Chapter M: Major infectious diseases (133)

Faroe Islands
The Faroese economy is dependent on fishing, which
makes the economy vulnerable to price swings. The sector accounts
for about 95% of exports and nearly half of GDP. In early 2008 the
Faroese economy began to slow as a result of smaller catches and
historically high oil prices that continue to trouble the economy.
Though oil prices have come down, reduced catches, especially of cod
and haddock, have continued to strain the Faroese economy. GDP grew
0.5% in 2008-09. The slowdown in the Faroese economy followed a
strong performance since the mid-1990s with annual growth rates
averaging close to 6%, mostly a result of increased fish landings
and salmon farming, and high export prices. Unemployment reached its
lowest level in the first half of 2008, but increased to 3.9% in
2009 and is rising. The Faroese Home Rule Government produced
increasing budget surpluses that helped to reduce the large public
debt, most of it to Denmark. However, total dependence on fishing
and salmon farming make the Faroese economy very vulnerable to
fluctuations in world demand. In addition, budget surpluses turned
to deficits in 2008-09, and the economy at both the country and
local level is running large deficits. Initial discoveries of oil in
the Faroese area give hope for eventual oil production, which may
provide a foundation for a more diversified economy and less
dependence on Danish economic assistance. Aided by an annual subsidy
from Denmark amounting to about 6% of Faroese GDP, the Faroese have
a standard of living almost equal to that of Denmark and Greenland.

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

Finland
Finland has a highly industrialized, largely free-market
economy with per capita output roughly that of Austria, Belgium, the
Netherlands, and Sweden. Trade is important with exports accounting
for over one third of GDP in recent years. Finland is strongly
competitive in manufacturing - principally the wood, metals,
engineering, telecommunications, and electronics industries. Finland
excels in high-tech exports such as mobile phones. Except for timber
and several minerals, Finland depends on imports of raw materials,
energy, and some components for manufactured goods. Because of the
climate, agricultural development is limited to maintaining
self-sufficiency in basic products. Forestry, an important export
earner, provides a secondary occupation for the rural population.
Finland had been one of the best performing economies within the EU
in recent years and its banks and financial markets avoided the
worst of global financial crisis. However, the world slowdown hit
exports and domestic demand hard in 2009, with Finland experiencing
one of the deepest contractions in the euro zone. A recovery of
exports stimulated economic growth in 2010, and led to a lowering of
unemployment. The recession left a deep mark on general government
finances and the debt ratio, turning previously strong budget
surpluses into deficits. In the next few years, the great challenge
of economic policy will be to implement a post-recession exit
strategy in which measures supporting growth will be combined with
general government adjustment measures. Longer-term, Finland must
address a rapidly aging population and decreasing productivity that
threaten competitiveness, fiscal sustainability, and economic growth.

France
France is in the midst of transition from a well-to-do modern
economy that has featured extensive government ownership and
intervention to one that relies more on market mechanisms. The
government has partially or fully privatized many large companies,
banks, and insurers, and has ceded stakes in such leading firms as
Air France, France Telecom, Renault, and Thales. It maintains a
strong presence in some sectors, particularly power, public
transport, and defense industries. With at least 75 million foreign
tourists per year, France is the most visited country in the world
and maintains the third largest income in the world from tourism.
France's leaders remain committed to a capitalism in which they
maintain social equity by means of laws, tax policies, and social
spending that reduce income disparity and the impact of free markets
on public health and welfare. France has weathered the global
economic crisis better than most other big EU economies because of
the relative resilience of domestic consumer spending, a large
public sector, and less exposure to the downturn in global demand
than in some other countries. Nonetheless, France's real GDP
contracted 2.5% in 2009, but recovered somewhat in 2010, while the
unemployment rate increased from 7.4% in 2008 to 9.5% in 2010. The
government pursuit of aggressive stimulus and investment measures in
response to the economic crisis, however, are contributing to a
deterioration of France's public finances. The government budget
deficit rose sharply from 3.4% of GDP in 2008 to 7.8% of GDP in
2010, while France's public debt rose from 68% of GDP to 84% over
the same period. Paris is terminating stimulus measures, eliminating
tax credits, and freezing most government spending to bring the
budget deficit under the 3% euro-zone ceiling by 2013, and to
highlight France's commitment to fiscal discipline at a time of
intense financial market scrutiny of euro zone debt levels.
President SARKOZY - who secured passage of pension reform in 2010 -
is expected to seek passage of some tax reforms in 2011, but he may
delay additional, more costly, reforms until after the 2012 election.

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

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

Gabon
Gabon enjoys a per capita income four times that of most
sub-Saharan African nations, but because of high income inequality,
a large proportion of the population remains poor. Gabon depended on
timber and manganese until oil was discovered offshore in the early
1970s. The oil sector now accounts for more than 50% of GDP although
the industry is in decline as fields pass their peak production.
Gabon continues to face fluctuating prices for its oil, timber, and
manganese exports and the global recession led to a GDP contraction
of 1.4% in 2009. Despite the abundance of natural wealth, poor
fiscal management hobbles the economy. In 1997, an IMF mission to
Gabon criticized the government for overspending on off-budget
items, overborrowing from the central bank, and slipping on its
schedule for privatization and administrative reform. The rebound of
oil prices from 1999 to 2008 helped growth, but drops in production
have hampered Gabon from fully realizing potential gains. Gabon
signed a 14-month Stand-By Arrangement with the IMF in May 2007, and
later that year issued a $1 billion sovereign bond to buy back a
sizable portion of its Paris Club debt.

