than the other 15. Eleven established EU member states introduced
the euro as their common currency on 1 January 1999 (Greece did so
two years later), but the UK, Sweden, and Denmark chose not to
participate. Of the 12 most recent member states, only Slovenia (1
January 2007) and Cyprus and Malta (1 January 2008) have adopted the
euro; the remaining nine are legally required to adopt the currency
upon meeting EU's fiscal and monetary convergence criteria.

Falkland Islands (Islas Malvinas)
The economy was formerly based on
agriculture, mainly sheep farming, but today fishing contributes the
bulk of economic activity. In 1987, the government began selling
fishing licenses to foreign trawlers operating within the Falkland
Islands' exclusive fishing zone. These license fees total more than
$40 million per year, which help support the island's health,
education, and welfare system. Squid accounts for 75% of the fish
taken. Dairy farming supports domestic consumption; crops furnish
winter fodder. Exports feature shipments of high-grade wool to the
UK and the sale of postage stamps and coins. The islands are now
self-financing except for defense. The British Geological Survey
announced a 200-mile oil exploration zone around the islands in
1993, and early seismic surveys suggest substantial reserves capable
of producing 500,000 barrels per day; to date, no exploitable site
has been identified. An agreement between Argentina and the UK in
1995 seeks to defuse licensing and sovereignty conflicts that would
dampen foreign interest in exploiting potential oil reserves.
Tourism, especially eco-tourism, is increasing rapidly, with about
30,000 visitors in 2001. Another large source of income is interest
paid on money the government has in the bank. The British military
presence also provides a sizeable economic boost.

Faroe Islands
The Faroese economy is dependent on fishing, which
makes the economy vulnerable to price swings. The sector accounts
for 95% of exports and nearly half of GDP. Since 2003 the Faroese
economy has picked up as a result of higher prices for fish and for
housing. Unemployment is minimal and government finances are
relatively sound. Oil finds close to the Islands give hope for
economically recoverable deposits, which could eventually lay the
basis for a more diversified economy and lessen dependence on Danish
economic assistance. Aided by a substantial annual subsidy (about
15% of GDP) from Denmark, the Faroese have a standard of living not
far below the Danes and other Scandinavians.

Fiji
Fiji, endowed with forest, mineral, and fish resources, is one
of the most developed of the Pacific island economies though still
with a large subsistence sector. Sugar exports, remittances from
Fijians working abroad, and a growing tourist industry - with
400,000 to 500,000 tourists annually - are the major sources of
foreign exchange. Fiji's sugar has special access to European Union
markets but will be harmed by the EU's decision to cut sugar
subsidies. Sugar processing makes up one-third of industrial
activity but is not efficient. Fiji's tourism industry was damaged
by the December 2006 coup and is facing an uncertain recovery time.
In 2007 tourist arrivals were down almost 6%, with substantial job
losses in the service sector, and GDP dipped nearly 7%. The coup has
created a difficult business climate. The EU has suspended all aid
until the interim government takes steps toward new elections.
Long-term problems include low investment, uncertain land ownership
rights, and the government's inability to manage its budget.
Overseas remittances from Fijians working in Kuwait and Iraq have
decreased significantly. Fiji's current account deficit reached 23%
of GDP in 2006.

Finland
Finland has a highly industrialized, largely free-market
economy with per capita output roughly that of the UK, France,
Germany, and Italy. Its key economic sector is manufacturing -
principally the wood, metals, engineering, telecommunications, and
electronics industries. Trade is important; Finland's ratio of
exports to GDP has risen from a quarter to 37% over the past 15
years. Finland excels in high-tech exports such as mobile phones.
Except for timber and several minerals, Finland depends on imports
of raw materials, energy, and some components for manufactured
goods. Because of the climate, agricultural development is limited
to maintaining self-sufficiency in basic products. Forestry, an
important export earner, provides a secondary occupation for the
rural population. Although Finland has been one of the best
performing economies within the EU in recent years and its banks and
financial markets have avoided the worst of global financial crisis,
the world slowdown has hit export growth and domestic demand and
will serve as a brake on economic growth in 2009 and 2010. The
slowdown of construction, other investment, and exports will cause
unemployment to rise. During 2009, unemployment will climb to over
8% of the labor force. Long-term challenges include the need to
address a rapidly aging population and decreasing productivity that
threaten competitiveness, fiscal sustainability, and economic growth.

