Chapter CXIII: Section 3: , Taipei, Taiwan, telephone: 886 (2) 2162-2000, FAX (44)

Saint Lucia
Changes in the EU import preference regime and the
increased competition from Latin American bananas have made economic
diversification increasingly important in Saint Lucia. The island
nation has been able to attract foreign business and investment,
especially in its offshore banking and tourism industries. Tourism
is the main source of foreign exchange, with more than 700,000
arrivals in 2005. The manufacturing sector is the most diverse in
the Eastern Caribbean area, and the government is trying to
revitalize the banana industry. Economic fundamentals remain solid,
even though unemployment needs to be cut.

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. The islands are heavily subsidized by France
to the great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Recent test
drilling for oil may pave the way for development of the energy
sector.

Saint Vincent and the Grenadines
Economic growth in this
lower-middle-income country hinges upon seasonal variations in the
agricultural and tourism sectors. Tropical storms wiped out
substantial portions of crops in 1994, 1995, and 2002, and tourism
in the Eastern Caribbean suffered low arrivals in the immediate
aftermath of 11 September 2001. The islands had more than 160,000
tourist arrivals in 2005, mostly to the Grenadines. Saint Vincent is
home to a small offshore banking sector and has moved to adopt
international regulatory standards. Saint Vincent is also a producer
of marijuana and is being used as a transshipment point for illegal
narcotics from South America.

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; about 100,000 tourists visited the islands in 2005. 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
The tourist sector contributes over 50% of GDP. In 2006
more than 2.1 million tourists visited San Marino. The key
industries are banking, wearing apparel, electronics, and ceramics.
Main agricultural products are wine and cheeses. 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, but strengthening prices helped boost
export earnings in 2003. 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. Sao Tome is optimistic about the development
of petroleum resources in its territorial waters in the oil-rich
Gulf of Guinea, which are being jointly developed in a 60-40 split
with Nigeria. 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 exceeded 4% in 2006, as a result of increases
in public expenditures and oil-related capital investment.

Saudi Arabia
This is an oil-based economy with strong government
controls over major economic activities. Saudi Arabia possesses 25%
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 75% of budget revenues, 45% of
GDP, and 90% of export earnings. About 40% of GDP comes from the
private sector. Roughly 5.5 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors. The government is encouraging private sector growth
to lessen the kingdom's dependence on oil and increase employment
opportunities for the swelling Saudi population. The government is
promoting private sector and foreign participation in the power
generation, telecom, natural gas, and petrochemical industries. 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. With high oil revenues enabling the
government to post large budget surpluses, Riyadh has been able to
substantially boost spending on job training and education,
infrastructure development, and government salaries.

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
1995-2006. Annual inflation had been pushed down to the low 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. Senegal still relies heavily upon outside donor assistance.
Under the IMF's Highly Indebted Poor Countries (HIPC) debt relief
program, Senegal will benefit from eradication of two-thirds of its
bilateral, multilateral, and private-sector debt.

Serbia
MILOSEVIC-era mismanagement of the economy, an extended
period of 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 October 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,
a down-sized 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 only minimal progress in
restructuring and privatizing its holdings in major sectors of the
economy, including energy and telecommunications. It has made
halting progress towards EU membership and is currently pursuing a
Stabilization and Association Agreement with Brussels. Serbia is
also pursuing membership in the World Trade Organization.
Unemployment remains an ongoing political and economic problem. The
Republic of Montenegro severed its economy from Serbia during the
MILOSEVIC era; therefore, the formal separation of Serbia and
Montenegro in June 2006 had little real impact on either economy.
Kosovo's economy continues to transition to a market-based system
and is largely dependent on the international community and the
diaspora for financial and technical assistance. The euro and the
Serbian dinar are both accepted currencies in Kosovo. While
maintaining ultimate oversight, UNMIK continues to work with the EU
and Kosovo's local provisional government to accelerate economic
growth, lower unemployment, and attract foreign investment to help
Kosovo integrate into regional economic structures. The complexity
of Serbia and Kosovo's political and legal relationships has created
uncertainty over property rights and hindered the privatization of
state-owned assets in Kosovo. Most of Kosovo's population lives in
rural towns outside of the largest city, Pristina. Inefficient,
near-subsistence farming is common.
note: economic data for Serbia currently reflects information for
the former Serbia and Montenegro, unless otherwise noted; data for
Serbia alone will be added when available

Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the old
near-subsistence level. 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 in order 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.
Sharp drops illustrated the vulnerability of the tourist sector in
1991-92 due largely to the Gulf War, and once again following the 11
September 2001 terrorist attacks on the US. Growth slowed in
1998-2002, and fell in 2003, due to sluggish tourist and tuna
sectors, but resumed in 2004. Growth turned negative again in
2005-06. Tight controls on exchange rates and the scarcity of
foreign exchange have impaired short-term economic prospects. The
black-market value of the Seychelles rupee is half the official
exchange rate; without a devaluation of the currency, the tourist
sector may remain sluggish as vacationers seek cheaper destinations
such as Comoros, Mauritius, and Madagascar.