Gambia, The
The Gambia has sparse natural resource deposits and a
limited agricultural base, and relies in part on remittances from
workers overseas and tourist receipts. About three-quarters of the
population depends on the agricultural sector for its livelihood.
Small-scale manufacturing activity features the processing of
peanuts, fish, and hides. The Gambia's natural beauty and proximity
to Europe has made it one of the larger markets for tourism in West
Africa, boosted by government and private sector investments in
eco-tourism and upscale facilities. In the past few years, The
Gambia's re-export trade - traditionally a major segment of economic
activity - has declined, but its banking sector has grown rapidly.
Unemployment and underemployment rates remain high; economic
progress depends on sustained bilateral and multilateral aid, on
responsible government economic management, and on continued
technical assistance from multilateral and bilateral donors. The
quality of fiscal management, however, is weak. The government has
promised to raise civil service wages over the next two years and
the deficit is projected to worsen.

Gaza Strip
High population density, limited land and sea access,
continuing isolation, and strict internal and external security
controls have degraded economic conditions in the Gaza Strip - the
smaller of the two areas in the Palestinian Territories.
Israeli-imposed crossings closures, which became more restrictive
after HAMAS violently took over the territory in June 2007, and
fighting between HAMAS and Israel during December 2008-January 2009,
resulted in the near collapse of most of the private sector,
extremely high unemployment, and high poverty rates. Shortages of
goods are met through large-scale humanitarian assistance - led by
UNRWA - and the HAMAS-regulated black market tunnel trade that
flourishes under the Gaza Strip's border with Egypt. However,
chnages to the blockade in 2010 included moving from a white list -
in which only approved items were allowed into Gaza through the
crossings - to a black list, where all but non-approved items were
allowed into Gaza through the crossings. Israeli authorities have
recently signaled that exports from the territory might be possible
in the future, but currently regular exports from Gaza are not
permitted.

Georgia
Georgia's economy sustained GDP growth of more than 10% in
2006-07, based on strong inflows of foreign investment and robust
government spending. However, GDP growth slowed in 2008 following
the August 2008 conflict with Russia, and turned negative in 2009 as
foreign direct investment and workers' remittances declined in the
wake of the global financial crisis, but rebounded in 2010.
Georgia's main economic activities include the cultivation of
agricultural products such as grapes, citrus fruits, and hazelnuts;
mining of manganese and copper; and output of a small industrial
sector producing alcoholic and nonalcoholic beverages, metals,
machinery, aircraft and chemicals. Areas of recent improvement
include growth in the construction, banking services, and mining
sectors, but reduced availability of external investment and the
slowing regional economy are emerging risks. The country imports
nearly all its needed supplies of natural gas and oil products. It
has sizeable hydropower capacity, a growing component of its energy
supplies. Georgia has overcome the chronic energy shortages and gas
supply interruptions of the past by renovating hydropower plants and
by increasingly relying on natural gas imports from Azerbaijan
instead of from Russia. The construction on the Baku-T'bilisi-Ceyhan
oil pipeline, the Baku-T'bilisi-Erzerum gas pipeline, and the
Kars-Akhalkalaki Railroad are part of a strategy to capitalize on
Georgia's strategic location between Europe and Asia and develop its
role as a transit point for gas, oil and other goods. Georgia has
historically suffered from a chronic failure to collect tax
revenues; however, the government, since coming to power in 2004,
has simplified the tax code, improved tax administration, increased
tax enforcement, and cracked down on petty corruption. However, the
economic downturn of 2008-09 eroded the tax base and led to a
decline in the budget surplus and an increase in public borrowing
needs. The country is pinning its hopes for renewed growth on a
determined effort to continue to liberalize the economy by reducing
regulation, taxes, and corruption in order to attract foreign
investment, but the economy faces a more difficult investment
climate both domestically and internationally.

Germany
The German economy - the fifth largest economy in the world
in PPP terms and Europe's largest - is a leading exporter of
machinery, vehicles, chemicals, and household equipment and benefits
from a highly skilled labor force. Like its western European
neighbors, Germany faces significant demographic challenges to
sustained long-term growth. Low fertility rates and declining net
immigration are increasing pressure on the country's social welfare
system and necessitate structural reforms. The modernization and
integration of the eastern German economy - where unemployment can
exceed 20% in some municipalities - continues to be a costly
long-term process, with annual transfers from west to east amounting
in 2008 alone to roughly $12 billion. Reforms launched by the
government of Chancellor Gerhard SCHROEDER (1998-2005), deemed
necessary to address chronically high unemployment and low average
growth, contributed to strong growth in 2006 and 2007 and falling
unemployment, which in 2008 reached a new post-reunification low of
7.8%. These advances, as well as a government subsidized, reduced
working hour scheme, help explain the relatively modest increase in
unemployment during the 2008-09 recession - the deepest since World
War II - and its healthy decrease in 2010. GDP contracted nearly 5%
in 2009 but grew by 3.3% in 2010. Germany crept out of recession
thanks largely to rebounding manufacturing orders and exports -
primarily outside the Euro Zone - and relatively steady consumer
demand. Stimulus and stabilization efforts initiated in 2008 and
2009 and tax cuts introduced in Chancellor Angela MERKEL's second
term increased Germany's budget deficit to 3.3% in 2009 and to 3.6%
in 2010. The EU has given Germany until 2013 to get its consolidated
budget deficit below 3% of GDP. A new constitutional amendment
likewise limits the federal government to structural deficits of no
more than 0.35% of GDP per annum as of 2016.

Ghana
Ghana is well endowed with natural resources and agriculture
accounts for roughly one-third of GDP and employs more than half of
the workforce, mainly small landholders. The services sector
accounts for 50% of GDP. Gold and cocoa production and individual
remittances are major sources of foreign exchange. Oil production at
Ghana's offshore Jubilee field began in mid-December and is expected
to boost economic growth. Ghana signed a Millennium Challenge
Corporation (MCC) Compact in 2006, which aims to assist in
transforming Ghana's agricultural sector. Ghana opted for debt
relief under the Heavily Indebted Poor Country (HIPC) program in
2002, and is also benefiting from the Multilateral Debt Relief
Initiative that took effect in 2006. In 2009 Ghana signed a
three-year Poverty Reduction and Growth Facility with the IMF to
improve macroeconomic stability, private sector competitiveness,
human resource development, and good governance and civic
responsibility. Sound macro-economic management along with high
prices for gold and cocoa helped sustain GDP growth in 2008-10. In
early 2010 President John Atta MILLS targeted recovery from high
inflation and current account and budget deficits as his priorities.

