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CountryECONOMY - OVERVIEW
Afghanistan Afghanistan is gradually recovering from decades of conflict. Before 2014, the economy had sustained nearly a decade of strong growth, largely because of international assistance. Since 2014, however, the economy has slowed, in large part because of the withdrawal of nearly 100,000 foreign troops that had artificially inflated the country’s economic growth. Despite improvements in life expectancy, incomes, and literacy since 2001, Afghanistan is extremely poor, landlocked, and highly dependent on foreign aid. Much of the population continues to suffer from shortages of housing, clean water, electricity, medical care, and jobs. Corruption, insecurity, weak governance, lack of infrastructure, and the Afghan Government's difficulty in extending rule of law to all parts of the country pose challenges to future economic growth. Afghanistan's living standards are among the lowest in the world.

The international community remains committed to Afghanistan's development, pledging over $83 billion at ten donors' conferences between 2003 and 2016. In October 2016, the donors at the Brussels conference pledged an additional $3.8 billion in development aid annually from 2017 to 2020. Despite this help, the Government of Afghanistan will need to overcome a number of challenges, including low revenue collection, anemic job creation, high levels of corruption, weak government capacity, and poor public infrastructure.

In 2016 Afghanistan's growth rate was only marginally above that of 2014 and 2015. The drawdown of international security forces that started in 2012 has negatively affected economic growth, as a substantial portion of commerce, especially in the services sector, has catered to the ongoing international troop presence in the country. Afghan President Ashraf GHANI Ahmadzai is dedicated to instituting economic reforms to include improving revenue collection and fighting corruption. However, the reforms will take time to implement and Afghanistan will remain dependent on international donor support over the next several years.
Akrotiri Economic activity is limited to providing services to the military and their families located in Akrotiri. All food and manufactured goods must be imported.
Albania Albania, a formerly closed, centrally-planned state, is a developing country with a modern open-market economy. Albania managed to weather the first waves of the global financial crisis but, the negative effects of the crisis caused a significant economic slowdown. Since 2014, Albania’s economy has steadily improved and economic growth is projected to increase to 3.8% in 2017. However, close trade, remittance, and banking sector ties with Greece and Italy make Albania vulnerable to spillover effects of possible debt crises and weak growth in the euro zone.

Remittances, a significant catalyst for economic growth, declined from 12-15% of GDP before the 2008 financial crisis to 5.8% of GDP in 2015, mostly from Albanians residing in Greece and Italy. The agricultural sector, which accounts for almost half of employment but only about one-fifth of GDP, is limited primarily to small family operations and subsistence farming, because of a lack of modern equipment, unclear property rights, and the prevalence of small, inefficient plots of land. Complex tax codes and licensing requirements, a weak judicial system, endemic corruption, poor enforcement of contracts and property issues, and antiquated infrastructure contribute to Albania's poor business environment making attracting foreign investment difficult. Since 2015, Albania has launched an ambitious program to increase tax compliance and bring more businesses into the formal economy. In July 2016, Albania passed constitutional amendments reforming the judicial system in order to strengthen the rule of law and to reduce deeply entrenched corruption.

Albania’s electricity supply is uneven despite upgraded transmission capacities with neighboring countries. However, the government has recently taken steps to stem non-technical losses and has begun to upgrade the distribution grid. Better enforcement of electricity contracts has improved the financial viability of the sector, decreasing its reliance on budget support. Also, with help from international donors, the government is taking steps to improve the poor road and rail networks, a long standing barrier to sustained economic growth.

Inward FDI has increased significantly in recent years as the government has embarked on an ambitious program to improve the business climate through fiscal and legislative reforms. The government is focused on the simplification of licensing requirements and tax codes, and it entered into a new arrangement with the IMF for additional financial and technical support. Albania’s three-year IMF program, an extended fund facility arrangement, was successfully concluded in February 2017. Albania’s 2017 budget aims to reach a small primary surplus, which the Albanian Government plans to achieve by strengthening tax collection amid moderate public wage and pension increases. The country continues to face high public debt, exceeding its former statutory limit of 60% of GDP in 2013 and reaching 71% in 2016.
Algeria Algeria's economy remains dominated by the state, a legacy of the country's socialist post-independence development model. In recent years the Algerian Government has halted the privatization of state-owned industries and imposed restrictions on imports and foreign involvement in its economy.

Hydrocarbons have long been the backbone of the economy, accounting for roughly 30% of GDP, 60% of budget revenues, and nearly 95% of export earnings. Algeria has the 10th-largest reserves of natural gas in the world and is the sixth-largest gas exporter. It ranks 16th in oil reserves. Hydrocarbon exports enabled Algeria to maintain macroeconomic stability and amass large foreign currency reserves while oil prices were high. In addition, Algeria's external debt is extremely low at about 2% of GDP. However, Algeria has struggled to develop non-hydrocarbon industries because of heavy regulation and an emphasis on state-driven growth. Declining oil prices since 2014 have reduced the government’s ability to use state-driven growth to distribute rents and fund generous public subsidies. Algeria’s foreign exchange reserves have declined by more than 40% since late 2013 and its oil stabilization fund has decreased from about $75 billion at the end of 2013 to about $7 billion in 2017, which is the statutory minimum.

Algiers has strengthened protectionist measures since 2015 to limit its import bill and encourage domestic production of non-oil and gas industries. Since 2015, the government has imposed additional regulatory requirements on access to foreign exchange for imports and import quotas for specific products, such as cars, to limit their importation. Meanwhile, Algeria has not increased non-hydrocarbon exports, and hydrocarbon exports have declined because of field depletion and increased domestic demand.

With declining revenues caused by falling oil prices, the government has been under pressure to reduce spending. A wave of economic protests in February and March 2011 prompted Algiers to offer more than $23 billion in public grants and retroactive salary and benefit increases, moves which continue to weigh on public finances. In 2016, the government increased taxes on electricity and fuel, resulting in a modest increase in gasoline prices, and in 2017 raised by 2% the value-added tax on nearly all products, but has refrained from directly reducing subsidies, particularly for education, healthcare, and housing programs.

Long-term economic challenges include diversifying the economy away from its reliance on hydrocarbon exports, bolstering the private sector, attracting foreign investment, and providing adequate jobs for younger Algerians.
American Samoa American Samoa has a traditional Polynesian economy in which more than 90% of the land is communally owned. Economic activity is strongly linked to the US with which American Samoa conducts most of its commerce. Tuna fishing and tuna processing plants are the backbone of the private sector with canned tuna the primary export. The two tuna canneries accounted for 13.1% of employment in 2013.

In late September 2009, an earthquake and the resulting tsunami devastated American Samoa and nearby Samoa, disrupting transportation and power generation, and resulting in about 200 deaths. The US Federal Emergency Management Agency oversaw a relief program of nearly $25 million. Transfers from the US Government add substantially to American Samoa's economic well-being.

Attempts by the government to develop a larger and broader economy are restrained by Samoa's remote location, its limited transportation, and its devastating hurricanes. Tourism is a promising developing sector. In 2015, a new fish processing company completed refurbishing the processing facilities left behind by one of the two canneries that closed in 2009 and opened a new cannery. With two operating canneries once again, fish processing and exports will rise in the coming years.
Andorra Andorra has a developed economy and a free market, with per capita income above the European average and above the level of its neighbors, Spain and France. The country has developed a sophisticated infrastructure including a one-of-a-kind micro-fiber-optic network for the entire country. Tourism, retail sales, and finance are the mainstays of Andorra's small economy, accounting for more than three-quarters of GDP. Andorra's duty-free status for some products and its summer and winter resorts attract millions of visitors annually, although the economic downturn in neighboring countries has curtailed the number of tourists. Andorra uses the euro and is effectively subject to the monetary policy of the European Central Bank. Andorra's comparative advantage as a tax haven eroded when the borders of neighboring France and Spain opened; its bank secrecy laws have been relaxed under pressure from the EU and OECD.

Agricultural production is limited - only about 5% of the land is arable - and most food has to be imported, making the economy vulnerable to changes in fuel and food prices. The principal livestock is sheep. Manufacturing output and exports consist mainly of perfumes and cosmetic products, products of the printing industry, electrical machinery and equipment, clothing, tobacco products, and furniture. Andorra is a member of the EU Customs Union and is treated as an EU member for trade in manufactured goods (no tariffs) and as a non-EU member for agricultural products.

Andorra is open to, and actively seeking to attract, foreign investment. The Andorran economy is undergoing a process of diversification centered largely on the sectors of tourism, trade, property, and finance. To provide incentives for growth and diversification in the economy, the Andorran government began sweeping economic reforms in 2006. The Parliament approved three laws to complement the first phase of economic openness: on companies (October 2007), on business accounting (December 2007), and on foreign investment (April 2008 and June 2012). From 2011 to 2015, the Parliament also approved direct taxes in the form of taxes on corporations, on individual incomes of residents and non-residents, and on capital gains, savings, and economic activities. These regulations aim to establish a transparent, modern, and internationally comparable regulatory framework.