Sierra Leone
Sierra Leone is an extremely poor African nation with
tremendous inequality in income distribution. While it possesses
substantial mineral, agricultural, and fishery resources, its
economic and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development.
About two-thirds 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, a highly-developed and successful free-market
economy, enjoys a remarkably open and corruption-free environment,
stable prices, and a per capita GDP equal to that of the four
largest West European countries. The economy depends heavily on
exports, particularly in consumer electronics and information
technology products. It was hard hit in 2001-03 by the global
recession, by the slump in the technology sector, and by an outbreak
of Severe Acute Respiratory Syndrome (SARS) in 2003, which curbed
tourism and consumer spending. Fiscal stimulus, low interest rates,
a surge in exports, and internal flexibility led to vigorous growth
in 2004-06, with real GDP growth averaging 7% annually. The
government hopes to establish a new growth path that will be less
vulnerable to the global demand cycle 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 mastered much of the difficult transition from
a centrally planned economy to a modern market economy. The DZURINDA
government made excellent progress during 2001-04 in macroeconomic
stabilization and structural reform. Major privatizations are nearly
complete, the banking sector is almost completely 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 sector has
been strong. Slovakia's economic growth exceeded expectations in
2001-06, despite the general European slowdown. Unemployment, at an
unacceptable 18% in 2003-04, dropped to 10.2% in 2006, but remains
the economy's Achilles heel. Slovakia joined the EU on 1 May 2004.

Slovenia
With a GDP per capita substantially greater than the other
transitioning economies of Central Europe, Slovenia is a model of
economic success and stability for its neighbors in the former
Yugoslavia. The country, which joined the EU in 2004 and joined the
eurozone on 1 January 2007, has excellent infrastructure, a
well-educated work force, and an excellent central location.
Privatization of the economy proceeded at an accelerated pace in
2002-05. Despite lackluster performance in Europe in 2001-05,
Slovenia maintained moderate growth. Structural reforms to improve
the business environment have allowed for 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. Despite its economic success, Slovenia faces growing
challenges. Much of the economy remains in state hands and foreign
direct investment (FDI) in Slovenia is one of the lowest in the EU
on a per capita basis. Taxes are relatively high, the labor market
is often seen as inflexible, and legacy industries are losing sales
to more competitive firms in China, India, and elsewhere. The
current center-right government, elected in October 2004, has
pledged to accelerate privatization of a number of large state
holdings and is interested in increasing FDI in Slovenia. In late
2005, the government's new Committee for Economic Reforms was
elevated to cabinet-level status. The Committee's program includes
plans for lowering the tax burden, privatizing state-controlled
firms, improving the flexibility of the labor market, and increasing
the government's efficiency.

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 the Regional
Assistance Mission to the Solomon Islands (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
Somalia's economic fortunes are driven by its deep political
divisions. The northwestern area has declared its independence as
the "Republic of Somaliland"; the northeastern region of Puntland is
a semi-autonomous state; and the remaining southern portion is
riddled with the struggles of rival factions. Economic life
continues, in part because much activity is local and relatively
easily protected. Agriculture is the most important sector, with
livestock normally accounting for about 40% of GDP and about 65% of
export earnings, but Saudi Arabia's ban on Somali livestock, due to
Rift Valley Fever concerns, has severely hampered the sector. Nomads
and semi-nomads, 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. Despite the seeming anarchy, Somalia's service
sector has managed to survive and grow. 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 exchange services have sprouted
throughout the country, handling between $500 million and $1 billion
in remittances annually. Mogadishu's main market offers a variety of
goods from food to the newest electronic gadgets. The SCIC has
opened Mogadishu's main port and airport - closed for 15 years - and
now controls most of the ports and airfields in southern Somalia.
Hotels continue to operate, and militias provide security. The
ongoing civil disturbances and clan rivalries, however, have
interfered with any broad-based economic development and
international aid arrangements. Somalia's arrears to the IMF
continued to grow in 2006. Statistics on Somalia's GDP, growth, per
capita income, and inflation should be viewed skeptically. In late
December 2004, a major tsunami caused an estimated 150 deaths and
resulted in destruction of property in coastal areas.

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 ranks among the 10 largest in the world; and a modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. However, growth has not
been strong enough to lower South Africa's high unemployment rate,
and daunting economic problems remain from the apartheid era -
especially poverty and lack of economic empowerment among the
disadvantaged groups. South African economic policy is fiscally
conservative, but pragmatic, focusing on targeting inflation and
liberalizing trade as means to increase job growth and household
income.