Gibraltar
Self-sufficient Gibraltar benefits from an extensive
shipping trade, offshore banking, and its position as an
international conference center. Tax rates are low to attract
foreign investment. The British military presence has been sharply
reduced and now contributes about 7% to the local economy, compared
with 60% in 1984. The financial sector, tourism (almost 5 million
visitors in 1998), gaming revenues, shipping services fees, and
duties on consumer goods also generate revenue. The financial
sector, tourism, and the shipping sector contribute 30%, 30%, and
25%, respectively, of GDP. Telecommunications, e-commerce, and
e-gaming account for the remaining 15%. In recent years, Gibraltar
has seen major structural change from a public to a private sector
economy, but changes in government spending still have a major
impact on the level of employment.

Greece
Greece has a capitalist economy with the public sector
accounting for about 40% of GDP and with per capita GDP about
two-thirds that of the leading euro-zone economies. Tourism provides
15% of GDP. Immigrants make up nearly one-fifth of the work force,
mainly in agricultural and unskilled jobs. Greece is a major
beneficiary of EU aid, equal to about 3.3% of annual GDP. The Greek
economy grew by nearly 4.0% per year between 2003 and 2007, due
partly to infrastructural spending related to the 2004 Athens
Olympic Games, and in part to an increased availability of credit,
which has sustained record levels of consumer spending. But the
economy went into recession in 2009 as a result of the world
financial crisis, tightening credit conditions, and Athens' failure
to address a growing budget deficit, which was triggered by falling
state revenues, and increased government expenditures. The economy
contracted by 2% in 2009, and 4.8% in 2010. Greece violated the EU's
Growth and Stability Pact budget deficit criterion of no more than
3% of GDP from 2001 to 2006, but finally met that criterion in
2007-08, before exceeding it again in 2009, with the deficit
reaching 15.4% of GDP. Austerity measures reduced the deficit to
9.4% of GDP in 2010. Public debt, inflation, and unemployment are
above the euro-zone average while per capita income is below;
unemployment rose to 12% in 2010. Eroding public finances, a
credibility gap stemming from inaccurate and misreported statistics,
and consistent underperformance on following through with reforms
prompted major credit rating agencies in late 2009 to downgrade
Greece's international debt rating, and has led the country into a
financial crisis. Under intense pressure by the EU and international
market participants, the government has adopted a medium-term
austerity program that includes cutting government spending,
reducing the size of the public sector, decreasing tax evasion,
reforming the health care and pension systems, and improving
competitiveness through structural reforms to the labor and product
markets. Athens, however, faces long-term challenges to push through
unpopular reforms in the face of often vocal opposition from the
country's powerful labor unions and the general public. Greek labor
unions are striking over new austerity measures, but the strikes so
far have had a limited impact on the government's will to adopt
reforms. An uptick in widespread unrest, however, could challenge
the government's ability to implement reforms and meet budget
targets, and could also lead to rioting or violence. In April 2010 a
leading credit agency assigned Greek debt its lowest possible credit
rating; in May, the International Monetary Fund and Eurozone
governments provided Greece emergency short- and medium-term loans
worth $147 billion so that the country could make debt repayments to
creditors. In exchange for the largest bailout ever assembled, the
government announced combined spending cuts and tax increases
totaling $40 billion over three years, on top of the tough austerity
measures already taken. Greece, however, struggled to boost revenues
and cut spending to meet 2010 targets set by the EU and the IMF,
especially after Eurostat - the EU's statistical office - revised
upward Greece's deficit and debt numbers for 2009 and 2010. Greece's
lenders are calling on Athens to step up efforts in 2011 to increase
tax collection, shore up public enterprises, and rein in health
spending, and are planning to give Greece more time to repay its
EU-IMF loan. Greece responded by introducing major structural
reforms, but investors still question whether Greece can sustain
fiscal efforts in the face of a bleak economic outlook and public
discontent.

Greenland
The economy remains critically dependent on exports of
shrimp and fish and on a substantial subsidy - about $650 million in
2009 - from the Danish Government, which supplies nearly 60% of
government revenues. The public sector, including publicly owned
enterprises and the municipalities, plays the dominant role in
Greenland's economy. Greenland's GDP contracted about 2% in 2009 as
a result of the global economic slowdown. Budget surpluses turned to
deficits beginning in 2007 and unemployment has risen. During the
last decade the Greenland Home Rule Government (GHRG) pursued
conservative fiscal and monetary policies, but public pressure has
increased for better schools, health care and retirement systems.
The Greenlandic economy has benefited from increasing catches and
exports of shrimp, Greenland halibut and, more recently, crabs. Due
to Greenland's continued dependence on exports of fish - which
account for 82% of exports - the economy remains very sensitive to
foreign developments. International consortia are increasingly
active in exploring for hydrocarbon resources off Greenland's
western coast, and international studies indicate the potential for
oil and gas fields in northern and northeastern Greenland. In May
2007 a US aluminum producer concluded a memorandum of understanding
with the Greenland Home Rule Government to build an aluminum smelter
and a power generation facility, which takes advantage of
Greenland's abundant hydropower potential. Within the area of
mining, olivine sand continues to be produced and gold production
has resumed in south Greenland. Tourism also offers another avenue
of economic growth for Greenland, with increasing numbers of cruise
lines now operating in Greenland's western and southern waters
during the peak summer tourism season.