The principal objectives of the economic reform are to attract investment and businesses which can contribute most to Andorra’s economic development, offering greater diversification and contributing higher added value. Prior to 2008, when the first law on investment was approved, Andorra offered limited foreign investment opportunities largely due to concerns about the impact of foreign firms on such a small economy. As a consequence, non-citizens were allowed to own no more than 33% of a company. Only after residing in the country for a minimum of 20 years were foreigners entitled to own 100%.
Angola Angola's economy is overwhelmingly driven by its oil sector. Oil production and its supporting activities contribute about 50% of GDP, more than 70% of government revenue, and more than 90% of the country's exports. Diamonds contribute an additional 5% to exports. Subsistence agriculture provides the main livelihood for most of the people, but half of the country's food is still imported.

Increased oil production supported growth averaging more than 17% per year from 2004 to 2008. A postwar reconstruction boom and resettlement of displaced persons has led to high rates of growth in construction and agriculture as well. Some of the country's infrastructure is still damaged or undeveloped from the 27-year-long civil war. However, the government since 2005 has used billions of dollars in credit from China, Brazil, Portugal, Germany, Spain, and the EU to help rebuild Angola's public infrastructure. Land mines left from the war still mar the countryside, and as a result, the national military, international partners, and private Angolan firms all continue to remove them.

The global recession that started in 2008 stalled Angola’s economic growth. In particular, lower prices for oil and diamonds slowed GDP growth to 2.4% in 2009, and many construction projects stopped because Luanda accrued $9 billion in arrears to foreign construction companies when government revenue fell. Angola formally abandoned its currency peg in 2009, and in November 2009 signed onto an IMF Stand-By Arrangement loan of $1.4 billion to rebuild international reserves. Consumer inflation declined from 325% in 2000 to less than 9% in 2014, before rising again in 2015-16.

Falling oil prices, the depreciation of the kwanza, and slower than expected growth in non-oil GDP have reduced growth prospects. Corruption, especially in the extractive sectors, is a major long-term challenge that poses an additional threat to the economy. Government spending in the run-up to the 2017 elections is likely to strain Luanda’s budget.
Anguilla Anguilla has few natural resources, and the economy depends heavily on luxury tourism, offshore banking, lobster fishing, and remittances from emigrants. Increased activity in the tourism industry has spurred the growth of the construction sector contributing to economic growth. Anguillan officials have put substantial effort into developing the offshore financial sector, which is small but growing. In the medium term, prospects for the economy will depend largely on the tourism sector and, therefore, on revived income growth in the industrialized nations as well as on favorable weather conditions.
Antarctica Scientific undertakings rather than commercial pursuits are the predominant human activity in Antarctica. Offshore fishing and tourism, both based abroad, account for Antarctica's limited economic activity.

Antarctic fisheries, targeting three main species - Patagonian and Antarctic toothfish (Dissostichus eleginoides and D. mawsoni), mackerel icefish (Champsocephalus gunnari), and krill (Euphausia superba) – reported landing 295,000 metric tons in 2013-14 (estimated fishing is from the area covered by the Convention on the Conservation of Antarctic Marine Living Resources (CCAMLR), which extends slightly beyond the Antarctic Treaty area). Unregulated fishing, particularly of Patagonian toothfish (also known as Chilean sea bass), is an ongoing problem. The CCAMLR determines the recommended catch limits for marine species.

A total of 36,702 tourists visited the Antarctic Treaty area in the 2014-15 Antarctic summer, slightly lower than the 37,405 visitors in 2013-14. These estimates were provided to the Antarctic Treaty by the International Association of Antarctica Tour Operators (IAATO) and do not include passengers on overflights. Nearly all of them were passengers on commercial (nongovernmental) ships and several yachts that make trips during the summer.
Antigua and Barbuda Tourism continues to dominate Antigua and Barbuda's economy, accounting for nearly 60% of GDP and 40% of investment. The dual-island nation's agricultural production is focused on the domestic market and constrained by a limited water supply and a labor shortage stemming from the lure of higher wages in tourism and construction. Manufacturing comprises enclave-type assembly for export with major products being bedding, handicrafts, and electronic components.

Like other countries in the region, Antigua's economy was severely hit by effects of the global economic recession in 2009. The country suffered from the collapse of its largest private sector employer, a steep decline in tourism, a rise in debt, and a sharp economic contraction between 2009 and 2011. Antigua has not yet returned to its pre-crisis growth levels.

Prospects for economic growth in the medium term will continue to depend on tourist arrivals from the US, Canada, and Europe and could be disrupted by potential damage from natural disasters. The new government, elected in 2014 and led by Prime Minister Gaston Browne, continues to face significant fiscal challenges. The government places some hope in a new Citizenship by Investment Program to both reduce public debt levels and spur growth.
Arctic Ocean Economic activity is limited to the exploitation of natural resources, including petroleum, natural gas, fish, and seals.
Argentina Argentina benefits from rich natural resources, a highly literate population, an export-oriented agricultural sector, and a diversified industrial base. Although one of the world's wealthiest countries 100 years ago, Argentina suffered during most of the 20th century from recurring economic crises, persistent fiscal and current account deficits, high inflation, mounting external debt, and capital flight. In 2016, the World Bank downgraded Argentina from a high-income to upper-middle-income economy, on par with Columbia.

A severe depression, growing public and external indebtedness, and an unprecedented bank run culminated in 2001 in the most serious economic, social, and political crisis in the country's turbulent history. Interim President Adolfo RODRIGUEZ SAA declared a default - at the time the largest ever - on the government's foreign debt in December of that year, and abruptly resigned only a few days after taking office. His successor, Eduardo DUHALDE, announced an end to the peso's decade-long 1-to-1 peg to the US dollar in early 2002. The economy bottomed out that year, with real GDP 18% smaller than in 1998 and almost 60% of Argentines below the poverty line. Real GDP rebounded to grow by an average 8.5% annually over the subsequent six years, taking advantage of previously idled industrial capacity and labor, and expansionary monetary and fiscal policies. Inflation also increased, however, during the administration of President Nestor KIRCHNER, which responded with price restraints on businesses, as well as export taxes and restraints, and beginning in 2007, with understating inflation data.

Cristina FERNANDEZ DE KIRCHNER succeeded her husband as president in late 2007, and the rapid economic growth of previous years began to slow sharply the following year as government policies held back exports and the world economy fell into recession. The economy in 2010 rebounded strongly from the 2009 recession, but slowed in late 2011 even as the government continued to rely on expansionary fiscal and monetary policies, which kept inflation in the double digits.

In order to deal with these problems, the government expanded state intervention in the economy: it nationalized the oil company YPF from Spain's Repsol, expanded measures to restrict imports, and further tightened currency controls in an effort to bolster foreign reserves and stem capital flight. Between 2011 and 2013, Central Bank foreign reserves dropped $21.3 billion from a high of $52.7 billion. In July 2014, Argentina and China agreed on an $11 billion currency swap; the Argentine Central Bank has received the equivalent of $3.2 billion in Chinese yuan, which it counts as international reserves.

With the election of President Mauricio MACRI in November 2015, Argentina began a historic political and economic transformation, as his administration took steps to liberalize the Argentine economy, lifting capital controls, floating the peso, removing export controls on some commodities, cutting some energy subsidies, and reforming the country’s official statistics. Argentina negotiated debt payments with holdout bond creditors and returned to international capital markets in April 2016. In September 2016, Argentina completed its first IMF Article IV Consultation since 2006.

After years of international isolation, Argentina has taken on several international leadership roles in 2017, including hosting the World Economic Forum on Latin America and the World Trade Organization Ministerial Conference, and is set to assume the presidency of the G-20 in 2018.
Armenia Under the old Soviet central planning system, Armenia developed a modern industrial sector, supplying machine tools, textiles, and other manufactured goods to sister republics, in exchange for raw materials and energy. Armenia has since switched to small-scale agriculture and away from the large agro industrial complexes of the Soviet era. Armenia has only two open trade borders - Iran and Georgia - because its borders with Azerbaijan and Turkey have been closed since 1991 and 1993, respectively, as a result of Armenia's ongoing conflict with Azerbaijan over the separatist Nagorno-Karabakh region.

Armenia joined the World Trade Organization in January 2003. The government has made some improvements in tax and customs administration in recent years, but anti-corruption measures have been largely ineffective. Armenia will need to pursue additional economic reforms and strengthen the rule of law in order to raise its economic growth and improve economic competitiveness and employment opportunities, especially given its economic isolation from Turkey and Azerbaijan.

Armenia's geographic isolation, a narrow export base, and pervasive monopolies in important business sectors have made it particularly vulnerable to deteriorations in the global commodity markets and the economic challenges in Russia. Armenia is particularly dependent on Russian commercial and governmental support, as most key Armenian infrastructure is Russian-owned and/or managed, especially in the energy sector. Remittances from expatriates working in Russia are equivalent to about 7-8% of GDP. Armenia joined the Russia-led Eurasian Economic Union in January 2015, but has expressed interest in expanding its economic ties with the European Union as well, and in March 2017 an EU-Armenia Comprehensive and Enhanced Partnership Agreement was initiated. Armenia’s rising government debt is leading Yerevan to tighten its fiscal policies – the debt almost reached the debt to GDP threshold set by national legislation as of March 2017.
Aruba Tourism, petroleum bunkering, hospitality, and financial and business services are the mainstays of the small open Aruban economy.