South Georgia and the 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 2003-04 landed 136,262 metric tons, of
which 87% (118,166 tons) was krill and 8% (11,182 tons) Patagonian
toothfish, compared to 142,555 tons in 2002-03 of which 83% (117,728
tons) was krill and 12% (16,479 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 2004-05 Antarctic summer 28,202 tourists, most of them
seaborne (approximately 97%), visited the Southern Ocean and
Antarctica, compared to 14,762 in 1999-2000.

Spain
The Spanish economy boomed from 1986 to 1990, averaging 5%
annual growth. After a European-wide recession in the early 1990s,
the Spanish economy resumed moderate growth starting in 1994.
Spain's mixed capitalist economy supports a GDP that on a per capita
basis is 80% that of the four leading West European economies. The
center-right government of former President AZNAR successfully
worked to gain admission to the first group of countries launching
the European single currency (the euro) on 1 January 1999. The AZNAR
administration continued to advocate liberalization, privatization,
and deregulation of the economy and introduced some tax reforms to
that end. Unemployment fell steadily under the AZNAR administration
but remains high at 8.7%. Growth averaging 3% annually during
2003-06 was satisfactory given the background of a faltering
European economy. The Socialist president, RODRIGUEZ ZAPATERO, has
made mixed progress in carrying out key structural reforms, which
need to be accelerated and deepened to sustain Spain's strong
economic growth. Despite the economy's relative solid footing
significant downside risks remain, including Spain's continued loss
of competitiveness, the potential for a housing market collapse, the
country's changing demographic profile and a decline in EU
structural funds.

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 have brought some policy
reversals, however. 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 most
privatizations. Although suffering a brutal civil war that began in
1983, Sri Lanka saw GDP growth average 4.5% in the last ten years,
with a brief interruption during the global downturn 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. Growth, partly spurred by
reconstruction, reached 5% in 2005 and more than 6% in 2006. Sri
Lanka's most dynamic sectors now are food processing, textiles and
apparel, food and beverages, port contstruction, telecommunications,
and insurance and banking. In 2005, plantation crops made up only
about 15% of exports (compared with more than 90% in 1970), while
textiles and garments accounted for more than 60%. About 800,000 Sri
Lankans work abroad, 90% in the Middle East. They send home about $1
billion a year. The struggle by the Tamil Tigers of the north and
east for a largely independent homeland continues to cast a shadow
over the economy.

Sudan
Sudan has turned around a struggling economy with sound
economic policies and infrastructure investments, but it still faces
formidable economic problems, starting from its low level of per
capita output. From 1997 to date, Sudan has been implementing IMF
macroeconomic reforms. In 1999, Sudan began exporting crude oil and
in the last quarter of 1999 recorded its first trade surplus, which,
along with monetary policy, has stabilized the exchange rate.
Increased oil production, revived light industry, and expanded
export processing zones helped sustain GDP growth at 10% in 2006.
Agricultural production remains Sudan's most important sector,
employing 80% of the work force, contributing 35% of GDP, and
accounting for most of GDP growth, but most farms remain rain-fed
and susceptible to drought. Chronic instability - resulting from the
long-standing civil war between the Muslim north and the
Christian/pagan south, adverse weather, and weak world agricultural
prices - ensure that much of the population will remain at or below
the poverty line for years.

Suriname
The economy is dominated by the mining industry, which
accounts for more than a third of GDP and subjects government
revenues to mineral price volatility. 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. 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. The government of Ronald VENETIAAN,
in his first term, implemented an austerity program, raised taxes,
and attempted to control spending. Economic policies are likely to
remain the same during VENETIAAN's second term. Prospects for local
onshore oil production are good, as a drilling program is underway.
Offshore oil drilling was given a boost in 2004 when the State Oil
Company (Staatsolie) signed exploration agreements with Repsol,
Mearsk, and Occidental. Bidding on these new offshore blocks was
completed in July 2006.

Svalbard
Coal mining is the major economic activity on Svalbard. The
treaty of 9 February 1920 gives 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 more than 80% of the population. The manufacturing sector
has diversified since the mid-1980s. Sugar and wood pulp remain
important foreign exchange earners. 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. Customs duties from the
Southern African Customs Union and worker remittances from South
Africa substantially supplement domestically earned income. The
government is trying to improve the atmosphere for foreign
investment. 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 2004-05 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. 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
2% of employment. The government's commitment to fiscal discipline
resulted in a substantial budgetary surplus in 2001, which was cut
by more than half in 2002, due to the global economic slowdown,
declining revenue, and increased spending. The Swedish central bank
(the Riksbank) focuses on price stability with its inflation target
of 2%. Growth remained sluggish in 2003, but picked up during
2004-06. Presumably because of generous sick-leave benefits, Swedish
workers report in sick more often than other Europeans. In September
2003, Swedish voters turned down entry into the euro system,
concerned about the impact on the economy and sovereignty.