Grenada
Grenada relies on tourism as its main source of foreign
exchange especially since the construction of an international
airport in 1985. Hurricanes Ivan (2004) and Emily (2005) severely
damaged the agricultural sector - particularly nutmeg and cocoa
cultivation - which had been a key driver of economic growth.
Grenada has rebounded from the devastating effects of the hurricanes
but is now saddled with the debt burden from the rebuilding process.
Public debt-to-GDP is nearly 110%, leaving the THOMAS administration
limited room to engage in public investments and social spending.
Strong performances in construction and manufacturing, together with
the development of tourism and an offshore financial industry, have
also contributed to growth in national output; however, economic
growth was stagnant in 2010 after a sizeable contraction in 2009,
because of the global economic slowdown's effects on tourism and
remittances.

Guam
The economy depends largely on US military spending and
tourism. Total US grants, wage payments, and procurement outlays
amounted to $1.3 billion in 2004. Over the past 30 years, the
tourist industry has grown to become the largest income source
following national defense. The Guam economy continues to experience
expansion in both its tourism and military sectors.

Guatemala
Guatemala is the most populous of the Central American
countries with a GDP per capita roughly one-half that of the average
for Latin America and the Caribbean. The agricultural sector
accounts for nearly 15% of GDP and half of the labor force; key
agricultural exports include coffee, sugar, and bananas. The 1996
peace accords, which ended 36 years of civil war, removed a major
obstacle to foreign investment, and since then Guatemala has pursued
important reforms and macroeconomic stabilization. The Central
American Free Trade Agreement (CAFTA) entered into force in July
2006 spurring increased investment and diversification of exports,
with the largest increases in ethanol and non-traditional
agricultural exports. While CAFTA has helped improve the investment
climate, concerns over security, the lack of skilled workers and
poor infrastructure continue to hamper foreign direct investment.
The distribution of income remains highly unequal with the richest
decile comprising over 40% of Guatemala's overall consumption. More
than half of the population is below the national poverty line and
15% lives in extreme poverty. Poverty among indigenous groups, which
make up 38% of the population, averages 76% and extreme poverty
rises to 28%. 43% of children under five are chronically
malnourished, one of the highest malnutrition rates in the world.
President COLOM entered into office with the promise to increase
education, healthcare, and rural development, and in April 2008 he
inaugurated a conditional cash transfer program, modeled after
programs in Brazil and Mexico, that provide financial incentives for
poor families to keep their children in school and get regular
health check-ups. Given Guatemala's large expatriate community in
the United States, it is the top remittance recipient in Central
America, with inflows serving as a primary source of foreign income
equivalent to nearly two-thirds of exports. Economic growth fell in
2009 as export demand from US and other Central American markets
fell and foreign investment slowed amid the global recession, but
the economy recovered gradually in 2010 and will likely return to
more normal growth rates by 2012. President COLOM, in his last year
in office, will likely face opposition to economic reform,
particularly over a long-delayed tax reform and an IMF-recommended
reform to strengthen the banking sector. Larger budget deficits and
increased debt can be expected in 2011.

Guernsey
Financial services - banking, fund management, insurance -
account for about 23% of employment and about 55% of total income in
this tiny, prosperous Channel Island economy. Tourism,
manufacturing, and horticulture, mainly tomatoes and cut flowers,
have been declining. Financial services, construction, retail, and
the public sector have been growing. Light tax and death duties make
Guernsey a popular tax haven. The evolving economic integration of
the EU nations is changing the environment under which Guernsey
operates.

Guinea
Guinea is a poor country that possesses major mineral,
hydropower, and agricultural resources. The country has almost half
of the world's bauxite reserves. The mining sector accounts for more
than 70% of exports. Long-run improvements in the management of the
economy, literacy, and the legal framework are needed if the country
is to move out of poverty. Investor confidence has been sapped by
rampant corruption, a lack of electricity and other infrastructure,
a lack of skilled workers, and the political uncertainty resulting
from the death of President Lansana CONTE in December 2008.
International donors, including the G-8, the IMF, and the World
Bank, cut their development programming significantly in response to
the coup, and international partners have said that a resumption of
aid will be contingent on a successful democratic transition with a
democratically elected president and a functioning National
Assembly. Growth rose slightly in 2006-08, primarily due to
increases in global demand and commodity prices on world markets,
but bauxite and alumina exports were negatively affected by the
global economic downturn and the economy in 2009 contracted.
International investors expressed renewed interest in Guinea's iron
ore mines in 2010.

Guinea-Bissau
One of the poorest countries in the world,
Guinea-Bissau's legal economy depends mainly on farming and fishing,
but trafficking narcotics is probably the most lucrative trade.
Cashew crops have increased remarkably in recent years.
Guinea-Bissau exports fish and seafood along with small amounts of
peanuts, palm kernels, and timber. Rice is the major crop and staple
food. However, intermittent fighting between Senegalese-backed
government troops and a military junta destroyed much of the
country's infrastructure and caused widespread damage to the economy
in 1998; the civil war led to a 28% drop in GDP that year, with
partial recovery in 1999-2002. In December 2003, the World Bank,
IMF, and UNDP were forced to step in to provide emergency budgetary
support in the amount of $107 million for 2004, representing over
80% of the total national budget. The combination of limited
economic prospects, a weak and faction-ridden government, and
favorable geography have made this West African country a way
station for drugs bound for Europe.