Tourism accounts for a majority of economic activity; as of 2014, over 1.7 million tourists visited Aruba annually, with the large majority of those from the US. The rapid growth of the tourism sector has resulted in a substantial expansion of other activities. Construction continues to boom, especially in the hotel sector.

Aruba is heavily dependent on imports and is making efforts to expand exports to improve its trade balance. Almost all consumer and capital goods are imported, with the US, the Netherlands, and Panama being the major suppliers.

In 2016, Citgo Petroleum Corporation, an indirect wholly owned subsidiary of Petroleos de Venezuela SA, and the Government of Aruba signed an agreement to restart Valero Energy Corp.'s former 235,000-b/d refinery . Tourism and related industries have continued to grow, and the Aruban government is working to attract more diverse industries. Aruba's banking sector continues to be a strong sector; unemployment has significantly decreased.
Ashmore and Cartier Islands no economic activity
Atlantic Ocean The Atlantic Ocean provides some of the world's most heavily trafficked sea routes, between and within the Eastern and Western Hemispheres. Other economic activity includes the exploitation of natural resources, e.g., fishing, dredging of aragonite sands (The Bahamas), and production of crude oil and natural gas (Caribbean Sea, Gulf of Mexico, and North Sea).
Australia Following two decades of continuous growth, low unemployment, contained inflation, very low public debt, and a strong and stable financial system, Australia enters 2017 facing a range of growth constraints, principally driven by the sharp fall in global prices of key export commodities. Demand for resources and energy from Asia and especially China has stalled and sharp drops in current prices have impacted growth.

The services sector is the largest part of the Australian economy, accounting for about 70% of GDP and 75% of jobs. Australia was comparatively unaffected by the global financial crisis as the banking system has remained strong and inflation is under control.

Australia benefited from a dramatic surge in its terms of trade in recent years, although this trend has reversed due to falling global commodity prices. Australia is a significant exporter of natural resources, energy, and food. Australia's abundant and diverse natural resources attract high levels of foreign investment and include extensive reserves of coal, iron, copper, gold, natural gas, uranium, and renewable energy sources. A series of major investments, such as the US$40 billion Gorgon Liquid Natural Gas Project, will significantly expand the resources sector.

Australia is an open market with minimal restrictions on imports of goods and services. The process of opening up has increased productivity, stimulated growth, and made the economy more flexible and dynamic. Australia plays an active role in the WTO, APEC, the G20, and other trade forums. Australia’s free trade agreement (FTA) with China entered into force in 2015, adding to existing FTAs with the Republic of Korea, Japan, Chile, Malaysia, New Zealand, Singapore, Thailand, and the US, and a regional FTA with ASEAN and New Zealand. Australia continues to negotiate bilateral agreements with India and Indonesia, as well as larger agreements with its Pacific neighbors and the Gulf Cooperation Council countries, and an Asia-wide Regional Comprehensive Economic Partnership that includes the 10 ASEAN countries and China, Japan, Korea, New Zealand and India.
Austria Austria, with its well-developed market economy, skilled labor force, and high standard of living, is closely tied to other EU economies, especially Germany's. Its economy features a large service sector, a relatively sound industrial sector, and a small, but highly developed agricultural sector.

Economic growth has been relatively weak in recent years, approaching 0.9% in 2015, but rising to 1.4% in 2016. Austria's 5.8% unemployment rate, while low by European standards, is at its highest rate since the end of World War II, driven by an increased number of refugees and EU migrants entering the labor market. Without extensive vocational training programs and generous early retirement, the unemployment rate would be even higher.

Although Austria's fiscal position compares favorably with other euro-zone countries, it faces several external risks, such as unexpectedly weak world economic growth threatening the export market, Austrian banks' continued exposure to Central and Eastern Europe, repercussions from the Hypo Alpe Adria bank collapse, political and economic uncertainties caused by the European sovereign debt crisis, the current refugee crisis, and continued unrest in Russia/Ukraine. The budget deficit stood at 1.4% of GDP in 2016 and public debt reached a post-war high of 86.2% of the GDP in 2015.
Azerbaijan Prior to the decline in global oil prices since 2014, Azerbaijan's high economic growth was attributable to rising energy exports, and some non-export sectors also featured double-digit growth. Oil exports through the Baku-Tbilisi-Ceyhan Pipeline, the Baku-Novorossiysk, and the Baku-Supsa Pipelines remain the main economic driver, but efforts to boost Azerbaijan's gas production are underway. The expected completion of the geopolitically important Southern Gas Corridor between Azerbaijan and Europe will open up another source of revenue from gas exports. Declining oil prices caused a 3.8% contraction in GDP in 2016, reinforced by a sharp reduction in the construction sector. The economic decline has been accompanied by higher inflation and a weakened banking sector in the aftermath of the two sharp currency devaluations in 2015.

Azerbaijan has made limited progress with market-based economic reforms. Pervasive public and private sector corruption and structural economic inefficiencies remain a drag on long-term growth, particularly in non-energy sectors, but the government has made efforts to combat corruption, particularly in customs and with the “ASAN” one-stop window concept for government services. Several other obstacles impede Azerbaijan's economic progress, including the need for more foreign investment in the non-energy sector and the continuing conflict with Armenia over the Nagorno-Karabakh region. While trade with Russia and the other former Soviet republics remains important, Azerbaijan has expanded trade with Turkey and Europe and is seeking new markets for non-oil/gas exports, mainly from the agricultural sector, for example with Gulf Cooperation Council member countries, the US, and others.

Long-term prospects depend on world oil prices, Azerbaijan's ability to implement export routes for its growing gas production, and its ability to improve the business environment and diversify the economy. In late 2016, the President approved a strategic roadmap that identified key non-energy segments of the economy for development, such as agriculture, logistics, and tourism.
Bahamas, The The Bahamas has the second highest per capital GDP in the English-speaking Caribbean with an economy heavily dependent on tourism and international banking. Tourism accounts for approximately 75-80% of GDP and directly or indirectly employs half of the archipelago's labor force. Financial services constitute the second-most important sector of the Bahamian economy, accounting for about 15% of GDP. Manufacturing and agriculture combined contribute less than 7% of GDP and show little growth, despite government incentives aimed at those sectors. On January 1, 2015, the Government introduced a 7.5% Value Added Tax (VAT) on most goods and services, a measure designed to strengthen the fiscal balance sheet. In August 2016, Moody’s downgraded the Bahamas’ bond and issue ratings to Baa3 from Baa2 with a stable outlook, maintaining that rating in its February 2017 review. In December 2016, S&P downgraded the country to BB+ (speculative grade) from BBB- (investment grade) with a stable outlook based on projections of slow economic growth and the pace of debt accumulation. The Bahamas is the only country in the Western Hemisphere that is not a member of the World Trade Organization.
Bahrain Low oil prices have generated a budget deficit of at least a $4 billion deficit in 2016, nearly 14% of GDP. Bahrain has few options for covering this deficit, with meager foreign assets and a constrained borrowing ability. In the last year the three major US credit agencies downgraded Bahrain’s sovereign debt rating to “junk” status, citing persistently low oil prices and the government’s inability to more effectively cut spending.

Oil comprises 86% of Bahraini budget revenues, despite past efforts to diversify its economy and to build communication and transport facilities for multinational firms with business in the Gulf. As part of its diversification plans, Bahrain implemented a Free Trade Agreement (FTA) with the US in August 2006, the first FTA between the US and a Gulf state.

Other major economic activities are production of aluminum - Bahrain's second biggest export after oil - finance, and construction. Bahrain continues to seek new natural gas supplies as feedstock to support its expanding petrochemical and aluminum industries.

In 2011, Bahrain experienced economic setbacks as a result of domestic unrest driven by the majority Shia population; however, the economy recovered in 2012-15, partly as a result of improved tourism. In addition to addressing its current fiscal woes, Bahraini authorities face the long-term challenge of boosting Bahrain’s regional competitiveness — especially regarding industry, finance, and tourism — and reconciling revenue constraints with popular pressure to maintain generous state subsidies and a large public sector. Over the past year, the government lifted subsidies on meat, diesel, kerosene, and gasoline and announced new higher prices for electricity and water, although it plans to roll these increases out more gradually than previous subsidy cuts.
Bangladesh Bangladesh's economy has grown roughly 6% per year since 1996 despite prolonged periods of political instability, poor infrastructure, endemic corruption, insufficient power supplies, and slow implementation of economic reforms. Although more than half of GDP is generated through the services sector, almost half of Bangladeshis are employed in the agriculture sector, with rice as the single-most-important product.