Switzerland
Switzerland is a peaceful, prosperous, and stable modern
market economy with low unemployment, a highly skilled labor force,
and a per capita GDP larger than that of the big Western European
economies. The Swiss in recent years have brought their economic
practices largely into conformity with the EU's to enhance their
international competitiveness. 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. Reflecting the
anemic economic conditions of Europe, GDP growth stagnated during
the 2001-03 period, improved during 2004-05 to 1.8% annually and to
2.9% in 2006. Even so, unemployment has remained at less than half
the EU average.

Syria
The Syrian economy grew by an estimated 2.9% in real terms in
2006, 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 exports and led to higher budgetary and
export receipts. Total foreign assets of the Central Bank and
domestic banking system rose to about $20 billion in 2006, and the
government strengthened the private sector foreign exchange rate by
about 7 percent from the start of the year. The Government of Syria
has implemented modest economic reforms in the past few years,
including cutting interest rates, opening private banks,
consolidating some of the multiple exchange rates, and raising
prices on some subsidized foodstuffs. Nevertheless, the economy
remains highly controlled by the government. Long-run economic
constraints include declining oil production and exports, weak
investment, and increasing pressure on water supplies caused by
heavy use in agriculture, rapid population growth, industrial
expansion, and water pollution.

Taiwan
Taiwan has a dynamic capitalist economy with gradually
decreasing guidance of investment and foreign trade by government
authorities. In keeping with this trend, some large,
government-owned banks and industrial firms are being privatized.
Exports have provided the primary impetus for industrialization. The
island runs a trade surplus, and foreign reserves are the world's
third largest. Despite restrictions cross-strait links, China has
overtaken the US to become Taiwan's largest export market and, in
2006, its second-largest source of imports after Japan. China is
also the island's number one destination for foreign direct
investment. Strong trade performance in 2006 pushed Taiwan's GDP
growth rate above 4%, and unemployment is below 4%. Consumer
spending recovered following a slowdown early in 2006, when banks
tightened lending to address a sharp increase in delinquent consumer
debt.

Tajikistan
Tajikistan has one of the lowest per capita GDPs among
the 15 former Soviet republics. Only 6% of the land area is arable;
cotton is the most important crop. Mineral resources, varied but
limited in amount, include silver, gold, uranium, and tungsten.
Industry consists only of a large aluminum plant, hydropower
facilities, and small obsolete factories mostly in light industry
and food processing. The civil war (1992-97) severely damaged the
already weak economic infrastructure and caused a sharp decline in
industrial and agricultural production. While Tajikistan has
experienced steady economic growth since 1997, nearly two-thirds of
the population continue to live in abject poverty. Economic growth
reached 10.6% in 2004, but dropped to 8% in 2005, and to 7% in 2006.
Tajikistan's economic situation, however, remains fragile due to
uneven implementation of structural reforms, weak governance,
widespread unemployment, and the external debt burden. Continued
privatization of medium and large state-owned enterprises could
increase productivity. A debt restructuring agreement was reached
with Russia in December 2002, including a $250 million write-off of
Tajikistan's $300 million debt to Russia. Tajikistan ranks third in
the world in terms of water resources per head. A proposed
investment to finish the hydropower dams Rogun and Sangtuda I and II
would substantially add to electricity production, which could be
exported for profit. If finished, Rogun will be the world's tallest
dam. In 2006, Tajikistan was the recipient of substantial Shanghai
Cooperation Organization infrastructure development credits to
improve its roads and electricity transmission network.

Tanzania
Tanzania is one of the poorest countries in the world. The
economy depends heavily on agriculture, which accounts for almost
half of GDP, provides 85% of exports, and employs 80% of the work
force. Topography and climatic conditions, however, limit cultivated
crops to only 4% of the land area. Industry traditionally featured
the processing of agricultural products and light consumer goods.
The World Bank, the International Monetary Fund, and bilateral
donors have provided funds to rehabilitate Tanzania's out-of-date
economic infrastructure and to alleviate poverty. Long-term growth
through 2005 featured a pickup in industrial production and a
substantial increase in output of minerals, led by gold. Recent
banking reforms have helped increase private-sector growth and
investment. Continued donor assistance and solid macroeconomic
policies supported real GDP growth of nearly 6% in 2006.

Thailand
With a well-developed infrastructure, a free-enterprise
economy, and pro-investment policies, Thailand appears to have fully
recovered from the 1997-98 Asian Financial Crisis. The country was
one of East Asia's best performers in 2002-04. Boosted by increased
consumption and strong export growth, the Thai economy grew 6.9% in
2003 and 6.1% in 2004 despite a sluggish global economy. Bangkok has
pursued preferential trade agreements with a variety of partners in
an effort to boost exports and to maintain high growth. In late
December 2004, a major tsunami took 8,500 lives in Thailand and
caused massive destruction of property in the southern provinces of
Krabi, Phangnga, and Phuket. In 2006, investment stagnated as
investors, spooked by the Thaksin administration's political
problems, stayed on the sidelines. The military coup in September
brought in a new economic team, led by the former central bank
governor. In December, the Thai Board of Investment reported the
value of investment applications from January to November had
declined by 27% year-on-year. On the positive side, exports have
performed at record levels, rising nearly 17% in 2006.
Export-oriented manufacturing - in particular automobile production
- and farm output are driving these gains.