Guyana
The Guyanese economy exhibited moderate economic growth in
recent years and is based largely on agriculture and extractive
industries. The economy is heavily dependent upon the export of six
commodities - sugar, gold, bauxite, shrimp, timber, and rice - which
represent nearly 60% of the country's GDP and are highly susceptible
to adverse weather conditions and fluctuations in commodity prices.
Guyana's entrance into the Caricom Single Market and Economy (CSME)
in January 2006 has broadened the country's export market, primarily
in the raw materials sector. Economic recovery since a 2005
flood-related contraction was buoyed by increases in remittances and
foreign direct investment in the sugar and rice industries as well
as the mining sector. Chronic problems include a shortage of skilled
labor and a deficient infrastructure. The government is juggling a
sizable external debt against the urgent need for expanded public
investment. In March 2007, the Inter-American Development Bank,
Guyana's principal donor, canceled Guyana's nearly $470 million
debt, equivalent to nearly 48% of GDP, which along with other Highly
Indebted Poor Country (HIPC) debt forgiveness brought the
debt-to-GDP ratio down from 183% in 2006 to 120% in 2007. Guyana
became heavily indebted as a result of the inward-looking, state-led
development model pursued in the 1970s and 1980s. Growth slowed in
2009-10 as a result of the world recession. The slowdown in the
domestic economy and lower import costs helped to narrow the
country's current account deficit, despite generally lower earnings
from exports.

Haiti
Haiti's economy suffered a severe setback when a 7.1 magnitude
earthquake damaged its capital city, Port-au-Prince, in January
2010. Already the poorest country in the Western Hemisphere with 80%
of the population living under the poverty line and 54% in abject
poverty, the damage to Port-au-Prince caused the country's GDP to
contract an estimated 8% in 2010. Two-thirds of all Haitians depend
on the agricultural sector, mainly small-scale subsistence farming,
and remain vulnerable to damage from frequent natural disasters,
exacerbated by the country's widespread deforestation. US economic
engagement under the Haitian Hemispheric Opportunity through
Partnership Encouragement (HOPE) Act, passed in December 2006, has
boosted apparel exports and investment by providing tariff-free
access to the US. Congress voted in 2010 to extend the legislation
until 2020 under the Haitian Economic Lift Act (HELP); the apparel
sector accounts for three-quarters of Haitian exports and nearly
one-tenth of GDP. Remittances are the primary source of foreign
exchange, equaling nearly a quarter of GDP and more than twice the
earnings from exports. Haiti suffers from a lack of investment
because of insecurity and limited infrastructure, and a severe trade
deficit. In 2005, Haiti paid its arrears to the World Bank, paving
the way for reengagement with the Bank. Haiti received debt
forgiveness for over $1 billion of its debt through the
Highly-Indebted Poor Country (HIPC) initiative in 2009. The
remainder of its outstanding external debt was cancelled by donor
countries in early 2010 but has since climbed back to about $500
million. The government relies on formal international economic
assistance for fiscal sustainability.

Heard Island and McDonald Islands
The islands have no indigenous
economic activity, but the Australian Government allows limited
fishing in the surrounding waters.

Holy See (Vatican City)
The Holy See is supported financially by a
variety of sources, including investments, real estate income, and
donations from Catholic individuals, dioceses, and institutions;
these help fund the Roman Curia (Vatican bureaucracy), diplomatic
missions, and media outlets. The separate Vatican City State budget
includes the Vatican museums and post office and is supported
financially by the sale of stamps, coins, medals, and tourist
mementos; by fees for admission to museums; and by publications
sales. Moreover, an annual collection taken up in dioceses and
direct donations go to a non-budgetary fund known as Peter's Pence,
which is used directly by the Pope for charity, disaster relief, and
aid to churches in developing nations. The incomes and living
standards of lay workers are comparable to those of counterparts who
work in the city of Rome.

Honduras
Honduras, the second poorest country in Central America,
suffers from extraordinarily unequal distribution of income, as well
as high underemployment. While historically dependent on the export
of bananas and coffee, Honduras has diversified its export base to
include apparel and automobile wire harnessing. Nearly half of
Honduras's economic activity is directly tied to the US, with
exports to the US equivalent to 30% of GDP and remittances for
another 20%. The US-Central America Free Trade Agreement (CAFTA)
came into force in 2006 and has helped foster foriegn direct
investment, but physical and political insecurity may deter
potential investors; about 70% of FDI is from US firms. The economy
registered marginally positive economic growth in 2010, insufficient
to improve living standards for the nearly 60% of the population in
poverty. The LOBO administration inherited a difficult fiscal
position with off-budget debts accrued in previous administrations
and government salaries nearly equivalent to tax collections. His
government has displayed a commitment to improving tax collection
and cutting expenditures. This enabled Tegucigalpa to secure an IMF
Precautionary Stand-By agreement in October 2010. The IMF agreement
has helped renew multilateral and bilateral donor confidence in
Honduras following the ZELAYA administration's economic
mismanagement and the political coup.

Hong Kong
Hong Kong has a free market economy highly dependent on
international trade and finance - the value of goods and services
trade, including the sizable share of re-exports, is about four
times GDP. Hong Kong's open economy left it exposed to the global
economic slowdown, but its increasing integration with China,
through trade, tourism, and financial links, helped it recover more
quickly than many observers anticipated. The Hong Kong government is
promoting the Special Administrative Region (SAR) as the site for
Chinese renminbi (RMB) internationalization. Hong Kong residents are
allowed to establish RMB-denominated savings accounts;
RMB-denominated corporate and Chinese government bonds have been
issued in Hong Kong; and RMB trade settlement is allowed. The
territory far exceeded the RMB conversion quota set by Beijing for
trade settlements in 2010 due to the growth of earnings from exports
to the mainland. RMB deposits grew to roughly 3.6% of total system
deposits in Hong Kong by October 2010, an increase of over 250%
since the beginning of the year. The government is pursuing efforts
to introduce additional use of RMB in Hong Kong financial markets
and is seeking to expand the RMB quota for 2011. The mainland has
long been Hong Kong's largest trading partner, accounting for about
half of Hong Kong's exports by value. Hong Kong's natural resources
are limited, and food and raw materials must be imported. As a
result of China's easing of travel restrictions, the number of
mainland tourists to the territory has surged from 4.5 million in
2001 to 17.7 million in 2009, outnumbering visitors from all other
countries combined. Hong Kong has also established itself as the
premier stock market for Chinese firms seeking to list abroad. In
2009 mainland Chinese companies constituted about 40% of the firms
listed on the Hong Kong Stock Exchange and accounted for 60% of the
Exchange's market capitalization. During the past decade, as Hong
Kong's manufacturing industry moved to the mainland, its service
industry has grown rapidly and in 2009 accounted for more than 90%
of the territory's GDP. GDP growth averaged a strong 4% from 1989 to
2008. Hong Kong's GDP fell in 2009 as a result of the global
financial crisis, but a recovery began in third quarter 2009, and
the economy grew nearly 6% in 2010. The Hong Kong government adopted
several temporary fiscal policy support measures in response to the
crisis that it may discontinue if strong growth is sustained. Credit
expansion and tight housing supply conditions caused Hong Kong
property prices to rise rapidly in 2010, and some lower income
segments of the population are increasingly unable to afford
adequate housing. Hong Kong continues to link its currency closely
to the US dollar, maintaining an arrangement established in 1983.

