Chapter M: Major infectious diseases (130)

Pacific Ocean
The Pacific Ocean is a major contributor to the world
economy 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. Exploitation
of offshore oil and gas reserves is playing an ever-increasing role
in the energy supplies of the US, Australia, NZ, China, and Peru.
The high cost of recovering offshore oil and gas, combined with the
wide swings in world prices for oil since 1985, has led to
fluctuations in new drillings.

Pakistan
Pakistan, an impoverished and underdeveloped country, has
suffered from decades of internal political disputes, low levels of
foreign investment, and declining exports of manufactures. Faced
with untenable budgetary deficits, high inflation, and hemorrhaging
foreign exchange reserves, the government agreed to an International
Monetary Fund Standby Arrangement in November 2008. Between 2004-07,
GDP growth in the 6-8% range was spurred by gains in the industrial
and service sectors, despite severe electricity shortfalls. Poverty
levels decreased by 10% since 2001, and Islamabad steadily raised
development spending in recent years. In 2008 the fiscal deficit - a
result of chronically low tax collection and increased spending -
exceeded Islamabad's target of 4% of GDP. Inflation remains the top
concern among the public, jumping from 7.7% in 2007 to 20.8% in
2008, primarily because of rising world fuel and commodity prices.
In addition, the Pakistani rupee has depreciated significantly as a
result of political and economic instability.

Palau
The economy consists primarily of tourism, subsistence
agriculture, and fishing. The government is the major employer of
the work force relying heavily on financial assistance from the US.
The Compact of Free Association with the US, entered into after the
end of the UN trusteeship on 1 October 1994, provided Palau with up
to $700 million in US aid for the following 15 years in return for
furnishing military facilities. Business and tourist arrivals
numbered 85,000 in 2007. The population enjoys a per capita income
roughly 50% higher than that of the Philippines and much of
Micronesia. Long-run prospects for the key tourist sector have been
greatly bolstered by the expansion of air travel in the Pacific, the
rising prosperity of leading East Asian countries, and the
willingness of foreigners to finance infrastructure development.

Panama
Panama's dollarized economy rests primarily on a
well-developed services sector that accounts for 80% of GDP.
Services include operating the Panama Canal, banking, the Colon Free
Zone, insurance, container ports, flagship registry, and tourism.
Economic growth will be bolstered by the Panama Canal expansion
project that began in 2007 and is scheduled to be completed by 2014
at a cost of $5.3 billion - about 25% of current GDP. The expansion
project will more than double the Canal's capacity, enabling it to
accommodate ships that are now too large to transverse the
transoceanic crossway, and should help to reduce the high
unemployment rate. Strong economic performance has reduced the
national poverty level to 29% in 2008; however, Panama has the
second most unequal income distribution in Latin America. The
government has implemented tax reforms, as well as social security
reforms, and backs regional trade agreements and development of
tourism. Not a CAFTA signatory, Panama in December 2006
independently negotiated a free trade agreement with the US, which,
when implemented, will help promote the country's economic growth.

Papua New Guinea
Papua New Guinea is richly endowed with natural
resources, but exploitation has been hampered by rugged terrain and
the high cost of developing infrastructure. Agriculture provides a
subsistence livelihood for 75% of the population. Mineral deposits,
including copper, gold, and oil, account for nearly two-thirds of
export earnings. The government of Prime Minister SOMARE has
expended much of its energy remaining in power. He was the first
prime minister ever to serve a full five-year term. The government
also brought stability to the national budget, largely through
expenditure control; however, it relaxed spending constraints in
2006 and 2007 as elections approached. Numerous challenges still
face the government including regaining investor confidence,
restoring integrity to state institutions, promoting economic
efficiency by privatizing moribund state institutions, and balancing
relations with Australia, its former colonial ruler. Other
socio-cultural challenges could upend the economy including a
worsening HIV/AIDS epidemic, currently the highest rate in all of
East Asia and the Pacific, and chronic law and order and land tenure
issues. Australia supplied more than $300 million in aid in FY07/08,
which accounts for nearly 20% of the national budget. A consortium
led by a major American oil company hopes to begin the
commercialization of the country's estimated 227 billion cubic
meters of natural gas reserves through the construction of a
liquefied natural gas (LNG) production facility by 2010. The project
has the potential to double the GDP of Papua New Guinea.

Paracel Islands
The islands have the potential for oil and gas
development. Waters around the islands support commercial fishing,
but the islands themselves are not populated on a permanent basis.
China announced plans in 1997 to open the islands for tourism.

Paraguay
Landlocked Paraguay has a market economy marked by a large
informal sector, featuring reexport of imported consumer goods to
neighboring countries, as well as the activities of thousands of
microenterprises and urban street vendors. A large percentage of the
population, especially in rural areas, derives its living from
agricultural activity, often on a subsistence basis. Because of the
importance of the informal sector, accurate economic measures are
difficult to obtain. On a per capita basis, real income has
stagnated at 1980 levels. Most observers attribute Paraguay's poor
economic performance to political uncertainty, corruption, limited
progress on structural reform, and deficient infrastructure. The
economy rebounded between 2003 and 2008, however, as growing world
demand for commodities combined with high prices and favorable
weather to support Paraguay's commodity-based export expansion.
Paraguay is the sixth largest soy producer in the world.

Peru
Peru's economy reflects its varied geography - an arid coastal
region, the Andes further inland, and tropical lands bordering
Colombia and Brazil. Abundant mineral resources are found in the
mountainous areas, and Peru's coastal waters provide excellent
fishing grounds. The Peruvian economy grew by more than 4% per year
during the period 2002-06, with a stable exchange rate and low
inflation. Growth jumped to 9% per year in 2007 and 2008, driven by
higher world prices for minerals and metals and the government's
aggressive trade liberalization strategies. Peru's rapid expansion
has helped to reduce the national poverty rate by about 15% since
2002, though underemployment and inflation remain high. Despite
Peru's strong macroeconomic performance, overdependence on minerals
and metals subjects the economy to fluctuations in world prices, and
poor infrastructure precludes the spread of growth to Peru's
non-coastal areas. Not all Peruvians therefore have shared in the
benefits of growth. President GARCIA's pursuit of sound trade and
macroeconomic policies has cost him political support since his
election. Nevertheless, he remains committed to Peru's free-trade
path. The United States and Peru completed negotiations on the
implementation of the US-Peru Trade Promotion Agreement (PTPA), and
the agreement entered into force February 1, 2009, opening the way
to greater trade and investment between the two economies.