Togo
This small, sub-Saharan economy is heavily dependent on both
commercial and subsistence agriculture, which provides employment
for 65% of the labor force. Some basic foodstuffs must still be
imported. Cocoa, coffee, and cotton generate about 40% of export
earnings, with cotton being the most important cash crop. Togo is
the world's fourth-largest producer of phosphate. The government's
decade-long effort, supported by the World Bank and the IMF, to
implement economic reform measures, encourage foreign investment,
and bring revenues in line with expenditures has moved slowly.
Progress depends on follow-through on privatization, increased
openness in government financial operations, progress toward
legislative elections, and continued support from foreign donors.
Togo is working with donors to write a PRGF that could eventually
lead to a debt reduction plan.

Tokelau
Tokelau's small size (three villages), isolation, and lack
of resources greatly restrain economic development and confine
agriculture to the subsistence level. The people rely heavily on aid
from New Zealand - about $4 million annually - to maintain public
services, with annual aid being substantially greater than GDP. The
principal sources of revenue come from sales of copra, postage
stamps, souvenir coins, and handicrafts. Money is also remitted to
families from relatives in New Zealand.

Tonga
Tonga, a small, open, South Pacific island economy, has a
narrow export base in agricultural goods. Squash, coconuts, bananas,
and vanilla beans are the main crops, and agricultural exports make
up two-thirds of total exports. The country must import a high
proportion of its food, mainly from New Zealand. The country remains
dependent on external aid and remittances from Tongan communities
overseas to offset its trade deficit. Tourism is the second-largest
source of hard currency earnings following remittances. The
government is emphasizing the development of the private sector,
especially the encouragement of investment, and is committing
increased funds for health and education. Tonga has a reasonably
sound basic infrastructure and well-developed social services. High
unemployment among the young, a continuing upturn in inflation,
pressures for democratic reform, and rising civil service
expenditures are major issues facing the government.

Trinidad and Tobago
Trinidad and Tobago, the leading Caribbean
producer of oil and gas, has earned a reputation as an excellent
investment site for international businesses. Tourism is a growing
sector, although not proportionately as important as in many other
Caribbean islands. The economy benefits from a growing trade
surplus. Economic growth in 2006 reached 12.6% as prices for oil,
petrochemicals, and liquefied natural gas remained high, and foreign
direct investment continued to grow to support expanded capacity in
the energy sector. The government is coping with a rise in violent
crime.

Tromelin Island
no economic activity

Tunisia
Tunisia has a diverse economy, with important agricultural,
mining, energy, tourism, and manufacturing sectors. Governmental
control of economic affairs while still heavy has gradually lessened
over the past decade with increasing privatization, simplification
of the tax structure, and a prudent approach to debt. Progressive
social policies also have helped raise living conditions in Tunisia
relative to the region. Real growth slowed to a 15-year low of 1.9%
in 2002 because of agricultural drought and lackluster tourism.
Increased rain helped to push GDP growth to an average rate of 5% in
2003-06. However, a recession in agriculture, weak expansion in the
tourism and textile sectors, and increasing import costs due to
rising world energy prices cut growth to 4% in 2006. Tunisia is
gradually removing barriers to trade with the EU. Broader
privatization, further liberalization of the investment code to
increase foreign investment, improvements in government efficiency,
and reduction of the trade deficit are among the challenges ahead.

Turkey
Turkey's dynamic economy is a complex mix of modern industry
and commerce along with a traditional agriculture sector that still
accounts for more than 35% of employment. It has a strong and
rapidly growing private sector, yet the state still plays a major
role in basic industry, banking, transport, and communication. The
largest industrial sector is textiles and clothing, which accounts
for one-third of industrial employment; it faces stiff competition
in international markets with the end of the global quota system.
However, other sectors, notably the automotive and electronics
industries, are rising in importance within Turkey's export mix.
Real GNP growth has exceeded 6% in many years, but this strong
expansion has been interrupted by sharp declines in output in 1994,
1999, and 2001. The economy is turning around with the
implementation of economic reforms, and 2004 GDP growth reached 9%,
followed by roughly 5% annual growth in 2005-06. Inflation fell to
7.7% in 2005 - a 30-year low, but climbed back to 9.8% in 2006.
Despite the strong economic gains in 2002-06, which were largely due
to renewed investor interest in emerging markets, IMF backing, and
tighter fiscal policy, the economy is still burdened by a high
current account deficit and high debt. The public sector fiscal
deficit exceeds 6% of GDP - due in large part to high interest
payments, which accounted for about 37% of central government
spending in 2004. Prior to 2005, foreign direct investment (FDI) in
Turkey averaged less than $1 billion annually, but further economic
and judicial reforms and prospective EU membership are expected to
boost FDI. Privatization sales are currently approaching $21
billion. Oil began to flow through the Baku-Tblisi-Ceyhan pipeline
in May 2006, marking a major milestone that will bring up to 1
billion barrels per day from the Caspian to market.