Hungary
Hungary has made the transition from a centrally planned to
a market economy, with a per capita income nearly two-thirds that of
the EU-25 average. The private sector accounts for more than 80% of
GDP. Foreign ownership of and investment in Hungarian firms are
widespread, with cumulative foreign direct investment worth more
than $70 billion. The government's austerity measures, imposed since
late 2006, have reduced the budget deficit from over 9% of GDP in
2006 to 3.8% in 2010. Hungary's impending inability to service its
short-term debt - brought on by the global financial crisis in late
2008 - led Budapest to obtain an IMF-arranged financial assistance
package worth over $25 billion. The global economic downturn,
declining exports, and low domestic consumption and fixed asset
accumulation, dampened by government austerity measures, resulted in
an economic contraction of 6.3% in 2009. The economy rebounded in
2010 with a big boost from exports, and growth of more than 2.5% is
expected in 2011. Unemployment remained high, at more than 11%.

Iceland
Iceland's Scandinavian-type social-market economy combines a
capitalist structure and free-market principles with an extensive
welfare system. Prior to the 2008 crisis, Iceland had achieved high
growth, low unemployment, and a remarkably even distribution of
income. The economy depends heavily on the fishing industry, which
provides 40% of export earnings, more than 12% of GDP, and employs
7% of the work force. It remains sensitive to declining fish stocks
as well as to fluctuations in world prices for its main exports:
fish and fish products, aluminum, and ferrosilicon. Iceland's
economy has been diversifying into manufacturing and service
industries in the last decade, particularly within the fields of
software production, biotechnology, and tourism. Abundant geothermal
and hydropower sources have attracted substantial foreign investment
in the aluminum sector and boosted economic growth, although the
financial crisis has put several investment projects on hold. Much
of Iceland's economic growth in recent years came as the result of a
boom in domestic demand following the rapid expansion of the
country's financial sector. Domestic banks expanded aggressively in
foreign markets, and consumers and businesses borrowed heavily in
foreign currencies, following the privatization of the banking
sector in the early 2000s. Worsening global financial conditions
throughout 2008 resulted in a sharp depreciation of the krona
vis-a-vis other major currencies. The foreign exposure of Icelandic
banks, whose loans and other assets totaled more than 10 times the
country's GDP, became unsustainable. Iceland's three largest banks
collapsed in late 2008. The country secured over $10 billion in
loans from the IMF and other countries to stabilize its currency and
financial sector, and to back government guarantees for foreign
deposits in Icelandic banks. GDP fell 6.8% in 2009, and unemployment
peaked at 9.4% in February 2009. GDP fell 3.4% in 2010. Since the
collapse of Iceland's financial sector, government economic
priorities have included: stabilizing the krona, reducing Iceland's
high budget deficit, containing inflation, restructuring the
financial sector, and diversifying the economy. Three new banks were
established to take over the domestic assets of the collapsed banks.
Two of them have foreign majority ownership, while the State holds a
majority of the shares of the third. British and Dutch authorities
have pressed claims totaling over $5 billion against Iceland to
compensate their citizens for losses suffered on deposits held in
the failed Icelandic bank, Landsbanki Islands. Iceland agreed to new
terms with the UK and the Netherlands to compensate British and
Dutch depositors, but the agreement must first be approved by the
Icelandic President. Iceland began EU accession negotiations with
the EU in July 2010, however, public support has dropped
substantially because of concern about losing control over fishing
resources and in reaction to measures taken by Brussels during the
ongoing Eurozone crisis.

India
India is developing into an open-market economy, yet traces of
its past autarkic policies remain. Economic liberalization,
including industrial deregulation, privatization of state-owned
enterprises, and reduced controls on foreign trade and investment,
began in the early 1990s and has served to accelerate the country's
growth, which has averaged more than 7% per year since 1997. India's
diverse economy encompasses traditional village farming, modern
agriculture, handicrafts, a wide range of modern industries, and a
multitude of services. Slightly more than half of the work force is
in agriculture, but services are the major source of economic
growth, accounting for more than half of India's output, with only
one-third of its labor force. India has capitalized on its large
educated English-speaking population to become a major exporter of
information technology services and software workers. In 2010, the
Indian economy rebounded robustly from the global financial crisis -
in large part because of strong domestic demand - and growth
exceeded 8% year-on-year in real terms. Merchandise exports, which
account for about 15% of GDP, returned to pre-financial crisis
levels. An industrial expansion and high food prices, resulting from
the combined effects of the weak 2009 monsoon and inefficiencies in
the government's food distribution system, fueled inflation which
peaked at about 11% in the first half fo 2010, but has gradually
decreased to single digits following a series of central bank
interest rate hikes. New Delhi in 2010 reduced subsidies in fuel and
fertilizers, sold a small percentage of its shares in some
state-owned enterprises and auctioned off rights to radio bandwidth
for 3G telecommunications in part to lower the government's deficit.
The Indian Government seeks to reduce its deficit to 5.5% of GDP in
FY 2010-11, down from 6.8% in the previous fiscal year. India's long
term challenges include widespread poverty, inadequate physical and
social infrastructure, limited non-agricultural employment
opportunities, insufficient access to quality basic and higher
education, and accommodiating rual-to-urban migration.