Philippines
Economic growth has averaged 5% since President
MACAPAGAL-ARROYO took office in 2001. MACAPAGAL-ARROYO averted a
fiscal crisis by pushing for new revenue measures and, until
recently, tightening expenditures. Declining fiscal deficits,
tapering debt and debt service ratios, and increased spending on
infrastructure and social services bolstered optimism over
Philippine economic prospects. Although the general macroeconomic
outlook improved significantly in recent years, the economy still
faces several long term challenges. The Philippines must maintain
the reform momentum in order to catch up with regional competitors,
improve employment opportunities, and alleviate poverty. The
Philippines will need still higher, sustained growth to make
progress in alleviating poverty, given its high population growth
and unequal distribution of income. The Philippine economy grew at
its fastest pace in three decades in 2007 with real GDP growth
exceeding 7%, but growth slowed to 3.8% in 2008 as a result of the
world financial crisis. High government spending, a relatively small
trade sector, a resilient service sector, and large remittances from
the four- to five-million Filipinos who work abroad have helped
cushion the economy from the current financial crisis.

Pitcairn Islands
The inhabitants of this tiny isolated economy exist
on fishing, subsistence farming, handicrafts, and postage stamps.
The fertile soil of the valleys produces a wide variety of fruits
and vegetables, including citrus, sugarcane, watermelons, bananas,
yams, and beans. Bartering is an important part of the economy. The
major sources of revenue are the sale of postage stamps to
collectors and the sale of handicrafts to passing ships. In October
2004, more than one-quarter of Pitcairn's small labor force was
arrested, putting the economy in a bind, since their services were
required as lighter crew to load or unload passing ships.

Poland
Poland has pursued a policy of economic liberalization since
1990 and today stands out as a success story among transition
economies. In 2008, GDP grew an estimated 4.8%, based on rising
private consumption, a jump in corporate investment, and EU funds
inflows. GDP per capita is still much below the EU average, but is
similar to that of the three Baltic states. Since 2004, EU
membership and access to EU structural funds have provided a major
boost to the economy. Unemployment is falling rapidly, though at
roughly 9.7% in 2008, it remains above the EU average. In 2008
inflation reached 4.3%, more than the upper limit of the National
Bank of Poland's target range, but has been falling due to global
economic slowdown. Poland's economic performance could improve
further if the country addresses some of the remaining deficiencies
in its business environment. An inefficient commercial court system,
a rigid labor code, bureaucratic red tape, and persistent low-level
corruption keep the private sector from performing up to its full
potential. Rising demands to fund health care, education, and the
state pension system present a challenge to the Polish Government's
effort to hold the consolidated public sector budget deficit under
3.0% of GDP, a target which was achieved in 2007-08. The PO/PSL
coalition government which came to power in November 2007 plans to
further reduce the budget deficit with the aim of eventually
adopting the euro by 2012. The new government has also announced its
intention to enact business-friendly reforms, reduce public sector
spending growth, lower taxes, and accelerate privatization. The
government, however, has moved slowly on major reforms. Pension and
health-care bills passed through the legislature, but the
legislature failed to overturn a presidential veto.

Portugal
Portugal has become a diversified and increasingly
service-based economy since joining the European Community in 1986.
Over the past two decades, successive governments have privatized
many state-controlled firms and liberalized key areas of the
economy, including the financial and telecommunications sectors. The
country qualified for the European Monetary Union (EMU) in 1998 and
began circulating the euro on 1 January 2002 along with 11 other EU
member economies. Economic growth had been above the EU average for
much of the 1990s, but fell back in 2001-08. GDP per capita stands
at roughly two-thirds of the EU-27 average. A poor educational
system, in particular, has been an obstacle to greater productivity
and growth. Portugal has been increasingly overshadowed by
lower-cost producers in Central Europe and Asia as a target for
foreign direct investment. The budget deficit surged to an all-time
high of 6% of GDP in 2005, but the government reduced the deficit to
2.6% in 2007 - a year ahead of Portugal's targeted schedule.
Nonetheless, the government faces tough choices in its attempts to
boost the economy, which declined 0.1% in 2008, while keeping the
budget deficit within the euro-zone 3%-of-GDP ceiling.

Puerto Rico
Puerto Rico has one of the most dynamic economies in the
Caribbean region. A diverse industrial sector has far surpassed
agriculture as the primary locus of economic activity and income.
Encouraged by duty-free access to the US and by tax incentives, US
firms have invested heavily in Puerto Rico since the 1950s. US
minimum wage laws apply. Sugar production has lost out to dairy
production and other livestock products as the main source of income
in the agricultural sector. Tourism has traditionally been an
important source of income with estimated arrivals of nearly 5
million tourists in 2004. Growth fell off in 2001-03, largely due to
the slowdown in the US economy, recovered in 2004-05, but declined
again in 2006-07.

Qatar
Qatar has experienced rapid economic growth over the last
several years on the back of high oil prices, and in 2008 posted its
eighth consecutive budget surplus. Economic policy is focused on
developing Qatar's nonassociated natural gas reserves and increasing
private and foreign investment in non-energy sectors, but oil and
gas still account for more than 50% of GDP, roughly 85% of export
earnings, and 70% of government revenues. Oil and gas have made
Qatar the second highest per-capita income country - following
Liechtenstein - and one of the world's fastest growing. Proved oil
reserves of 15 billion barrels should enable continued output at
current levels for 37 years. Qatar's proved reserves of natural gas
are nearly 26 trillion cubic meters, about 14% of the world total
and third largest in the world. The drop in oil prices in late 2008
and the global financial crisis will reduce Qatar's budget surplus
and may slow the pace of investment and development projects in 2009.