Turkmenistan
Turkmenistan is a largely desert country with intensive
agriculture in irrigated oases and large gas and oil resources.
One-half of its irrigated land is planted in cotton; formerly it was
the world's tenth-largest producer. Poor harvests in recent years
have led to an almost 50% decline in cotton exports. With an
authoritarian ex-Communist regime in power and a tribally based
social structure, Turkmenistan has taken a cautious approach to
economic reform, hoping to use gas and cotton sales to sustain its
inefficient economy. Privatization goals remain limited. In
1998-2005, Turkmenistan suffered from the continued lack of adequate
export routes for natural gas and from obligations on extensive
short-term external debt. At the same time, however, total exports
rose by an average of 15% per year in 2003-06, largely because of
higher international oil and gas prices. In 2006, Ashgabat raised
its natural gas export prices to its main customer, Russia, from $66
per thousand cubic meters (tcm) to $100 per tcm. Overall prospects
in the near future are discouraging because of widespread internal
poverty, a poor educational system, government misuse of oil and gas
revenues, and Ashgabat's unwillingness to adopt market-oriented
reforms. Turkmenistan's economic statistics are state secrets, and
GDP and other figures are subject to wide margins of error. In
particular, the rate of GDP growth is uncertain.

Turks and Caicos Islands
The Turks and Caicos economy is based on
tourism, offshore financial services, and fishing. Most capital
goods and food for domestic consumption are imported. The US is the
leading source of tourists, accounting for more than three-quarters
of the 175,000 visitors that arrived in 2004. Major sources of
government revenue also include fees from offshore financial
activities and customs receipts.

Tuvalu
Tuvalu consists of a densely populated, scattered group of
nine coral atolls with poor soil. The country has no known mineral
resources and few exports. Subsistence farming and fishing are the
primary economic activities. Fewer than 1,000 tourists, on average,
visit Tuvalu annually. Government revenues largely come from the
sale of stamps and coins and remittances from seamen on merchant
ships abroad. About 1,000 Tuvaluans are being repatriated from
Nauru, with the decline of phosphate resources there. Substantial
income is received annually from an international trust fund
established in 1987 by Australia, NZ, and the UK and supported also
by Japan and South Korea. Thanks to wise investments and
conservative withdrawals, this fund has grown from an initial $17
million to over $35 million in 1999. The US Government is also a
major revenue source for Tuvalu because of payments from a 1988
treaty on fisheries. In an effort to reduce its dependence on
foreign aid, the government is pursuing public sector reforms,
including privatization of some government functions and personnel
cuts of up to 7%. Tuvalu derives around $1.5 million per year from
the lease of its ".tv" Internet domain name. With merchandise
exports only a fraction of merchandise imports, continued reliance
must be placed on fishing and telecommunications license fees,
remittances from overseas workers, official transfers, and income
from overseas investments.

Uganda
Uganda has substantial natural resources, including fertile
soils, regular rainfall, and sizable mineral deposits of copper and
cobalt. Agriculture is the most important sector of the economy,
employing over 80% of the work force. Coffee accounts for the bulk
of export revenues. Since 1986, the government - with the support of
foreign countries and international agencies - has acted to
rehabilitate and stabilize the economy by undertaking currency
reform, raising producer prices on export crops, increasing prices
of petroleum products, and improving civil service wages. The policy
changes are especially aimed at dampening inflation and boosting
production and export earnings. During 1990-2001, the economy turned
in a solid performance based on continued investment in the
rehabilitation of infrastructure, improved incentives for production
and exports, reduced inflation, gradually improved domestic
security, and the return of exiled Indian-Ugandan entrepreneurs. In
2000, Uganda qualified for enhanced Highly Indebted Poor Countries
(HIPC) debt relief worth $1.3 billion and Paris Club debt relief
worth $145 million. These amounts combined with the original HIPC
debt relief added up to about $2 billion. Growth for 2001-02 was
solid despite continued decline in the price of coffee, Uganda's
principal export. Growth in 2003-06 reflected an upturn in Uganda's
export markets.