Indian Ocean
The Indian Ocean provides major sea routes connecting
the Middle East, Africa, and East Asia with Europe and the Americas.
It carries a particularly heavy traffic of petroleum and petroleum
products from the oilfields of the Persian Gulf and Indonesia. Its
fish are of great and growing importance to the bordering countries
for domestic consumption and export. Fishing fleets from Russia,
Japan, South Korea, and Taiwan also exploit the Indian Ocean, mainly
for shrimp and tuna. Large reserves of hydrocarbons are being tapped
in the offshore areas of Saudi Arabia, Iran, India, and western
Australia. An estimated 40% of the world's offshore oil production
comes from the Indian Ocean. Beach sands rich in heavy minerals and
offshore placer deposits are actively exploited by bordering
countries, particularly India, South Africa, Indonesia, Sri Lanka,
and Thailand.

Indonesia
Indonesia, a vast polyglot nation, has weathered the
global financial crisis relatively smoothly because of its heavy
reliance on domestic consumption as the driver of economic growth.
Although the economy slowed significantly in 2009 from the 6%-plus
growth rate recorded in 2007 and 2008, by 2010 growth returned to a
6% rate. During the recession, Indonesia outperformed its regional
neighbors and joined China and India as the only G20 members posting
growth. The government made economic advances under the first
administration of President YUDHOYONO, introducing significant
reforms in the financial sector, including tax and customs reforms,
the use of Treasury bills, and capital market development and
supervision. Indonesia's debt-to-GDP ratio in recent years has
declined steadily because of increasingly robust GDP growth and
sound fiscal stewardship. Indonesia still struggles with poverty and
unemployment, inadequate infrastructure, corruption, a complex
regulatory environment, and unequal resource distribution among
regions. YUDHOYONO's reelection, with respected economist BOEDIONO
as his vice president, suggests broad continuity of economic policy,
although the start of their term has been marred by corruption
scandals and the departure of an internationally respected finance
minister. The government in 2010 faces the ongoing challenge of
improving Indonesia's insufficient infrastructure to remove
impediments to economic growth, while addressing climate change
mitigation and adaptation needs, particularly with regard to
conserving Indonesia's forests and peatlands, the focus of a
potentially trailblazing $1 billion REDD+ pilot project.

Iran
Iran's economy is marked by an inefficient state sector,
reliance on the oil sector, which provides the majority of
government revenues, and statist policies, which create major
distortions throughout the system. Private sector activity is
typically limited to small-scale workshops, farming, and services.
Price controls, subsidies, and other rigidities weigh down the
economy, undermining the potential for private-sector-led growth.
Significant informal market activity flourishes. The legislature in
late 2009 passed President Mahmud AHMADI-NEJAD's bill to reduce
subsidies, particularly on food and energy. The bill would phase out
subsidies - which benefit Iran's upper and middle classes the most -
over three to five years and replace them with cash payments to
Iran's lower classes. However, the start of the program was delayed
repeatedly throughout 2010 over fears of public reaction to higher
prices. This is the most extensive economic reform since the
government implemented gasoline rationing in 2007. The recovery of
world oil prices in the last year increased Iran's oil export
revenue by at least $10 billion over 2009, easing some of the
financial impact of the newest round of international sanctions.
Although inflation has fallen substantially since the mid-2000s,
Iran continues to suffer from double-digit unemployment and
underemployment. Underemployment among Iran's educated youth has
convinced many to seek jobs overseas, resulting in a significant
"brain drain."

Iraq
An improved security environment and an initial wave of foreign
investment are helping to spur economic activity, particularly in
the energy, construction, and retail sectors. Broader economic
improvement, long-term fiscal health, and sustained increases in the
standard of living still depend on the government passing major
policy reforms and on continued development of Iraq's massive oil
reserves. Although foreign investors viewed Iraq with increasing
interest in 2010, most are still hampered by difficulties in
acquiring land for projects and by other regulatory impediments.
Iraq's economy is dominated by the oil sector, which provides over
90% of government revenue and 80% of foreign exchange earnings.
Since mid-2009, oil export earnings have returned to levels seen
before Operation Iraqi Freedom and government revenues have
rebounded, along with global oil prices. In 2011 Baghdad probably
will increase oil exports above the current level of 1.9 million
barrels per day (bbl/day) as a result of new contracts with
international oil companies, but is likely to fall short of the 2.4
million bbl/day it is forecasting in its budget. Iraq is making
modest progress in building the institutions needed to implement
economic policy. In 2010, Bagdad signed a new agreement with both
the IMF and World Bank for conditional aid programs that will help
strengthen Iraq's economic institutions. Some reform-minded leaders
within the Iraqi government are seeking to pass laws to strengthen
the economy. This legislation includes a package of laws to
establish a modern legal framework for the oil sector and a
mechanism to equitably divide oil revenues within the nation,
although these and other important reforms are still under
contentious and sporadic negotiation. Iraq's recent contracts with
major oil companies have the potential to greatly expand oil
revenues, but Iraq will need to upgrade its oil processing,
pipeling, and export infrastructure to enable these deals to reach
their potential. The Government of Iraq is pursuing a strategy to
gain additional foreign investment in Iraq's economy. This includes
an amendment to the National Investment Law, multiple international
trade and investment events, as well as potential participation in
joint ventures with state-owned enterprises. Provincial Councils
also are using their own budgets to promote and facilitate
investment at the local level. However, widespread corruption,
inadequate infrastructure, insufficient essential services, and
antiquated commercial laws and regulations stifle investment and
continue to constrain the growth of private, non-energy sectors. The
Central Bank has successfully held the exchange rate at
approximately 1,170 Iraqi dinar/US dollar since January 2009.
Inflation has decreased consistently since 2006 as the security
situation has improved. However, Iraqi leaders remain hard pressed
to translate macroeconomic gains into improved lives for ordinary
Iraqis. Unemployment remains a problem throughout the country.
Reducing corruption and implementing reforms - such as bank
restructuring and developing the private sector - would be important
steps in this direction.