Romania
Romania, which joined the European Union on 1 January 2007,
began the transition from Communism in 1989 with a largely obsolete
industrial base and a pattern of output unsuited to the country's
needs. The country emerged in 2000 from a punishing three-year
recession thanks to strong demand in EU export markets. Domestic
consumption and investment have fueled strong GDP growth in recent
years, but have led to large current account imbalances. Romania's
macroeconomic gains have only recently started to spur creation of a
middle class and address Romania's widespread poverty. Corruption
and red tape continue to handicap its business environment.
Inflation rose in 2007-08, driven in part by strong consumer demand
and high wage growth, rising energy costs, a nation-wide drought
affecting food prices, and a relaxation of fiscal discipline.
Romania's strong GDP growth moderated markedly in the last quarter
of 2008 as the country began to feel the effects of a global
downturn in financial markets and trade, and growth is expected to
be much weaker in 2009. Romania hopes to adopt the euro by 2014.

Russia
Russia ended 2008 with GDP growth of 5.6%, following 10
straight years of growth averaging 7% annually since the financial
crisis of 1998. Over the last six years, fixed capital investment
growth and personal income growth have averaged above 10%, but both
grew at slower rates in 2008. Growth in 2008 was driven largely by
non-tradable services and domestic manufacturing, rather than
exports. During the past decade, poverty and unemployment declined
steadily and the middle class continued to expand. Russia also
improved its international financial position, running balance of
payments surpluses since 2000. Foreign exchange reserves grew from
$12 billion in 1999 to almost $600 billion by end July 2008, which
include $200 billion in two sovereign wealth funds: a reserve fund
to support budgetary expenditures in case of a fall in the price of
oil and a national welfare fund to help fund pensions and
infrastructure development. Total foreign debt is almost one-third
of GDP. The state component of foreign debt has declined, but
commercial short-term debt to foreigners has risen strongly. These
positive trends began to reverse in the second half of 2008.
Investor concerns over the Russia-Georgia conflict, corporate
governance issues, and the global credit crunch in September caused
the Russian stock market to fall by roughly 70%, primarily due to
margin calls that were difficult for many Russian companies to meet.
The global crisis also affected Russia's banking system, which faced
liquidity problems. Moscow responded quickly in early October 2008,
initiating a rescue plan of over $200 billion that was designed to
increase liquidity in the financial sector, to help firms refinance
foreign debt, and to support the stock market. The government also
unveiled a $20 billion tax cut plan and other safety nets for
society and industry. Meanwhile, a 70% drop in the price of oil
since mid-July further exacerbated imbalances in external accounts
and the federal budget. In mid-November, mini-devaluations of the
currency by the Central Bank caused increased capital flight and
froze domestic credit markets, resulting in growing unemployment,
wage arrears, and a severe drop in production. Foreign exchange
reserves dropped to around $435 billion by end 2008, as the Central
Bank defended an overvalued ruble. In the first year of his term,
President MEDVEDEV outlined a number of economic priorities for
Russia including improving infrastructure, innovation, investment,
and institutions; reducing the state's role in the economy;
reforming the tax system and banking sector; developing one of the
biggest financial centers in the world, combating corruption, and
improving the judiciary. The Russian government needs to diversify
the economy further, as energy and other raw materials still
dominate Russian export earnings and federal budget receipts.
Russia's infrastructure requires large investments and must be
replaced or modernized if the country is to achieve broad-based
economic growth. Corruption, lack of trust in institutions, and more
recently, exchange rate uncertainty and the global economic crisis
continue to dampen domestic and foreign investor sentiment. Russia
has made some progress in building the rule of law, the bedrock of a
modern market economy, but much work remains on judicial reform.
Moscow continues to seek accession to the WTO and has made some
progress, but its timeline for entry into the organization continues
to slip, and the negotiating atmosphere has soured in the wake of
the Georgia and global economic crises.

Rwanda
Rwanda is a poor rural country with about 90% of the
population engaged in (mainly subsistence) agriculture. It is the
most densely populated country in Africa and is landlocked with few
natural resources and minimal industry. Primary foreign exchange
earners are coffee and tea. The 1994 genocide decimated Rwanda's
fragile economic base, severely impoverished the population,
particularly women, and eroded the country's ability to attract
private and external investment. However, Rwanda has made
substantial progress in stabilizing and rehabilitating its economy
to pre-1994 levels, although poverty levels are higher now. GDP has
rebounded and inflation has been curbed. Despite Rwanda's fertile
ecosystem, food production often does not keep pace with population
growth, requiring food imports. Rwanda continues to receive
substantial aid money and obtained IMF-World Bank Heavily Indebted
Poor Country (HIPC) initiative debt relief in 2005-06. Rwanda also
received Millennium Challenge Account Threshold status in 2006. The
government has embraced an expansionary fiscal policy to reduce
poverty by improving education, infrastructure, and foreign and
domestic investment and pursuing market-oriented reforms, although
energy shortages, instability in neighboring states, and lack of
adequate transportation linkages to other countries continue to
handicap growth.

Saint Barthelemy
The economy of Saint Barthelemy is based upon
high-end tourism and duty-free luxury commerce, serving visitors
primarily from North America. The luxury hotels and villas host
70,000 visitors each year with another 130,000 arriving by boat. The
relative isolation and high cost of living inhibits mass tourism.
The construction and public sectors also enjoy significant
investment in support of tourism. With limited fresh water
resources, all food must be imported, as must all energy resources
and most manufactured goods. Employment is strong and attracts labor
from Brazil and Portugal.