Ukraine
After Russia, the Ukrainian republic was far and away the
most important economic component of the former Soviet Union,
producing about four times the output of the next-ranking republic.
Its fertile black soil generated more than one-fourth of Soviet
agricultural output, and its farms provided substantial quantities
of meat, milk, grain, and vegetables to other republics. Likewise,
its diversified heavy industry supplied the unique equipment (for
example, large diameter pipes) and raw materials to industrial and
mining sites (vertical drilling apparatus) in other regions of the
former USSR. Ukraine depends on imports of energy, especially
natural gas, to meet some 85% of its annual energy requirements.
Shortly after independence was ratified in December 1991, the
Ukrainian Government liberalized most prices and erected a legal
framework for privatization, but widespread resistance to reform
within the government and the legislature soon stalled reform
efforts and led to some backtracking. Output by 1999 had fallen to
less than 40% of the 1991 level. Loose monetary policies pushed
inflation to hyperinflationary levels in late 1993. Ukraine's
dependence on Russia for energy supplies and the lack of significant
structural reform have made the Ukrainian economy vulnerable to
external shocks. A dispute with Russia over pricing in late 2005 and
early 2006 led to a temporary gas cut-off; Ukraine concluded a deal
with Russia in January 2006 that almost doubled the price Ukraine
pays for Russian gas, and could cost the Ukrainian economy $1.4-2.2
billion. Ukrainian Government officials eliminated most tax and
customs privileges in a March 2005 budget law, bringing more
economic activity out of Ukraine's large shadow economy, but more
improvements are needed, including fighting corruption, developing
capital markets, and improving the legislative framework for
businesses. Reforms in the more politically sensitive areas of
structural reform and land privatization are still lagging. Outside
institutions - particularly the IMF - have encouraged Ukraine to
quicken the pace and scope of reforms. GDP growth was 6% in 2006, up
from 2.4% in 2005 mainly because of high steel prices worldwide and
strong demand for Ukrainian goods. The privatization of the
Kryvoryzhstal steelworks in late 2005 produced $4.8 billion in
windfall revenue for the government. Some of the proceeds were used
to finance the budget deficit, some to recapitalize two state banks,
some to retire public debt, and the rest may be used to finance
future deficits. Although the economy is likely to expand in 2007,
long-term growth could be threatened by the government's plans to
reinstate tax, trade, and customs privileges and to maintain
restrictive grain export quotas.

United Arab Emirates
The UAE has an open economy with a high per
capita income and a sizable annual trade surplus. Its wealth is
based on oil and gas output (about 30% of GDP), and the fortunes of
the economy fluctuate with the prices of those commodities. Since
the discovery of oil in the UAE more than 30 years ago, the UAE has
undergone a profound transformation from an impoverished region of
small desert principalities to a modern state with a high standard
of living. The government has increased spending on job creation and
infrastructure expansion and is opening up its utilities to greater
private sector involvement. In April 2004, the UAE signed a Trade
and Investment Framework Agreement (TIFA) with Washington and in
November 2004 agreed to undertake negotiations toward a Free Trade
Agreement (FTA) with the US. Higher oil revenue, strong liquidity,
and cheap credit in 2005-06 led to a surge in asset prices (shares
and real estate) and consumer inflation. Rising prices are
increasing the operating costs for businesses in the UAE and
degrading the UAE's allure to foreign investors. Dependence on a
large expatriate workforce and oil are significant long-term
challenges to the UAE's economy.

United Kingdom
The UK, a leading trading power and financial center,
is one of the quintet of trillion dollar economies of Western
Europe. Over the past two decades, the government has greatly
reduced public ownership and contained the growth of social welfare
programs. Agriculture is intensive, highly mechanized, and efficient
by European standards, producing about 60% of food needs with less
than 2% of the labor force. The UK has large coal, natural gas, and
oil reserves; primary energy production accounts for 10% of GDP, one
of the highest shares of any industrial nation. Services,
particularly banking, insurance, and business services, account by
far for the largest proportion of GDP while industry continues to
decline in importance. GDP growth slipped in 2001-03 as the global
downturn, the high value of the pound, and the bursting of the "new
economy" bubble hurt manufacturing and exports. Output recovered in
2004, to 3.2% growth, then slowed to 1.7% in 2005 and 2.6% in 2006.
The economy is one of the strongest in Europe; inflation, interest
rates, and unemployment remain low. The relatively good economic
performance has complicated the BLAIR government's efforts to make a
case for Britain to join the European Economic and Monetary Union
(EMU). Critics point out that the economy is doing well outside of
EMU, and public opinion polls show a majority of Britons are opposed
to the euro. Meantime, the government has been speeding up the
improvement of education, transport, and health services, at a cost
in higher taxes and a widening public deficit.