France
France is in the midst of transition from a well-to-do modern
economy that has featured extensive government ownership and
intervention to one that relies more on market mechanisms. The
government has partially or fully privatized many large companies,
banks, and insurers, and has ceded stakes in such leading firms as
Air France, France Telecom, Renault, and Thales. It maintains a
strong presence in some sectors, particularly power, public
transport, and defense industries. The telecommunications sector is
gradually being opened to competition. France's leaders remain
committed to a capitalism in which they maintain social equity by
means of laws, tax policies, and social spending that reduce income
disparity and the impact of free markets on public health and
welfare. Widespread opposition to labor reform has in recent years
hampered the government's ability to revitalize the economy. During
2007-08, the government implemented several important labor reforms,
including a de facto extension of the 35-hour workweek by allowing
employees to work longer overtime hours. During 2009, the government
is expected to delay or even renounce other reform efforts due to
the on-going financial crisis. GDP growth dropped to 0.3% in 2008;
the French government plans to increase public investment and
continue injecting capital into the banking sector to alleviate the
negative effects of the crisis during 2009. As a result of lower
fiscal revenues and increased expenditures the general government
deficit is expected to exceed the euro-zone ceiling 3% of GDP.
France's tax burden remains one of the highest in Europe - at nearly
50% of GDP in 2005. With at least 75 million foreign tourists per
year, France is the most visited country in the world and maintains
the third largest income in the world from tourism.

French Polynesia
Since 1962, when France stationed military
personnel in the region, French Polynesia has changed from a
subsistence agricultural economy to one in which a high proportion
of the work force is either employed by the military or supports the
tourist industry. With the halt of French nuclear testing in 1996,
the military contribution to the economy fell sharply. Tourism
accounts for about one-fourth of GDP and is a primary source of hard
currency earnings. Other sources of income are pearl farming and
deep-sea commercial fishing. The small manufacturing sector
primarily processes agricultural products. The territory benefits
substantially from development agreements with France aimed
principally at creating new businesses and strengthening social
services.

French Southern and Antarctic Lands
Economic activity is limited to
servicing meteorological and geophysical research stations, military
bases, and French and other fishing fleets. The fish catches landed
on Iles Kerguelen by foreign ships are exported to France and
Reunion.

Gabon
Gabon enjoys a per capita income four times that of most
sub-Saharan African nations, but because of high income inequality,
a large proportion of the population remains poor. Gabon depended on
timber and manganese until oil was discovered offshore in the early
1970s. The oil sector now accounts for more than 50% of GDP. Gabon
continues to face fluctuating prices for its oil, timber, and
manganese exports. Despite the abundance of natural wealth, poor
fiscal management hobbles the economy. In 1997, an IMF mission to
Gabon criticized the government for overspending on off-budget
items, overborrowing from the central bank, and slipping on its
schedule for privatization and administrative reform. The rebound of
oil prices since 1999 have helped growth, but drops in production
have hampered Gabon from fully realizing potential gains, and will
continue to temper the gains for most of this decade. In December
2000, Gabon signed a new agreement with the Paris Club to reschedule
its official debt. A follow-up bilateral repayment agreement with
the US was signed in December 2001. Gabon signed a 14-month Stand-By
Arrangement with the IMF in May 2007, and received Paris Club debt
rescheduling later that year.

Gambia, The
The Gambia has no confirmed mineral or natural resource
deposits and has a limited agricultural base. About 75% of the
population depends on crops and livestock for its livelihood.
Small-scale manufacturing activity features the processing of
peanuts, fish, and hides. Reexport trade normally constitutes a
major segment of economic activity, but a 1999 government-imposed
preshipment inspection plan, and instability of the Gambian dalasi
(currency) have drawn some of the reexport trade away from The
Gambia. The Gambia's natural beauty and proximity to Europe has made
it one of the larger markets for tourism in West Africa. The
government's 1998 seizure of the private peanut firm Alimenta
eliminated the largest purchaser of Gambian groundnuts. Despite an
announced program to begin privatizing key parastatals, no plans
have been made public that would indicate that the government
intends to follow through on its promises. Unemployment and
underemployment rates remain extremely high; short-run economic
progress depends on sustained bilateral and multilateral aid, on
responsible government economic management, on continued technical
assistance from the IMF and bilateral donors, and on expected growth
in the construction sector.

Gaza Strip
High population density, limited land access, and strict
internal and external security controls have kept economic
conditions in the Gaza Strip - the smaller of the two areas under
the Palestinian Authority (PA) - even more degraded than in the West
Bank. The beginning of the second intifada in September 2000 sparked
an economic downturn, largely the result of Israeli closure
policies; these policies, which were imposed to address security
concerns in Israel, disrupted labor and trade access to and from the
Gaza Strip. In 2001, and even more severely in 2003, Israeli
military measures in PA areas resulted in the destruction of
capital, the disruption of administrative structures, and widespread
business closures. The Israeli withdrawal from the Gaza Strip in
September 2005 offered some medium-term opportunities for economic
growth, but Israeli-imposed crossings closures, which became more
restrictive after HAMAS violently took over the territory in June
2007, have resulted in widespread private sector layoffs and
shortages of most goods. The status of the crossings, which are
closed to all but the most basic goods, has not changed following
Israel's military offensive into the Gaza Strip in early 2009.