Saint Helena
The economy depends largely on financial assistance
from the UK, which amounted to about $27 million in FY06/07 or more
than twice the level of annual budgetary revenues. The local
population earns income from fishing, raising livestock, and sales
of handicrafts. Because there are few jobs, 25% of the work force
has left to seek employment on Ascension Island, on the Falklands,
and in the UK.

Saint Kitts and Nevis
The economy of Saint Kitts and Nevis is
heavily dependent upon tourism revenues, which has replaced sugar,
the traditional mainstay of the economy until the 1970s. Following
the 2005 harvest, the government closed the sugar industry after
decades of losses of 3-4% of GDP annually. To compensate for
employment losses, the government has embarked on a program to
diversify the agricultural sector and to stimulate other sectors of
the economy, such as tourism, export-oriented manufacturing, and
offshore banking. Economic growth was above average for Latin
America from 2004 to 2006, but has since slowed. Like other tourist
destinations in the Caribbean, the St. Kitts and Nevis is vulnerable
to damage from natural disasters and shifts in tourism demand. The
current government is constrained by a high public debt burden
equivalent to nearly 185% of GDP by the end of 2006, largely
attributable to public enterprise losses.

Saint Lucia
The island nation has been able to attract foreign
business and investment, especially in its offshore banking and
tourism industries, with a surge in foreign direct investment in
2006, attributed to the construction of several tourism projects.
Although crops such as bananas, mangos, and avocados continue to be
grown for export, tourism provides Saint Lucia's main source of
income and the industry is the island's biggest employer. The
tourism sector is likely to face declining revenues with the global
economic downturn as US and European travel declines. The
manufacturing sector is the most diverse in the Eastern Caribbean
area, and the government is trying to revitalize the banana
industry, although recent hurricanes have caused exports to
contract. Saint Lucia is vulnerable to a variety of external shocks
including volatile tourism receipts, natural disasters, and
dependence on foreign oil. The public debt-to-GDP ratio is about 70%
and high debt servicing obligations constrain the KING
administration's ability to respond to adverse external shocks.
Economic fundamentals remain solid, even though unemployment needs
to be reduced.

Saint Martin
The economy of Saint Martin centers around tourism with
85% of the labor force engaged in this sector. Over one million
visitors come to the island each year with most arriving through the
Princess Juliana International Airport in Sint Maarten. No
significant agriculture and limited local fishing means that almost
all food must be imported. Energy resources and manufactured goods
are also imported, primarily from Mexico and the United States.
Saint Martin is reported to have the highest per capita income in
the Caribbean.

Saint Pierre and Miquelon
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. France heavily subsidizes the islands to the
great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Fish farming,
crab fishing, and agriculture are being developed to diversify the
local economy. Recent test drilling for oil may pave the way for
development of the energy sector.

Saint Vincent and the Grenadines
Economic growth slowed in 2008
after reaching a 10-year high of nearly 7% in 2006, and will likely
slow in 2009 with the global economic downturn, though it will be
above average for Latin America. Success of the economy hinges upon
seasonal variations in agriculture, tourism, and construction
activity as well as remittance inflows. Much of the workforce is
employed in banana production and tourism, but persistent high
unemployment has prompted many to leave the islands. This
lower-middle-income country is vulnerable to natural disasters -
tropical storms wiped out substantial portions of crops in 1994,
1995, and 2002. In 2007, the islands had more than 200,000 tourist
arrivals, mostly to the Grenadines. Saint Vincent is home to a small
offshore banking sector and has moved to adopt international
regulatory standards. The government's ability to invest in social
programs and respond to external shocks is constrained by its high
debt burden - 25% of current revenues are directed towards debt
servicing. An agreement with Italy to write-off debt reduced the
public debt-to-GDP ratio to about 70%. The GONSALVES administration
is directing government resources to infrastructure projects,
including a new international airport that is expected to be
completed in 2011.

Samoa
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, agriculture, and
fishing. 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. The
fish catch declined during the El Nino of 2002-03 but returned to
normal by mid-2005. The manufacturing sector mainly processes
agricultural products. One factory in the Foreign Trade Zone employs
3,000 people to make automobile electrical harnesses for an assembly
plant in Australia. Tourism is an expanding sector accounting for
25% of GDP; 122,000 tourists visited the islands in 2007. The Samoan
Government has called for deregulation of the financial sector,
encouragement of investment, and continued fiscal discipline, while
at the same time protecting the environment. Observers point to the
flexibility of the labor market as a basic strength for future
economic advances. Foreign reserves are in a relatively healthy
state, the external debt is stable, and inflation is low.

San Marino
San Marino's economy relies heavily on its tourism and
banking industries, as well as from the manufacture and export of
ceramics, clothing, fabrics, furniture, paints, spirits, tiles, and
wine. The economy also benefits from foreign investment due to its
relatively low corporate taxes and low taxes on interest earnings.
The San Marino government, sworn in on 3 December 2008, will
continue to work towards an economic cooperation agreement with
Italy - a longstanding priority - as well as harmonizing its fiscal
laws with EU members. The per capita level of output and standard of
living are comparable to those of the most prosperous regions of
Italy, which supplies much of its food.

Sao Tome and Principe
This small, poor island economy has become
increasingly dependent on cocoa since independence in 1975. Cocoa
production has substantially declined in recent years because of
drought and mismanagement. Sao Tome has to import all fuels, most
manufactured goods, consumer goods, and a substantial amount of
food. Over the years, it has had difficulty servicing its external
debt and has relied heavily on concessional aid and debt
rescheduling. Sao Tome benefited from $200 million in debt relief in
December 2000 under the Highly Indebted Poor Countries (HIPC)
program, which helped bring down the country's $300 million debt
burden. In August 2005, Sao Tome signed on to a new 3-year IMF
Poverty Reduction and Growth Facility (PRGF) program worth $4.3
million. Considerable potential exists for development of a tourist
industry, and the government has taken steps to expand facilities in
recent years. The government also has attempted to reduce price
controls and subsidies. Potential exists for the development of
petroleum resources in Sao Tome's territorial waters in the oil-rich
Gulf of Guinea, which are being jointly developed in a 60-40 split
with Nigeria, but any actual production is at least several years
off. The first production licenses were sold in 2004, though a
dispute over licensing with Nigeria delayed Sao Tome's receipt of
more than $20 million in signing bonuses for almost a year. Real GDP
growth averaged about 6% in 2006-08, as a result of increases in
public expenditures and oil-related capital investment.