Garment exports, the backbone of Bangladesh's industrial sector, accounted for more than 80% of total exports and surpassed $25 billion in 2016. The sector continues to grow, despite a series of high-profile factory accidents that have killed more than 1,000 workers and crippling strikes, including a nationwide transportation blockade orchestrated by the political opposition during the first several months of 2015. Steady export growth in the garment sector combined with remittances from overseas Bangladeshis - which totaled about $15 billion and 8% of GDP in 2015 - are key contributors to Bangladesh's sustained economic growth and rising foreign exchange reserves.
Barbados Barbados is the wealthiest and one of the most developed countries in the Eastern Caribbean and enjoys one of the highest per capita incomes in the region. Historically, the Barbadian economy was dependent on sugarcane cultivation and related activities. However, in recent years the economy has diversified into light industry and tourism. Offshore finance and information services are important foreign exchange earners, boosted by being in the same time zone as eastern US financial centers and by a relatively highly educated workforce. Following the 2008-09 recession, the economy has grown due to increases in tourist arrivals, construction, financial services and exports. However, Barbados’ high public debt to GDP ratio and falling international reserves remain areas of concern. Growth prospects are limited because of a weak economic outlook.
Belarus As part of the former Soviet Union, Belarus had a relatively well-developed, though aging industrial base; it retained this industrial base - which is now outdated, energy inefficient, and dependent on subsidized Russian energy and preferential access to Russian markets - following the breakup of the USSR. The country also has a broad agricultural base which is largely inefficient and dependent on government subsidies. After an initial burst of capitalist reform between 1991 and 1994, including privatization of smaller state enterprises and some service sector businesses, creation of institutions of private property, and development of entrepreneurship, Belarus' economic development greatly slowed. About 80% of all industry remains in state hands, and foreign investment has been hindered by a reluctance to welcome private investment absent joint ownership or affiliation with the state. A few businesses, which had been privatized after independence, were renationalized. State banks account for 75% of the banking sector.

Economic output declined for several years following the collapse of the Soviet Union, but revived in the mid-2000s due to the boom in oil prices. Belarus has only small reserves of crude oil, though it imports most of its crude oil and natural gas from Russia at prices substantially below world market prices. Belarus then derives export revenue by refining Russian crude and selling it at market prices. In late 2006, Russia began a process of rolling back its subsidies on oil and gas exports to Belarus. Several times since, Russia and Belarus have had serious disagreements over the level and price of Russian energy supplies. At one point in 2010, Russia stopped the export of all subsidized oil to Belarus save for domestic needs before the two countries reached a deal to restart the export of discounted oil to Belarus. Beginning in early 2016, Russia claims Belarus began accumulating debt – reaching $740 million by April 2017 – for paying below an agreed price for Russian natural gas. Russia decided to reduce its export of crude oil as a result of the debt. In April 2017, Belarus agreed to pay its gas debt and Russia restored the flow of crude.

New non-Russian foreign investment has been limited in recent years. In 2011, a financial crisis began, triggered by government-directed salary hikes, compounded by an increased cost in Russian energy inputs and an overvalued Belarusian ruble that lead to a nearly three-fold devaluation of the Belarusian ruble. In November 2011, Belarus agreed to sell to Russia its remaining shares of Beltransgaz, the Belarusian natural gas pipeline operator, in exchange for reduced prices for Russian natural gas. The situation stabilized in 2012, after Belarus received part of a $3 billion loan from the Russian-dominated Eurasian Economic Community Bailout Fund, a $1 billion loan from the Russian state-owned bank Sberbank, and $2.5 billion from the sale of Beltransgaz to Russian state-owned Gazprom; nevertheless, the Belarusian currency lost more than 60% of its value, as inflation reached new highs in 2011 and 2012, before calming in 2013. In December 2013, Russia announced a new loan for Belarus of up to $2 billion for 2014. Notwithstanding foreign assistance, the Belarusian economy continued to struggle under the weight of high external debt servicing payments and trade deficit. In mid-December 2014, structural economic shortcomings were aggravated by the devaluation of the Russian ruble, which triggered a near 40% devaluation of the Belarusian ruble.

Since 2012, Belarus’s economy has suffered stagnation, which has led to widening productivity and income gaps between Belarus and neighboring countries. Since 2015, the Belarusian government has tightened its monetary policies (including allowing a more flexible exchange rate regime) and reduced subsidized government lending to state-owned industrial and agricultural enterprises, amid a drop in state budget revenues owing to falling global prices on key Belarusian export commodities - petroleum products and potash fertilizer. Belarus entered 2016 with a contracting economy and minimal hard currency reserves. GDP and foreign trade fell and unemployment rose, while inflation declined and hard currency reserves increased.
Belgium Belgium’s central geographic location and highly developed transport network have helped develop a well-diversified economy, with a broad mix of transport, services, manufacturing, and high tech. Industry is concentrated mainly in the more heavily-populated region of Flanders in the north. Belgium is 100% reliant on foreign sources of fossil fuels, and the planned closure of its seven nuclear plants by 2025 should increase its dependence on foreign energy. Its role as a regional logistical hub makes its economy vulnerable to shifts in foreign demand, particularly with EU trading partners. Roughly three-quarters of Belgium's trade is with other EU countries.

Belgium’s GDP grew by 1.4% in 2016, unemployment at yearend was 8.4%, and the budget deficit was 2.7% of GDP. The economy largely recovered from the March 2016 terrorist attacks, which mainly impacted the Brussels region tourist and hospitality industry. Prime Minister Charles MICHEL's center-right government has pledged to further reduce the deficit in response to EU pressure to decrease Belgium's high public debt of about 107% of GDP, but such efforts could also dampen economic growth. In addition to restrained public spending, low wage growth and higher inflation promise to curtail a more robust recovery in private consumption.

The government has pledged to pursue a reform program to improve Belgium’s competitiveness, including changes to tax policy, labor market rules, and welfare benefits. These changes have generally made Belgian wages more competitive regionally, but risk worsening tensions with trade unions and triggering extended strikes.
Belize Tourism is the number one foreign exchange earner in this small economy, followed by exports of sugar, bananas, citrus, marine products, and crude oil.

The government's expansionary monetary and fiscal policies, initiated in September 1998, led to GDP growth averaging nearly 4% in 1999-2007, however GDP growth slowed to 1% in 2015, and 0% in 2016. Oil discoveries in 2006 bolstered this growth and oil exploration continues, but production has fallen in recent years and future oil revenues remain uncertain and are offset by Belize’s growing imports of refined oil.

Although Belize has the third highest per capita income in Central America, the average income figure masks a huge income disparity between rich and poor, and a key government objective remains reducing poverty and inequality with the help of international donors. High unemployment, a growing trade deficit and heavy foreign debt burden continue to be major concerns. Belize faces continued pressure from rising sovereign debt, and a growing trade imbalance.
Benin The free market economy of Benin has grown consecutively for three years, averaging about 5% annually since 2014, but its close trade links to Nigeria expose Benin to risks from volatile commodity prices. Cotton is a key export commodity; high prices supported export earnings, but prices have fallen. Inflation has subsided and remains just 1% over the past several years.

During the first 6 months of President TALON’s administration, electrical supply, which has hampered Benin’s economic growth, increased and blackouts have been reduced. Private foreign direct investment is small, and foreign aid accounts for the majority of investment in infrastructure projects.

Benin’s 2001 privatization policy continues in telecommunications, water, electricity, and agriculture. Benin has appealed for international assistance to mitigate piracy against commercial shipping in its territory. Pilferage has significantly dropped as the Port of Cotonou is still making progress towards implementing the International Ship and Port Facility Security (ISPS) Code in an effort to remain competitive. Projects included in Benin's $307 million Millennium Challenge Corporation (MCC) compact (2006-11) were designed to increase investment and private sector activity by improving key institutional and physical infrastructure. The four projects focused on access to land, access to financial services, access to justice, and access to markets (including modernization of the port). The Port of Cotonou is the largest component of Benin’s economy with revenues projected to account for more than 40% of Benin’s national budget.

Realizing its economic potential requires further efforts to infrastructure upgrades, stemming corruption, and expanding access to foreign markets in Nigeria and neighboring landlocked countries. In September 2015, Benin signed a MCC second Compact for $375 million that is designed to strengthen the national utility service provider, attract private sector investment, fund infrastructure investments in electricity generation and distribution, and develop off-grid electrification for poor and unserved households. In order to raise growth, Benin plans to attract more foreign investment, place more emphasis on tourism, facilitate the development of new food processing systems and agricultural products, encourage new information and communication technology, and establish Independent Power Producers (IPP).
Bermuda Tourism accounts for about 5% of Bermuda's GDP, but a much larger share of employment. Over 80% of its visitors come from the US. The sector struggled in the wake of the global recession of 2008-09. International business, which consists primarily of reinsurance and other financial services, is the real bedrock of Bermuda's economy, consistently accounting for about 85% of the island's GDP. Even this sector, however, has lost roughly 5,000 high-paying expatriate jobs since 2008, weighing heavily on household consumption and retail sales. Bermuda must import almost everything. Agriculture and industry are limited due to the small size of the island.