United States
The US has the largest and most technologically
powerful economy in the world, with a per capita GDP of $43,500. In
this market-oriented economy, private individuals and business firms
make most of the decisions, and the federal and state governments
buy needed goods and services predominantly in the private
marketplace. US business firms enjoy greater flexibility than their
counterparts in Western Europe and Japan in decisions to expand
capital plant, to lay off surplus workers, and to develop new
products. At the same time, they face higher barriers to enter their
rivals' home markets than foreign firms face entering US markets. US
firms are at or near the forefront in technological advances,
especially in computers and in medical, aerospace, and military
equipment; their advantage has narrowed since the end of World War
II. The onrush of technology largely explains the gradual
development of a "two-tier labor market" in which those at the
bottom lack the education and the professional/technical skills of
those at the top and, more and more, fail to get comparable pay
raises, health insurance coverage, and other benefits. Since 1975,
practically all the gains in household income have gone to the top
20% of households. The response to the terrorist attacks of 11
September 2001 showed the remarkable resilience of the economy. The
war in March-April 2003 between a US-led coalition and Iraq, and the
subsequent occupation of Iraq, required major shifts in national
resources to the military. The rise in GDP in 2004-06 was
undergirded by substantial gains in labor productivity. Hurricane
Katrina caused extensive damage in the Gulf Coast region in August
2005, but had a small impact on overall GDP growth for the year.
Soaring oil prices in 2005 and 2006 threatened inflation and
unemployment, yet the economy continued to grow through year-end
2006. Imported oil accounts for about two-thirds of US consumption.
Long-term problems include inadequate investment in economic
infrastructure, rapidly rising medical and pension costs of an aging
population, sizable trade and budget deficits, and stagnation of
family income in the lower economic groups.

United States Pacific Island Wildlife Refuges
no economic activity

Uruguay
Uruguay's well-to-do economy is characterized by an
export-oriented agricultural sector, a well-educated work force, and
high levels of social spending. After averaging growth of 5%
annually during 1996-98, in 1999-2002 the economy suffered a major
downturn, stemming largely from the spillover effects of the
economic problems of its large neighbors, Argentina and Brazil. For
instance, in 2001-02 Argentina made massive withdrawals of dollars
deposited in Uruguayan banks, which led to a plunge in the Uruguayan
peso and a massive rise in unemployment. Total GDP in these four
years dropped by nearly 20%, with 2002 the worst year due to the
banking crisis. The unemployment rate rose to nearly 20% in 2002,
inflation surged, and the burden of external debt doubled.
Cooperation with the IMF helped stem the damage. A debt swap with
private-sector creditors in 2003 extended the maturity dates on
nearly half of Uruguay's then $11.3 billion of public debt and
helped restore public confidence. The economy grew about 12% in 2004
as a result of high commodity prices for Uruguayan exports, a
competitive peso, growth in the region, and low international
interest rates, and it continued to grow nearly 7% annually in 2005
and 2006.

Uzbekistan
Uzbekistan is a dry, landlocked country of which 11%
consists of intensely cultivated, irrigated river valleys. More than
60% of its population lives in densely populated rural communities.
Uzbekistan is now the world's second-largest cotton exporter and
fifth largest producer; it relies heavily on cotton production as
the major source of export earnings. Other major export earners
include gold, natural gas, and oil. Following independence in
September 1991, the government sought to prop up its Soviet-style
command economy with subsidies and tight controls on production and
prices. While aware of the need to improve the investment climate,
the government still sponsors measures that often increase, not
decrease, its control over business decisions. A sharp increase in
the inequality of income distribution has hurt the lower ranks of
society since independence. In 2003, the government accepted the
obligations of Article VIII under the International Monetary Fund
(IMF), providing for full currency convertibility. However, strict
currency controls and tightening of borders have lessened the
effects of convertibility and have also led to some shortages that
have further stifled economic activity. The Central Bank often
delays or restricts convertibility, especially for consumer goods.
Potential investment by Russia and China in Uzbekistan's gas and oil
industry would increase economic growth prospects. In November 2005,
Russian President Vladimir PUTIN and Uzbekistan President KARIMOV
signed an "alliance" treaty, which included provisions for economic
and business cooperation. Russian businesses have shown increased
interest in Uzbekistan, especially in mining, telecom, and oil and
gas. In December 2005, the Russians opened a "Trade House" to
support and develop Russian-Uzbek business and economic ties.

Vanuatu
This South Pacific island economy is based primarily on
small-scale agriculture, which provides a living for 65% of the
population. Fishing, offshore financial services, and tourism, with
more than 60,000 visitors in 2005, are other mainstays of the
economy. Mineral deposits are negligible; the country has no known
petroleum deposits. A small light industry sector caters to the
local market. Tax revenues come mainly from import duties. Economic
development is hindered by dependence on relatively few commodity
exports, vulnerability to natural disasters, and long distances from
main markets and between constituent islands. GDP growth rose less
than 3% on average in the 1990s. In response to foreign concerns,
the government has promised to tighten regulation of its offshore
financial center. In mid-2002 the government stepped up efforts to
boost tourism through improved air connections, resort development,
and cruise ship facilities. Agriculture, especially livestock
farming, is a second target for growth. Australia and New Zealand
are the main suppliers of tourists and foreign aid.