Saudi Arabia
Saudi Arabia has an oil-based economy with strong
government controls over major economic activities. It possesses
more than 20% of the world's proven petroleum reserves, ranks as the
largest exporter of petroleum, and plays a leading role in OPEC. The
petroleum sector accounts for roughly 80% of budget revenues, 45% of
GDP, and 90% of export earnings. About 40% of GDP comes from the
private sector. Roughly 6.4 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors. High oil prices through mid-2008 have boosted
growth, government revenues, and Saudi ownership of foreign assets,
while enabling Riyadh to pay down domestic debt. The government is
encouraging private sector growth - especially in power generation,
telecommunications, natural gas exploration, and petrochemicals - to
lessen the kingdom's dependence on oil exports and to increase
employment opportunities for the swelling Saudi population, nearly
40% of which are youths under 15 years old. Unemployment is high,
and the large youth population generally lacks the education and
technical skills the private sector needs. Riyadh has substantially
boosted spending on job training and education, infrastructure
development, and government salaries. As part of its effort to
attract foreign investment and diversify the economy, Saudi Arabia
acceded to the WTO in December 2005 after many years of
negotiations. The government has announced plans to establish six
"economic cities" in different regions of the country to promote
development and diversification. The last five years of high oil
prices have given the Kingdom ample financial reserves to manage the
impact of the global financial crisis, but tight international
credit, falling oil prices, and the global economic slowdown will
reduce Saudi economic growth in 2009.

Senegal
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which was linked at a fixed rate to the
French franc. Government price controls and subsidies have been
steadily dismantled. After seeing its economy contract by 2.1% in
1993, Senegal made an important turnaround, thanks to the reform
program, with real growth in GDP averaging over 5% annually during
1995-2008. Annual inflation had been pushed down to the single
digits. As a member of the West African Economic and Monetary Union
(WAEMU), Senegal is working toward greater regional integration with
a unified external tariff and a more stable monetary policy. High
unemployment, however, continues to prompt illegal migrants to flee
Senegal in search of better job opportunities in Europe. Senegal was
also beset by an energy crisis that caused widespread blackouts in
2006 and 2007. The phosphate industry has struggled for two years to
secure capital, and reduced output has directly impacted GDP. In
2007, Senegal signed agreements for major new mining concessions for
iron, zircon, and gold with foreign companies. Firms from Dubai have
agreed to manage and modernize Dakar's maritime port, and create a
new special economic zone. Senegal still relies heavily upon outside
donor assistance. Under the IMF's Highly Indebted Poor Countries
(HIPC) debt relief program, Senegal has benefited from eradication
of two-thirds of its bilateral, multilateral, and private-sector
debt. In 2007, Senegal and the IMF agreed to a new, non-disbursing,
Policy Support Initiative program.

Serbia
MILOSEVIC-era mismanagement of the economy, an extended
period of international economic sanctions, and the damage to
Yugoslavia's infrastructure and industry during the NATO airstrikes
in 1999 left the economy only half the size it was in 1990. After
the ousting of former Federal Yugoslav President MILOSEVIC in
September 2000, the Democratic Opposition of Serbia (DOS) coalition
government implemented stabilization measures and embarked on a
market reform program. After renewing its membership in the IMF in
December 2000, Yugoslavia continued to reintegrate into the
international community by rejoining the World Bank (IBRD) and the
European Bank for Reconstruction and Development (EBRD). A World
Bank-European Commission sponsored Donors' Conference held in June
2001 raised $1.3 billion for economic restructuring. In November
2001, the Paris Club agreed to reschedule the country's $4.5 billion
public debt and wrote off 66% of the debt. In July 2004, the London
Club of private creditors forgave $1.7 billion of debt just over
half the total owed. Belgrade has made progress in trade
liberalization and enterprise restructuring and privatization,
including telecommunications and small- and medium-size firms. It
has made halting progress towards EU membership despite signing a
Stabilization and Association Agreement with Brussels in May 2008.
Serbia is also pursuing membership in the World Trade Organization.
Unemployment and the large current account deficit remain ongoing
political and economic problems.

Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the
pre-independence, near-subsistence level, moving the island into the
upper-middle income group of countries. Growth has been led by the
tourist sector, which employs about 30% of the labor force and
provides more than 70% of hard currency earnings, and by tuna
fishing. In recent years, the government has encouraged foreign
investment to upgrade hotels and other services. At the same time,
the government has moved to reduce the dependence on tourism by
promoting the development of farming, fishing, and small-scale
manufacturing. GDP grew about 7-8% per year in 2006-07, driven by
tourism and a boom in tourism-related construction. The Seychelles
rupee was allowed to depreciate in 2006 after being overvalued for
years and fell by 10% in the first 9 months of 2007. Despite these
actions, the Seychelles economy has struggled to maintain its gains
and in 2008 suffered from food and oil price shocks, a foreign
exchange shortage, high inflation and large financing gaps, with GDP
growth reduced to about 3% in 2008. In July 2008 the government
defaulted on a Euro amortizing note worth roughly US$80 million,
leading to a downgrading of Seychelles credit rating. Seychelles
requested an IMF Stand-By Agreement in December 2008.