Ireland
Ireland is a small, modern, trade-dependent economy. Ireland
joined 11 other EU nations in circulating the euro on 1 January
2002. GDP growth averaged 6% in 1995-2007, but economic activity has
dropped sharply since 2008 with GDP falling by over 3% in 2008,
nearly 8% in 2009, and 1% in 2010, and further contraction is
expectd in 2011. Ireland entered into a recession for the first time
in more than a decade with the onset of the world financial crisis
and subsequent severe slowdown in its domestic property and
construction markets. Agriculture, once the most important sector,
is now dwarfed by industry and services. Although the export sector,
dominated by foreign multinationals, remains a key component of
Ireland's economy, construction most recently fueled economic growth
along with strong consumer spending and business investment.
Property prices rose more rapidly in Ireland in the decade up to
2007 than in any other developed economy. However, average home
prices have fallen 50% from the 2007 peak. In 2008 the COWEN
government moved to guarantee all bank deposits, recapitalize the
banking system, and establish partly-public venture capital funds in
response to the country's economic downturn. In 2009, in an effort
to stabilize the banking sector, the Irish Government established
the National Asset Management Agency (NAMA) to acquire problem
commercial property and development loans from Irish banks. Faced
with sharply reduced revenues and a burgeoning budget deficit, the
Irish Government introduced the first in a series of draconian
budgets in 2009. In addition to across-the-board cuts in spending,
the 2009 budget included wage reductions for all public servants.
These measures were not sufficient. The budget deficit reached
nearly 38% of GDP in 2010 because of additional government support
for the banking sector. In late 2010, the COWEN Government agreed to
a $112 billion loan package from the EU and IMF to help Dublin
recapitalize its banking sector and avoid defaulting on its
sovereign debt, and initiated a four-year austerity plan to cut an
additional $20 billion from its budget.

Isle of Man
Offshore banking, manufacturing, and tourism are key
sectors of the economy. The government offers low taxes and other
incentives to high-technology companies and financial institutions
to locate on the island; this has paid off in expanding employment
opportunities in high-income industries. As a result, agriculture
and fishing, once the mainstays of the economy, have declined in
their contributions to GDP. The Isle of Man also attracts online
gambling sites and the film industry. Trade is mostly with the UK.
The Isle of Man enjoys free access to EU markets.

Israel
Israel has a technologically advanced market economy. It
depends on imports of crude oil, grains, raw materials, and military
equipment. Despite limited natural resources, Israel has intensively
developed its agricultural and industrial sectors over the past 20
years. Cut diamonds, high-technology equipment, and agricultural
products (fruits and vegetables) are the leading exports. Israel
usually posts sizable trade deficits, which are covered by large
transfer payments from abroad and by foreign loans. Roughly half of
the government's external debt is owed to the US, its major source
of economic and military aid. Israel's GDP, after contracting
slightly in 2001 and 2002 due to the Palestinian conflict and
troubles in the high-technology sector, grew about 5% per year from
2004-07. The global financial crisis of 2008-09 spurred a brief
recession in Israel, but the country entered the crisis with solid
fundamentals - following years of prudent fiscal policy and a series
of liberalizing reforms - and a resilient banking sector, and the
economy has shown signs of an early recovery. Following GDP growth
of 4% in 2008, Israel's GDP slipped to 0.2% in 2009, but reached
3.4% in 2010, as exports rebounded. The global economic downturn
affected Israel's economy primarily through reduced demand for
Israel's exports in the United States and EU, Israel's top trading
partners. Exports account for about 25% of the country's GDP. The
Israeli Government responded to the recession by implementing a
modest fiscal stimulus package and an aggressive expansionary
monetary policy - including cutting interest rates to record lows,
purchasing government bonds, and intervening in the foreign currency
market. The Bank of Israel began raising interest rates in the
summer of 2009 when inflation rose above the upper end of the Bank's
target and the economy began to show signs of recovery.

Italy
Italy has a diversified industrial economy, which is divided
into a developed industrial north, dominated by private companies,
and a less-developed, welfare-dependent, agricultural south, with
high unemployment. The Italian economy is driven in large part by
the manufacture of high-quality consumer goods produced by small and
medium-sized enterprises, many of them family owned. Italy also has
a sizable underground economy, which by some estimates accounts for
as much as 15% of GDP. These activities are most common within the
agriculture, construction, and service sectors. Italy has moved
slowly on implementing needed structural reforms, such as reducing
graft, overhauling costly entitlement programs, and increasing
employment opportunities for young workers, particularly women. The
international financial crisis worsened conditions in Italy's labor
market, with unemployment rising from 6.2% in 2007 to 8.4% in 2010,
but in the longer-term Italy's low fertility rate and quota-driven
immigration policies will increasingly strain its economy. A rise in
exports and investment driven by the global economic recovery
nevertheless helped the economy grow by about 1% in 2010 following a
5% contraction in 2009. The Italian government has struggled to
limit government spending, but Italy's exceedingly high public debt
remains above 115% of GDP, and its fiscal deficit - just 1.5% of GDP
in 2007 - exceeded 5% in 2009 and 2010, as the costs of servicing
the country's debt rose.