Bermuda's economy entered its seventh straight year of recession in 2015. Unemployment is 9%, public debt is growing and exceeds $2.3 billion, the government pension fund faces a $2.4 billion shortfall, and the economy has not attracted significant new foreign investment. Bermuda's FY15/16 budget projects a 12% larger deficit than FY14/15. The government announced it would borrow $125 million in 2015 to meet current operating expenses. Still, Bermuda enjoys the fourth highest per capita income in the world, about 70% higher than that of the US.
Bhutan Bhutan's small economy is based largely on hydropower, agriculture, and forestry, which provide the main livelihood for more than half of the population. Because rugged mountains dominate the terrain and make the building of roads and other infrastructure difficult and expensive, industrial production is primarily of the cottage industry type. The economy is closely aligned with India's through strong trade and monetary links and is dependent on India for financial assistance and migrant laborers for development projects, especially for road construction. Bhutan inked a pact in December 2014 to expand duty-free trade with Bangladesh.

Multilateral development organizations administer most educational, social, and environment programs, and take into account the government's desire to protect the country's environment and cultural traditions. For example, the government, in its cautious expansion of the tourist sector, encourages visits by upscale, environmentally conscientious tourists. Complicated controls and uncertain policies in areas such as industrial licensing, trade, labor, and finance continue to hamper foreign investment.

Bhutan’s largest export - hydropower to India - could spur sustainable growth in the coming years if Bhutan resolves chronic delays in construction. Bhutan’s hydropower exports comprise 40% of total exports and 25% of GDP. Bhutan currently taps only 6.5% of its 24,000-megawatt hydropower potential and is behind schedule in building 12 new hydropower dams with a combined capacity of 10,000 megawatts by 2020 in accordance with a deal signed in 2008 with India. The high volume of imported materials to build hydropower plants has expanded Bhutan's trade and current account deficits. Bhutan also is exploring energy exports to Bangladesh.
Bolivia Bolivia is a resource rich country with strong growth attributed to captive markets for natural gas exports to Brazil and Argentina. However, the country remains one of the least developed countries in Latin America because of state-oriented policies that deter investment and growth.

Following a disastrous economic crisis during the early 1980s, reforms spurred private investment, stimulated economic growth, and cut poverty rates in the 1990s. The period 2003-05 was characterized by political instability, racial tensions, and violent protests against plans - subsequently abandoned - to export Bolivia's newly discovered natural gas reserves to large Northern Hemisphere markets. In 2005, the government passed a controversial hydrocarbons law that imposed significantly higher royalties and required foreign firms then operating under risk-sharing contracts to surrender all production to the state energy company in exchange for a predetermined service fee. High commodity prices between 2010 and 2014 sustained rapid growth and large trade surpluses with GDP growing 6.8% in 2013 and 5.4% in 2014. The global decline in oil prices that began in late 2014 exerted downward pressure on the price Bolivia receives for exported gas and resulted in lower GDP growth rates - 4.9% in 2015 and 4.3% in 2016 - and losses in government revenue as well as fiscal and trade deficits.

A lack of foreign investment in the key sectors of mining and hydrocarbons, along with conflict among social groups, pose challenges for the Bolivian economy. In 2015, President Evo MORALES expanded efforts to court international investment and boost Bolivia’s energy production capacity. MORALES passed an investment law and promised not to nationalize additional industries in an effort to improve the investment climate. In early 2016, the Government of Bolivia approved the 2016-20 National Economic and Social Development Plan aimed at maintaining growth of 5% and reducing poverty.
Bosnia and Herzegovina Bosnia and Herzegovina has a transitional economy with limited market reforms. The economy relies heavily on the export of metals, energy, textiles, and furniture as well as on remittances and foreign aid. A highly decentralized government hampers economic policy coordination and reform, while excessive bureaucracy and a segmented market discourage foreign investment. Foreign banks, primarily from Austria and Italy, control much of the banking sector, though the largest bank in the Republika Srpska entity is a private domestic one. The konvertibilna marka (convertible mark) - the national currency introduced in 1998 - is pegged to the euro through a currency board arrangement, which has maintained confidence in the currency and has facilitated reliable trade links with European partners. In 2016, Bosnia began a three-year IMF loan program that requires Bosnia to meet economic reform benchmarks to receive future funding installments.

Interethnic warfare in Bosnia and Herzegovina caused production to plummet by 80% from 1992 to 1995 and unemployment to soar, but the economy made progress until 2008, when the global economic crisis caused a downturn. Since 2013, Bosnia and Herzegovina has posted positive economic growth, though severe flooding hampered recovery in 2014. Bosnia and Herzegovina became a full member of the Central European Free Trade Agreement in September 2007.

Bosnia and Herzegovina's private sector is growing slowly, but foreign investment has dropped sharply since 2007. High unemployment remains the most serious macroeconomic problem. Successful implementation of a value-added tax in 2006 provided a steady source of revenue for the government and helped rein in gray-market activity, though public perceptions of government corruption and misuse of taxpayer money has encouraged a large informal economy to persist. National-level statistics have improved over time, but a large share of economic activity remains unofficial and unrecorded.

Bosnia and Herzegovina's top economic priorities are: acceleration of integration into the EU; strengthening the fiscal system; public administration reform; World Trade Organization membership; and securing economic growth by fostering a dynamic, competitive private sector.
Botswana Until the global recession, Botswana maintained one of the world's highest economic growth rates since independence in 1966. Diamond mining fueled much of the economic expansion and currently accounts for one-quarter of GDP, approximately 85% of export earnings, and about one-third of the government's revenues. Tourism is the secondary earner of foreign exchange and many Batswana engage in subsistence farming and cattle rearing. Through fiscal discipline and sound management, Botswana transformed itself from one of the poorest countries in the world to a middle-income country with a per capita GDP of approximately $16,900 in 2016. Botswana also ranks as one of the best credit risks in Africa.

Botswana's economy closely follows global economic trends because of its heavy reliance on a single luxury export. According to official government statistics, unemployment is around 20%, but unofficial estimates run much higher. De Beers, a major international diamond company, signed a 10-year deal with Botswana in 2012 and moved its rough stone sorting and trading division from London to Gaborone in 2013. The move was geared to support the development of Botswana's nascent downstream diamond industry.

Botswana’s economy recovered from the 2008 global recession in 2010, but has only grown modestly since then, primarily due to the downturn in the global diamond market, though water and power shortages also played a role. The prevalence of HIV/AIDS is second highest in the world and threatens the country's impressive economic gains. In 2016, Botswana entered its fourth year of drought, detrimental to Botswana’s small, but vital agriculture sector, but diamond exports increased to their highest levels since 2013, buffering economic growth. As a result, the economy registered 2.9% growth in 2016.
Bouvet Island no economic activity; declared a nature reserve
Brazil Brazil is the eighth-largest economy in the world, but is recovering from a recession in 2015 and 2016 that ranks as the worst in the country’s history. Falling commodity prices reduced export revenues and investment, which weakened the Brazilian real and cut tax revenues. The weaker real made existing public debt, which was largely denominated in foreign currency, more expensive. Lower tax revenues strained the government budget.

Economic reforms proposed in 2016 aim to slow the growth of government spending and reduce barriers to foreign investment. Government spending growth helped to push public debt to 70% of GDP at the end of 2016 up from 50% in 2012. Policies to strengthen Brazil’s workforce and industrial sector, such as local content requirements, may have boosted employment at the expense of investment.

Former President Dilma ROUSSEFF was impeached and convicted in August 2016 for moving funds among government budgets; the economy has also been affected by multiple corruption scandals involving private companies and government officials. Sanctions against the firms involved — some of the largest in Brazil — has limited their business opportunities, producing a ripple effect on associated businesses and contractors. In addition, investment in these companies has declined because of the scandals.

Brazil is a member of the Common Market of the South (Mercosur), a trade bloc including Argentina, Paraguay, Uruguay, and Venezuela. After the Asian and Russian financial crises, Mercosur adopted a protectionist stance to guard against exposure to the volatility of foreign markets. Brazil and its Mercosur partners have pledged to open the bloc to more trade and investment, but changes require approval of all five members, which makes policy adjustments too difficult to enact.
British Indian Ocean Territory All economic activity is concentrated on the largest island of Diego Garcia, where a joint UK-US military facility is located. Construction projects and various services needed to support the military installation are performed by military and contract employees from the UK, Mauritius, the Philippines, and the US. Some of the natural resources found in this territory include coconuts, fish, and sugarcane. Sugarcane is still a major export for this territory. There are no industrial or agricultural activities on the islands. The territory earns foreign exchange by selling fishing licenses and postage stamps.
British Virgin Islands The economy, one of the most stable and prosperous in the Caribbean, is highly dependent on tourism, which generates an estimated 45% of the national income. More than 934,000 tourists, mainly from the US, visited the islands in 2008. Because of traditionally close links with the US Virgin Islands, the British Virgin Islands has used the US dollar as its currency since 1959.

Livestock raising is the most important agricultural activity; poor soils limit the islands' ability to meet domestic food requirements.