Sierra Leone
Sierra Leone is an extremely poor nation with
tremendous inequality in income distribution. While it possesses
substantial mineral, agricultural, and fishery resources, its
physical and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development.
Nearly half of the working-age population engages in subsistence
agriculture. Manufacturing consists mainly of the processing of raw
materials and of light manufacturing for the domestic market.
Alluvial diamond mining remains the major source of hard currency
earnings accounting for nearly half of Sierra Leone's exports. The
fate of the economy depends upon the maintenance of domestic peace
and the continued receipt of substantial aid from abroad, which is
essential to offset the severe trade imbalance and supplement
government revenues. The IMF has completed a Poverty Reduction and
Growth Facility program that helped stabilize economic growth and
reduce inflation. A recent increase in political stability has led
to a revival of economic activity such as the rehabilitation of
bauxite and rutile mining.

Singapore
Singapore has a highly developed and successful
free-market economy. It enjoys a remarkably open and corruption-free
environment, stable prices, and a per capita GDP higher than that of
most developed countries. The economy depends heavily on exports,
particularly in consumer electronics, information technology
products, pharmaceuticals, and on a growing service sector. Real GDP
growth averaged 7% between 2004 and 2007, but dropped to 1.1% in
2008 as a result of the global financial crisis. The economy
contracted in the last three quarters of 2008. Prime Minister LEE
and other senior officials have dampened expectations for a quick
rebound in 2009. Over the longer term, the government hopes to
establish a new growth path that will be less vulnerable to global
demand cycles especially for information technology products. It has
attracted major investments in pharmaceuticals and medical
technology production and will continue efforts to establish
Singapore as Southeast Asia's financial and high-tech hub.

Slovakia
Slovakia has made significant economic reforms since its
separation from the Czech Republic in 1993. Reforms to the taxation,
healthcare, pension, and social welfare systems helped Slovakia to
consolidate its budget and get on track to join the EU in 2004 and
to adopt the euro in January 2009. Major privatizations are nearly
complete, the banking sector is almost entirely in foreign hands,
and the government has helped facilitate a foreign investment boom
with business friendly policies such as labor market liberalization
and a 19% flat tax. Foreign investment in the automotive and
electronic sectors has been strong. Slovakia's economic growth
exceeded expectations in 2001-08 despite the general European
slowdown. Unemployment, at an unacceptable 18% in 2003-04, dropped
to 8.4% in 2008 but remains the economy's Achilles heel. Despite its
2006 pre-election promises to loosen fiscal policy and reverse the
previous DZURINDA government's pro-market reforms, FICO's cabinet
has thus far been careful to keep a lid on spending in order to meet
euro adoption criteria and has focused on regulating energy and food
prices instead. The OECD expects Slovakia's GDP growth to be
positive in 2009.

Slovenia
Slovenia, which on 1 January 2007 became the first 2004
European Union entrant to adopt the euro, is a model of economic
success and stability for the region. With the highest per capita
GDP in Central Europe, Slovenia has excellent infrastructure, a
well-educated work force, and a strategic location between the
Balkans and Western Europe. Privatization has lagged since 2002, and
the economy has one of highest levels of state control in the EU.
Structural reforms to improve the business environment have allowed
for somewhat greater foreign participation in Slovenia's economy and
have helped to lower unemployment. In March 2004, Slovenia became
the first transition country to graduate from borrower status to
donor partner at the World Bank. In December 2007, Slovenia was
invited to begin the accession process for joining the OECD. Despite
its economic success, foreign direct investment (FDI) in Slovenia
has lagged behind the region average, and taxes remain relatively
high. Furthermore, the labor market is often seen as inflexible, and
legacy industries are losing sales to more competitive firms in
China, India, and elsewhere.

Solomon Islands
The bulk of the population depends on agriculture,
fishing, and forestry for at least part of its livelihood. Most
manufactured goods and petroleum products must be imported. The
islands are rich in undeveloped mineral resources such as lead,
zinc, nickel, and gold. Prior to the arrival of RAMSI, severe ethnic
violence, the closing of key businesses, and an empty government
treasury culminated in economic collapse. RAMSI's efforts to restore
law and order and economic stability have led to modest growth as
the economy rebuilds.

Somalia
Despite the lack of effective national governance, Somalia
has maintained a healthy informal economy, largely based on
livestock, remittance/money transfer companies, and
telecommunications. Agriculture is the most important sector, with
livestock normally accounting for about 40% of GDP and about 65% of
export earnings. Nomads and semi-pastoralists, who are dependent
upon livestock for their livelihood, make up a large portion of the
population. Livestock, hides, fish, charcoal, and bananas are
Somalia's principal exports, while sugar, sorghum, corn, qat, and
machined goods are the principal imports. Somalia's small industrial
sector, based on the processing of agricultural products, has
largely been looted and sold as scrap metal. Somalia's service
sector also has grown. Telecommunication firms provide wireless
services in most major cities and offer the lowest international
call rates on the continent. In the absence of a formal banking
sector, money transfer/remittance services have sprouted throughout
the country, handling roughly $2 billion in remittances annually.
Mogadishu's main market offers a variety of goods from food to the
newest electronic gadgets. Hotels continue to operate and are
supported with private-security militias. Somalia's arrears to the
IMF continued to grow in 2008. Statistics on Somalia's GDP, growth,
per capita income, and inflation should be viewed skeptically.

South Africa
South Africa is a middle-income, emerging market with
an abundant supply of natural resources; well-developed financial,
legal, communications, energy, and transport sectors; a stock
exchange that is 17th largest in the world; and modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. Growth was robust from
2004 to 2008 as South Africa reaped the benefits of macroeconomic
stability and a global commodities boom, but began to slow in the
second half of 2008 due to the global financial crisis' impact on
commodity prices and demand. However, unemployment remains high and
outdated infrastructure has constrained growth. At the end of 2007,
South Africa began to experience an electricity crisis because state
power supplier Eskom suffered supply problems with aged plants,
necessitating "load-shedding" cuts to residents and businesses in
the major cities. Daunting economic problems remain from the
apartheid era - especially poverty, lack of economic empowerment
among the disadvantaged groups, and a shortage of public
transportation. South African economic policy is fiscally
conservative but pragmatic, focusing on controlling inflation,
maintaining a budget surplus, and using state-owned enterprises to
deliver basic services to low-income areas as a means to increase
job growth and household income.