In the mid-1980s, the government began offering offshore registration to companies wishing to incorporate in the islands, and incorporation fees now generate substantial revenues. Roughly 400,000 companies were on the offshore registry by yearend 2000. The adoption of a comprehensive insurance law in late 1994, which provides a blanket of confidentiality with regulated statutory gateways for investigation of criminal offenses, made the British Virgin Islands even more attractive to international business.
Brunei Brunei is an energy-rich sultanate on the northern coast of Borneo in Southeast Asia. Brunei boasts a well-educated, largely English-speaking population; excellent infrastructure; and a stable government intent on attracting foreign investment. Crude oil and natural gas production account for approximately 65% of GDP and 95% of exports, with Japan as the primary export market.

Per capita GDP is among the highest in the world, and substantial income from overseas investment supplements income from domestic hydrocarbon production. Bruneian citizens pay no personal income taxes, and the government provides free medical services and free education through the university level.

The Bruneian Government wants to diversify its economy away from hydrocarbon exports to other industries such as information and communications technology and halal manufacturing, permissible under Islamic law. Brunei’s trade in 2016 was set to increase following its regional economic integration in the ASEAN Economic Community, and the expected ratification of the Trans-Pacific Partnership trade agreement.
Bulgaria Bulgaria, a former communist country that entered the EU in 2007, has an open economy that historically has demonstrated strong growth, but its per-capita income remains one of the lowest among EU members and its reliance on energy imports and foreign demand for its exports makes its growth sensitive to external market conditions.

The government undertook significant structural economic reforms in the 1990s to move the economy from a centralized, planned economy to a more liberal, market-driven economy. These reforms included privatization of state-owned enterprises, liberalization of trade, and strengthening of the tax system - changes that initially caused some economic hardships but later helped to attract investment, spur growth, and make gradual improvements to living conditions. From 2000 through 2008, Bulgaria maintained robust, average annual real GDP growth in excess of 6%, which was followed by a deep recession in 2009 as the financial crisis caused domestic demand, exports, capital inflows and industrial production to contract, prompting the government to rein in spending. Real GDP growth remained slow - less than 2% annually - until 2015, when demand from EU countries for Bulgarian exports, plus an inflow of EU development funds, boosted growth to more than 3%. In recent years, low international energy prices have contributed to Bulgaria’s economic growth and helped to ease inflation; but, in 2017, rising international gas prices could dampen Bulgaria’s growth prospects.

Bulgaria is heavily reliant on energy imports from Russia, a potential vulnerability, and is a participant in EU-backed efforts to diversify regional natural gas supplies. In late 2016, the Bulgarian Government provided funding to Bulgaria’s National Electric Company to cover the $695 million compensation owed to Russian nuclear equipment manufacturer Atomstroyexport for the cancellation of the Belene Nuclear Power Plant project, which the Bulgarian Government terminated in 2012. In 2016, the Bulgarian Government established the State eGovernment Agency. This new agency is responsible for the implementation of projects related to electronic governance as well as coordination of national policies in this area with the EU requirements and practices, as well as to strengthen cybersecurity.

Despite a favorable investment regime, including low, flat corporate income taxes, significant challenges remain. Corruption in public administration, a weak judiciary, low productivity, and the presence of organized crime continue to hamper the country's investment climate and economic prospects.
Burkina Faso Burkina Faso is a poor, landlocked country that depends on adequate rainfall. About 90% of the population is engaged in subsistence farming and cotton is the main cash crop. The country has few natural resources and a weak industrial base.

Cotton and gold are Burkina Faso’s key exports - gold has accounted for about three-quarters of the country’s total export revenues. Burkina Faso’s economic growth and revenue depends largely on production levels and global prices for the two commodities. The Burkinabe economy experienced high levels of growth over the last few years, and the country has seen an upswing in gold exploration, production, and exports.

Burkina Faso experienced a number of public protests over the high cost of living, corruption, and other socioeconomic issues in 2013, while the fall of the COMPAORE government in 2014 and failed coup in September 2015 disrupted economic activity and strained government finances. A new three-year IMF program, approved in 2013, was recently completed. Discussions are currently underway on a new program. Political insecurity in neighboring Mali, unreliable energy supplies, and poor transportation links pose long-term challenges.
Burma Since the transition to a civilian government in 2011, Burma has begun an economic overhaul aimed at attracting foreign investment and reintegrating into the global economy. Economic reforms have included establishing a managed float of the Burmese kyat in 2012, granting the Central Bank operational independence in July 2013, enacting a new anti-corruption law in September 2013, and granting licenses to nine foreign banks in 2014 and four more foreign banks in 2016. State Counselor AUNG SAN SUU KYI and the ruling National League for Democracy, who took power in March 2016, are seeking to improve Burma’s investment climate, following the US sanctions lift in October 2016 and reinstatement of Generalized System of Preferences trade benefits in November 2016. In October 2016, Burma passed a revised foreign investment law that consolidates investment regulations and eases the investment approval process. Parliament is also expected to pass amendments to the Companies Law and Gemstone Law later this year.

The government reforms since 2011 and the subsequent easing of most Western sanctions led to accelerated growth, from under 6% in 2011 to roughly 8% in 2013 through 2016. While the economy is expected to grow by 6.5% this year, the World Bank and IMF predict that growth will return to over 7% per year during the next three years. In 2015, growth slowed slightly because of political uncertainty in an election year, summer floods, and external factors, including China’s slowdown and lower commodity prices. Burma’s abundant natural resources and young labor force are attracting foreign investment in the energy, garment, information technology, and food and beverage sectors.

Despite these improvements, living standards have not improved for the majority of the people residing in rural areas. Burma remains one of the poorest countries in Asia – approximately 26% of the country’s 51 million people live in poverty. The isolationist policies and economic mismanagement of previous governments have left Burma with poor infrastructure, endemic corruption, underdeveloped human resources, and inadequate access to capital, which will require a major commitment to reverse. The Burmese government has been slow to address impediments to economic development such as insecure land rights, a restrictive trade licensing system, an opaque revenue collection system, and an antiquated banking system. AUNG SAN SUU KYI’s government is focusing on accelerating agricultural productivity and land reforms, modernizing and opening the financial sector, and developing transportation and electricity infrastructure.
Burundi Burundi is a landlocked, resource-poor country with an underdeveloped manufacturing sector. Agriculture accounts for over 40% of GDP and employs more than 90% of the population. Burundi's primary exports are coffee and tea, which account for more than 60% of foreign exchange earnings. Thus, Burundi's export earnings - and its ability to pay for imports - rest primarily on favorable weather conditions and international coffee and tea prices, although exports are a relatively small share of GDP. Burundi is heavily dependent on aid from bilateral and multilateral donors. Foreign aid represented 48% of Burundi's national income in 2015, one of the highest percentages in Sub-Saharan Africa, but decreased to 33.5% in 2016. Burundi joined the East African Community (EAC) in 2009.

The 1993-2005 civil war resulted in more than 200,000 deaths, forced more than 48,000 refugees into Tanzania, and displaced 140,000 others internally. Political stability, aid flows, and economic activity improved following the war’s end, but underlying weaknesses – low governmental capacity, a high poverty rate, poor educational levels, a weak legal system, a poor transportation network, and overburdened utilities – have prevented the implementation of planned economic reforms. Government corruption has also hindered the development of a private sector. The purchasing power of most Burundians has decreased as wage increases have not kept pace with inflation.

In 2015, Burundi’s economy suffered from political turmoil, including street protests and an attempted coup, following President NKURUNZIZA’s controversial announcement that he would run for a third term. Insecurity and refugee flows to neighboring countries slowed down economic activity and donors withdrew aid, increasing Burundi’s budget deficit and decreasing hard currency reserves. Real GDP growth dropped precipitously and has yet to recover to pre-conflict levels.
Cabo Verde Cabo Verde’s economy is vulnerable to external shocks and depends on development aid, foreign investment, remittances, and tourism. The economy is service-oriented with commerce, transport, tourism, and public services accounting for about three-fourths of GDP. Tourism is the mainstay of the economy and depends on conditions in the euro-zone countries. Cabo Verde annually runs a high trade deficit financed by foreign aid and remittances from its large pool of emigrants; remittances as a share of GDP are one of the highest in Sub-Saharan Africa.

Although about 40% of the population lives in rural areas, the share of food production in GDP is low. The island economy suffers from a poor natural resource base, including serious water shortages, exacerbated by cycles of long-term drought, and poor soil for growing food on several of the islands, requiring it to import most of what it consumes. The fishing potential, mostly lobster and tuna, is not fully exploited.

Economic reforms are aimed at developing the private sector and attracting foreign investment to diversify the economy and mitigate high unemployment. The government’s elevated debt levels have limited its capacity to finance any shortfalls.
Cambodia Cambodia has experienced strong economic growth over the last decade; GDP grew at an average annual rate of over 8% between 2000 and 2010 and at least 7% since 2011. The tourism, garment, construction and real estate, and agriculture sectors accounted for the bulk of growth. Around 600,000 people, the majority of whom are women, are employed in the garment and footwear sector. An additional 500,000 Cambodians are employed in the tourism sector, and a further 50,000 people in construction. Tourism has continued to grow rapidly with foreign arrivals exceeding 2 million per year since 2007 and reaching around 4.5 million visitors in 2014. Mining also is attracting some investor interest and the government has touted opportunities for mining bauxite, gold, iron and gems.

Cambodia remains one of the poorest countries in Asia and long-term economic development remains a daunting challenge, inhibited by endemic corruption, limited human resources, high income inequality, and poor job prospects. As of 2012, approximately 2.66 million people live on less than $1.20 per day, and 37% of Cambodian children under the age of 5 suffer from chronic malnutrition. More than 50% of the population is less than 25 years old. The population lacks education and productive skills, particularly in the impoverished countryside, which also lacks basic infrastructure.

The World Bank in 2016 formally reclassified Cambodia as a lower middle-income country as a result of continued rapid economic growth over the past several years. Cambodia’s graduation from a low-income country will reduce its eligibility for foreign assistance and will challenge the government to seek new sources of financing in 2017. The Cambodian Government has been working with bilateral and multilateral donors, including the Asian Development Bank, the World Bank and IMF, to address the country's many pressing needs; more than 30% of the government budget comes from donor assistance. A major economic challenge for Cambodia over the next decade will be fashioning an economic environment in which the private sector can create enough jobs to handle Cambodia's demographic imbalance.
Cameroon Cameroon’s market-based, diversified economy features oil and gas, timber, aluminum, agriculture, mining and the service sector. Oil remains Cameroon’s main export commodity, and despite falling global oil prices, still accounts for nearly 40% of exports. Cameroon’s economy suffers from factors that often impact underdeveloped countries, such as stagnant per capita income, a relatively inequitable distribution of income, a top-heavy civil service, endemic corruption, continuing inefficiencies of a large parastatal system in key sectors, and a generally unfavorable climate for business enterprise.

Since 1990, the government has embarked on various IMF and World Bank programs designed to spur business investment, increase efficiency in agriculture, improve trade, and recapitalize the nation's banks. The IMF continues to press for economic reforms, including increased budget transparency, privatization, and poverty reduction programs. The Government of Cameroon provides subsidies for electricity, food, and fuel that have strained the federal budget and diverted funds from education, healthcare, and infrastructure projects, as low oil prices have led to lower revenues.

Cameroon devotes significant resources to several large infrastructure projects currently under construction, including a deep seaport in Kribi and the Lom Pangar Hydropower Project. Cameroon’s energy sector continues to diversify, recently opening a natural gas-powered electricity generating plant. Cameroon continues to seek foreign investment to improve its inadequate infrastructure, create jobs, and improve its economic footprint, but its unfavorable business environment remains a significant deterrent to foreign investment.
Canada Canada resembles the US in its market-oriented economic system, pattern of production, and high living standards. Since World War II, the impressive growth of the manufacturing, mining, and service sectors has transformed the nation from a largely rural economy into one primarily industrial and urban. Canada has a large oil and natural gas sector with the majority of crude oil production derived from oil sands in the western provinces, especially Alberta. Canada now ranks third in the world in proved oil reserves behind Venezuela and Saudi Arabia and is the world’s sixth-largest oil producer.

The 1989 Canada-US Free Trade Agreement and the 1994 North American Free Trade Agreement (which includes Mexico) dramatically increased trade and economic integration between the US and Canada. Canada and the US enjoy the world’s most comprehensive and highly balanced bilateral trade and investment relationship, with merchandise trade of $544 billion in 2016, services trade of over $80 billion, and two-way investment stocks of nearly $700 billion. Over three-fourths of Canada’s exports are destined for the US each year. Canada is the largest foreign supplier of energy to the US, including oil, natural gas, and electric power, and a top source of US uranium imports.

Given its abundant natural resources, highly skilled labor force, and modern capital stock, Canada enjoyed solid economic growth from 1993 through 2007. The global economic crisis of 2007-08 moved the Canadian economy into sharp recession by late 2008, and Ottawa posted its first fiscal deficit in 2009 after 12 years of surplus. Canada's major banks emerged from the financial crisis of 2008-09 among the strongest in the world, owing to the financial sector's tradition of conservative lending practices and strong capitalization. Since the fall in world oil prices in 2014, Canada has achieved modest economic growth.
Cayman Islands With no direct taxation, the islands are a thriving offshore financial center. More than 93,000 companies were registered in the Cayman Islands as of 2008, including almost 300 banks, 800 insurers, and 10,000 mutual funds. A stock exchange was opened in 1997. Nearly 90% of the islands' food and consumer goods must be imported. The Caymanians enjoy a standard of living comparable to that of Switzerland.

Tourism is also a mainstay, accounting for about 70% of GDP and 75% of foreign currency earnings. The tourist industry is aimed at the luxury market and caters mainly to visitors from North America. Total tourist arrivals exceeded 1.9 million in 2008, with about half from the US.
Central African Republic Subsistence agriculture, together with forestry and mining, remains the backbone of the economy of the Central African Republic (CAR), with about 60% of the population living in outlying areas. The agricultural sector generates more than half of GDP. Timber and diamonds account for most export earnings, followed by cotton. Important constraints to economic development include the CAR's landlocked geography, poor transportation system, largely unskilled work force, and legacy of misdirected macroeconomic policies. Factional fighting between the government and its opponents remains a drag on economic revitalization. Distribution of income is extraordinarily unequal. Grants from France and the international community can only partially meet humanitarian needs.

Since 2009, the IMF has worked closely with the government to institute reforms that have resulted in some improvement in budget transparency, but other problems remain. The government's additional spending in the run-up to the 2011 election worsened CAR's fiscal situation. In 2012, the World Bank approved $125 million in funding for transport infrastructure and regional trade, focused on the route between CAR's capital and the port of Douala in Cameroon. In July 2016, the IMF approved a three-year extended credit facility valued at $116 million. The World Bank in late 2016 approved a $20 million grant to restore basic fiscal management, improve transparency, and assist with economic recovery.

Participants in the Kimberley Process, a commitment to remove conflict diamonds from the global supply chain, partially lifted the ban on diamond exports from CAR in 2015, but persistent insecurity will prevent GDP from recovering to its pre-2013 level.
Chad Chad’s landlocked location results in high transportation costs for imported goods and dependence on neighboring countries. Oil and agriculture are mainstays of Chad’s economy. Oil provides about 60% of export revenues, while cotton, cattle, livestock, and gum arabic provide the bulk of Chad's non-oil export earnings. The services sector contributes about one-third of GDP and has attracted foreign investment mostly through telecommunications and banking.

Nearly all of Chad’s fuel is provided by one domestic refinery, and unanticipated shutdowns occasionally result in shortages. The country regulates the price of domestic fuel, providing an incentive for black market sales.

Although high oil prices and strong local harvests supported the economy in the past, low oil prices now stress Chad’s fiscal position. Chad relies on foreign assistance and foreign capital for most of its public and private sector investment. Investment in Chad is difficult due to its limited infrastructure, lack of trained workers, extensive government bureaucracy, and corruption. Chad obtained a three-year extended credit facility from the IMF in 2014 and was granted debt relief under the Heavily Indebted Poor Countries Initiative in April 2015.

In 2017, economic policy will be driven by efforts that started in 2016 to reverse the recession and to repair damage to public finances and exports. The government is implementing an emergency action plan to counterbalance the drop in oil revenue and to diversify the economy. Multinational partners, such as the African Development Bank, the EU, and the World Bank are likely to continue budget support in 2017, but Chad will remain at high debt risk, given its dependence on oil revenue and pressure to spend on subsidies and security.
Chile Chile has a market-oriented economy characterized by a high level of foreign trade and a reputation for strong financial institutions and sound policy that have given it the strongest sovereign bond rating in South America. Exports of goods and services account for approximately one-third of GDP, with commodities making up some 60% of total exports. Copper is Chile’s top export and provides 20% of government revenue.

From 2003 through 2013, real growth averaged almost 5% per year, despite the slight contraction in 2009 that resulted from the global financial crisis. Growth slowed to an estimated 1.7% in 2016. A continued drop in copper prices prompted Chile to experience its second consecutive year of slow growth, elevated inflation, and a depreciating currency.

Chile deepened its longstanding commitment to trade liberalization with the signing of a free trade agreement with the US, effective 1 January 2004. Chile has 22 trade agreements covering 60 countries including agreements with the EU, Mercosur, China, India, South Korea, and Mexico. In May 2010, Chile signed the OECD Convention, becoming the first South American country to join the OECD. In October 2015, Chile signed the Trans-Pacific Partnership trade agreement.

The Chilean Government has generally followed a countercyclical fiscal policy, accumulating surpluses in sovereign wealth funds during periods of high copper prices and economic growth, and generally allowing deficit spending only during periods of low copper prices and growth. As of 31 October 2016, those sovereign wealth funds - kept mostly outside the country and separate from Central Bank reserves - amounted to more than $23.5 billion. Chile used these funds to finance fiscal stimulus packages during the 2009 economic downturn.