South Georgia and South Sandwich Islands
Some fishing takes place in
adjacent waters. There is a potential source of income from
harvesting finfish and krill. The islands receive income from
postage stamps produced in the UK, sale of fishing licenses, and
harbor and landing fees from tourist vessels. Tourism from
specialized cruise ships is increasing rapidly.

Southern Ocean
Fisheries in 2006-07 landed 126,976 metric tons, of
which 82% (104,586 tons) was krill (Euphausia superba) and 9.5%
(12,027 tons) Patagonian toothfish (Dissostichus eleginoides - also
known as Chilean sea bass), compared to 127,910 tons in 2005-06 of
which 83% (106,591 tons) was krill and 9.7% (12,396 tons) Patagonian
toothfish (estimated fishing from the area covered by the Convention
of the Conservation of Antarctic Marine Living Resources (CCAMLR),
which extends slightly beyond the Southern Ocean area).
International agreements were adopted in late 1999 to reduce
illegal, unreported, and unregulated fishing, which in the 2000-01
season landed, by one estimate, 8,376 metric tons of Patagonian and
Antarctic toothfish. In the 2007-08 Antarctic summer, 45,213
tourists visited the Southern Ocean, compared to 35,552 in
2006-2007, and 29,799 in 2005-2006 (estimates provided to the
Antarctic Treaty by the International Association of Antarctica Tour
Operators (IAATO), and does not include passengers on overflights
and those flying directly in and out of Antarctica).

Spain
The Spanish economy grew every year from 1994 through 2008
before entering a recession that started in the third quarter of
2008. Spain's mixed capitalist economy supports a GDP that on a per
capita basis is approaching that of the largest West European
economies. The Socialist president, Jose Luis Rodriguez ZAPATERO, in
office since 2004, has made mixed progress in carrying out key
structural reforms. The economy was greatly affected, especially
after Zapatero's second term began in April 2008, by the bursting of
the housing bubble and construction boom that had fueled much of the
economic growth between 2001 and 2007. The global financial crisis
exacerbated the economic downturn. GDP growth in 2008 was 1.2%, well
below the 3% or higher growth the country enjoyed from 1997 through
2007. The Spanish banking system is considered solid, thanks in part
to conservative oversight by the European Central Bank, and
government intervention to rescue banks on the scale seen elsewhere
in Europe in 2008 was not necessary. After considerable success
since the mid-1990s in reducing unemployment to a 2007 low of 8%,
Spain suffered a major spike in unemployment in the last few months
of 2008, finishing the year with an unemployment rate over 13%.

Spratly Islands
Economic activity is limited to commercial fishing.
The proximity to nearby oil- and gas-producing sedimentary basins
suggests the potential for oil and gas deposits, but the region is
largely unexplored. There are no reliable estimates of potential
reserves. Commercial exploitation has yet to be developed.

Sri Lanka
In 1977, Colombo abandoned statist economic policies and
its import substitution trade policy for more market-oriented
policies, export-oriented trade, and encouragement of foreign
investment. Recent changes in government, however, have brought some
policy reversals. Currently, the ruling Sri Lanka Freedom Party has
a more statist economic approach, which seeks to reduce poverty by
steering investment to disadvantaged areas, developing small and
medium enterprises, promoting agriculture, and expanding the already
enormous civil service. The government has halted privatizations.
Although suffering a brutal civil war that began in 1983, Sri Lanka
saw GDP growth average 4.5% in the last 10 years with the exception
of a recession in 2001. In late December 2004, a major tsunami took
about 31,000 lives, left more than 6,300 missing and 443,000
displaced, and destroyed an estimated $1.5 billion worth of
property. Government spending on development and fighting the LTTE
drove GDP growth to about 7% per year in 2006-07 before the global
recession slow growth in 2008, but high government spending and high
oil and commodity prices also raised inflation to around 15% in
2008. Sri Lanka's most dynamic sectors now are food processing,
textiles and apparel, food and beverages, port construction,
telecommunications, and insurance and banking. In 2008, plantation
crops made up only about 20% of exports (compared with more than 90%
in 1970), while textiles and garments accounted for more than 40%.
About 1.5 million Sri Lankans work abroad, 90% of them in the Middle
East. They send home more than $2.5 billion a year. The 25-year
civil conflict between LTTE and the government of Sri Lanka has been
a serious impediment to economic activities. By mid February 2009,
the LTTE remained in control of small and shrinking area in the
North. The conflict continues to cast a shadow over the economy.

Sudan
Until the second half of 2008, Sudan's economy boomed on the
back of increases in oil production, high oil prices, and large
inflows of foreign direct investment. GDP growth registered more
than 10% per year in 2006 and 2007. From 1997 to date, Sudan has
been working with the IMF to implement macroeconomic reforms,
including a managed float of the exchange rate. Sudan began
exporting crude oil in the last quarter of 1999. Agricultural
production remains important, because it employs 80% of the work
force and contributes a third of GDP. The Darfur conflict, the
aftermath of two decades of civil war in the south, the lack of
basic infrastructure in large areas, and a reliance by much of the
population on subsistence agriculture ensure much of the population
will remain at or below the poverty line for years despite rapid
rises in average per capita income. In January 2007, the government
introduced a new currency, the Sudanese Pound, at an initial
exchange rate of $1.00 equals 2 Sudanese Pounds.

Suriname
The economy is dominated by the mining industry, with
exports of alumina, gold, and oil accounting for about 85% of
exports and 25% of government revenues, making the economy highly
vulnerable to mineral price volatility. Prospects for local onshore
oil production are good, and a drilling program is underway.
Offshore oil drilling was given a boost in 2004 when the State Oil
Company (Staatsolie) signed exploration agreements with several
Western oil companies. Bidding on these new offshore blocks was
completed in July 2006. The short-term economic outlook depends on
the government's ability to control inflation and on the development
of projects in the bauxite and gold mining sectors, though
investment in these projects may slow with the tightening of global
credit markets. Suriname has received aid for these projects from
Netherlands, Belgium, and the European Development Fund. Suriname's
economic prospects for the medium term will depend on continued
commitment to responsible monetary and fiscal policies and to the
introduction of structural reforms to liberalize markets and promote
competition. In 2000, the government of Ronald VENETIAAN, returned
to office and inherited an economy with inflation of over 100% and a
growing fiscal deficit. He quickly implemented an austerity program,
raised taxes, attempted to control spending, and tamed inflation.
The VENETIAAN administration also has created a stabilization fund
to insulate future revenue from commodity shocks. These economic
policies are likely to remain in effect during VENETIAAN's third
term.

Svalbard
Coal mining is the major economic activity on Svalbard. The
treaty of 9 February 1920 gave the 41 signatories equal rights to
exploit mineral deposits, subject to Norwegian regulation. Although
US, UK, Dutch, and Swedish coal companies have mined in the past,
the only companies still mining are Norwegian and Russian. The
settlements on Svalbard are essentially company towns. The Norwegian
state-owned coal company employs nearly 60% of the Norwegian
population on the island, runs many of the local services, and
provides most of the local infrastructure. There is also some
hunting of seal, reindeer, and fox.

Swaziland
In this small, landlocked economy, subsistence agriculture
occupies approximately 70% of the population. The manufacturing
sector has diversified since the mid-1980s. Sugar and wood pulp
remain important foreign exchange earners. In 2007, the sugar
industry increased efficiency and diversification efforts, in
response to a 17% decline in EU sugar prices. Mining has declined in
importance in recent years with only coal and quarry stone mines
remaining active. Surrounded by South Africa, except for a short
border with Mozambique, Swaziland is heavily dependent on South
Africa from which it receives more than nine-tenths of its imports
and to which it sends 60% of its exports. Swaziland's currency is
pegged to the South African rand, subsuming Swaziland's monetary
policy to South Africa. Customs duties from the Southern African
Customs Union, which may equal as much as 70% of government revenue
this year, and worker remittances from South Africa substantially
supplement domestically earned income. Swaziland is not poor enough
to merit an IMF program; however, the country is struggling to
reduce the size of the civil service and control costs at public
enterprises. The government is trying to improve the atmosphere for
foreign investment. With an estimated 40% unemployment rate,
Swaziland's need to increase the number and size of small and medium
enterprises and attract foreign direct investment is acute.
Overgrazing, soil depletion, drought, and sometimes floods persist
as problems for the future. More than one-fourth of the population
needed emergency food aid in 2006-07 because of drought, and nearly
two-fifths of the adult population has been infected by HIV/AIDS.

Sweden
Aided by peace and neutrality for the whole of the 20th
century, Sweden has achieved an enviable standard of living under a
mixed system of high-tech capitalism and extensive welfare benefits.
It has a modern distribution system, excellent internal and external
communications, and a skilled labor force. In September 2003,
Swedish voters turned down entry into the euro system concerned
about the impact on the economy and sovereignty. Timber, hydropower,
and iron ore constitute the resource base of an economy heavily
oriented toward foreign trade. Privately owned firms account for
about 90% of industrial output, of which the engineering sector
accounts for 50% of output and exports. Agriculture accounts for
only 1% of GDP and of employment. Until 2008, Sweden was in the
midst of a sustained economic upswing, boosted by increased domestic
demand and strong exports. This and robust finances offered the
center-right government considerable scope to implement its reform
program aimed at increasing employment, reducing welfare dependence,
and streamlining the state's role in the economy. Despite strong
finances and underlying fundamentals, the Swedish economy slid into
recession in the third quarter of 2008 and growth continued downward
in the fourth as deteriorating global conditions reduced export
demand and consumption. On 3 February 2009, the Swedish Government
announced a $6 billon rescue package for the banking sector.

Switzerland
Switzerland is a peaceful, prosperous, and stable modern
market economy with low unemployment, a highly skilled labor force,
and a per capita GDP among the highest in the world. Switzerland's
economy benefits from a highly developed service sector led by
financial services and a manufacturing industry that specializes in
high-technology, knowledge-based production. The Swiss in recent
years have brought their economic practices largely into conformity
with the EU's to enhance their international competitiveness, but
some trade protectionism remains, particularly for its small
agricultural sector. Switzerland remains a safehaven for investors,
because it has maintained a degree of bank secrecy and has kept up
the franc's long-term external value. The global financial crisis
and resulting economic downturn could, however, put Switzerland in a
recession in 2009, particularly as global export demand stalls.
Switzerland's largest banks suffered significant losses in 2008 and
the country's largest bank accepted a government rescue deal in late
2008. The Swiss National Bank, beginning in October 2008, cut
interest rates on several consecutive occasions, effectively
instituting a zero-rate policy in a bid to boost the economy.

Syria
The Syrian economy grew by an estimated 2.4% in real terms in
2008 led by the petroleum and agricultural sectors, which together
account for about one-half of GDP. Higher crude oil prices countered
declining oil production and led to higher budgetary and export
receipts. Damascus has implemented modest economic reforms in the
past few years, including cutting lending interest rates, opening
private banks, consolidating all of the multiple exchange rates,
raising prices on some subsidized items, most notably gasoline and
cement, and establishing the Damascus Stock Exchange - which is set
to begin operations in 2009. In October 2007, for example, Damascus
raised the price of subsidized gasoline by 20%, then instituted a
rationing system in 2008. In addition, President ASAD signed
legislative decrees to encourage corporate ownership reform, and to
allow the Central Bank to issue Treasury bills and bonds for
government debt. Nevertheless, the economy remains highly controlled
by the government. Long-run economic constraints include declining
oil production, high unemployment and inflation, rising budget
deficits, and increasing pressure on water supplies caused by heavy
use in agriculture, rapid population growth, industrial expansion,
and water pollution.