In 2014, President Michelle BACHELET introduced tax reforms aimed at delivering her campaign promise to fight inequality and to provide access to education and health care. The reforms are expected to generate additional tax revenues equal to 3% of Chile’s GDP, mostly by increasing corporate tax rates to OECD averages.
China Since the late 1970s, China has moved from a closed, centrally planned system to a more market-oriented one that plays a major global role. China has implemented reforms in a gradualist fashion, resulting in efficiency gains that have contributed to a more than tenfold increase in GDP since 1978. Reforms began with the phaseout of collectivized agriculture, and expanded to include the gradual liberalization of prices, fiscal decentralization, increased autonomy for state enterprises, growth of the private sector, development of stock markets and a modern banking system, and opening to foreign trade and investment. China continues to pursue an industrial policy, state-support of key sectors, and a restrictive investment regime. Measured on a purchasing power parity (PPP) basis that adjusts for price differences, China in 2016 stood as the largest economy in the world, surpassing the US in 2014 for the first time in modern history. China became the world's largest exporter in 2010, and the largest trading nation in 2013. Still, China's per capita income is below the world average.

After keeping its currency tightly linked to the US dollar for years, China in July 2005 moved to an exchange rate system that references a basket of currencies. From mid-2005 to late 2008, the renminbi appreciated more than 20% against the US dollar, but the exchange rate remained virtually pegged to the dollar from the onset of the global financial crisis until June 2010, when Beijing allowed resumption of a gradual liberalization. In 2015, the People’s Bank of China announced it would continue to carefully push for full convertibility of the renminbi (RMB) after the currency was accepted as part of the IMF’s special drawing rights basket. After engaging in one-way, large-scale intervention to resist appreciation of the RMB for a decade, China’s 2016 intervention in foreign exchange markets has sought to prevent a rapid RMB depreciation that would have negative consequences for the United States, China, and the global economy.

China’s economic growth has slowed since 2011. The Chinese Government faces numerous economic challenges including: (a) reducing its high domestic savings rate and correspondingly low domestic household consumption; (b) servicing its high corporate debt burdens to maintain financial stability; (c) facilitating higher-wage job opportunities for the aspiring middle class, including rural migrants and college graduates, while maintaining competitiveness; (d) dampening speculative investment in the real estate sector; (e) reducing industrial overcapacity; and (f) raising productivity growth rates through the more efficient allocation of capital. Economic development has progressed further in coastal provinces than in the interior, and by 2016 more than 169.3 million migrant workers and their dependents had relocated to urban areas to find work. One consequence of China’s population control policy known as the “one-child policy” - which was relaxed in 2016 to permit all families to have two children - is that China is now one of the most rapidly aging countries in the world. Deterioration in the environment - notably air pollution, soil erosion, and the steady fall of the water table, especially in the North - is another long-term problem. China continues to lose arable land because of erosion and urbanization. The Chinese government is seeking to add energy production capacity from sources other than coal and oil, focusing on natural gas, nuclear, and clean energy development. In 2016, China ratified the Paris Agreement, a multilateral agreement to combat climate change, and committed to peak its carbon dioxide emissions between 2025 and 2030.

The government's 13th Five-Year Plan, unveiled in March 2016, emphasizes the need to increase innovation and boost domestic consumption to make the economy less dependent on government investment, exports, and heavy industry. However, China has made only marginal progress toward these rebalancing goals. Under President XI Jinping, Beijing has signaled its understanding that China's long-term economic health depends on giving the market a more decisive role in allocating resources, but has moved slowly on market-oriented reforms because of potential negative consequences for stability and short-term economic growth. He has also increased state-control over key sectors and Party control over state-owned enterprises. Chinese leaders in 2010 pledged to double China’s GDP by 2020, and the 13th Five Year Plan includes annual economic growth targets of at least 6.5% through 2020 to achieve that goal. In recent years, China has renewed its support for state-owned enterprises in sectors considered important to "economic security," explicitly looking to foster globally competitive industries. Chinese leaders also have undermined some market-oriented reforms by reaffirming the “dominant” role of the state in the economy, a stance that threatens to discourage private initiative and make the economy less efficient over time.
Christmas Island The main economic activities on Christmas Island are the mining of low grade phosphate, limited tourism, the provision of government services and, since 2005, the construction and operation of the Immigration Detention Center. The government sector includes administration, health, education, policing, customs, quarantine, and defense.
Clipperton Island Although 115 species of fish have been identified in the territorial waters of Clipperton Island, the only economic activity is tuna fishing.
Cocos (Keeling) Islands Coconuts, grown throughout the islands, are the sole cash crop. Small local gardens and fishing contribute to the food supply, but additional food and most other necessities must be imported from Australia. There is a small tourist industry.
Colombia Colombia’s economy benefits from free trade and sound fiscal policies but it has slowed in 2016 because of falling global oil prices, a strong dollar, and moderate inflation. Colombia heavily depends on energy and mining exports, making it vulnerable to a drop in commodity prices. Colombia is the world's fourth largest coal exporter, the world’s second largest coffee and cut flowers exporter, and Latin America’s fourth largest oil producer. Economic development is hampered by inadequate infrastructure, poverty, narcotrafficking, and an uncertain security situation.

Although real GDP growth averaged 4.7% for the past decade, growth fell to 2.0% in 2016. The El Nino weather pattern in early 2016 and a 40-day truckers strike caused food and energy prices to rise, with inflation spiking to a high of nearly 9% in July 2016. Declining oil prices have reduced government revenues. Colombia received about $1 billion in oil revenue in 2016, compared with $6 billion in 2014; oil accounts for 20% of government revenues. President Juan Manuel SANTOS signed into law a tax reform bill in December 2016 aimed at offsetting lost revenue from the drop in oil prices by decreasing corporate taxes to incentivize investment and by increasing the value added tax. The enactment of the tax reform bill was key to maintaining Colombia’s BBB investment-grade credit rating. Foreign investment has been hampered by Colombia’s struggle to address its fiscal problems. As of September 2016, FDI in Colombia had risen to $10.2 billion, up from $9.3 billion over the same period in 2015.

Colombia has signed or is negotiating Free Trade Agreements (FTA) with more than a dozen countries; the US-Colombia FTA went into force in May 2012. The US and Colombia have benefitted from the FTA, but Colombia’s ability to take full advantage of its enhanced access to American markets continues to be constrained by lack of export diversification. Non-tariff measures remain a point of contention for bilateral trade relations. The Colombian government acted in 2016 to address several bilateral trade irritants with the US, including truck scrappage, distilled spirits, pharmaceuticals, ethanol imports, and labor rights. US and industry stakeholders are still evaluating the implementation of recent reforms. Colombia is a founding member of the Pacific Alliance - a regional trade block formed in 2012 by Chile, Colombia, Mexico, and Peru to promote regional trade and economic integration. In 2013, Colombia began its accession process to the Organization for Economic Cooperation and Development.
Comoros One of the world's poorest countries, the Comoros is made up of three islands that are hampered by inadequate transportation links, a young and rapidly increasing population, and few natural resources. The low educational level of the labor force contributes to a subsistence level of economic activity and a heavy dependence on foreign grants and technical assistance. Agriculture, including fishing, hunting, and forestry, accounts for 50% of GDP, employs 80% of the labor force, and provides most of the exports. Export income is heavily reliant on the three main crops of vanilla, cloves, and ylang ylang (perfume essence); and the Comoros' export earnings are easily disrupted by disasters such as fires and extreme weather. Despite agriculture’s importance to the economy, the country imports roughly 70% of its food; rice, the main staple, accounts for the bulk of imports. Remittances from about 300,000 Comorans contribute about 25% of the country’s GDP.

The new government, elected in mid-2016, will be challenged to provide basic services, upgrade education and technical training, privatize commercial and industrial enterprises, improve health services, diversify exports, promote tourism, and reduce the high population growth rate. Recurring political instability, sometimes initiated from outside the country, has inhibited growth. In late 2015, Saudi Arabia provided a large budget grant to the Comorian Government, allowing arrears to be cleared and resulting in an overall fiscal surplus for 2016. The government has moved to improve revenue mobilization, reduce expenditures, and improve electricity access.
Congo, Democratic Republic of the The economy of the Democratic Republic of the Congo - a nation endowed with vast natural resource wealth - continues to struggle. Systemic corruption since independence in 1960, combined with countrywide instability and conflict that began in the early-90s, has dramatically reduced national output and government revenue and increased external debt. With the installation of a transitional government in 2003 after peace accords, economic conditions slowly began to improve as the transitional government reopened relations with international financial institutions and international donors, and President KABILA began implementing reforms.

Renewed activity in the mining sector, the source of most export income, boosted Kinshasa's fiscal position and GDP growth, but low commodity prices are leading to slower growth, rising inflation, and a growing fiscal deficit. An uncertain legal framework, corruption, and a lack of transparency in government policy are long-term problems for the large mining sector and for the economy as a whole.

Much economic activity still occurs in the informal sector and is not reflected in GDP data. The DRC signed a Poverty Reduction and Growth Facility with the IMF in 2009 and received $12 billion in multilateral and bilateral debt relief in 2010; but, at the end of 2012, the IMF suspended the last three payments under the loan facility - worth $240 million - because of concerns about the lack of transparency in mining contracts. In 2012, the DRC updated its business laws by adhering to OHADA, the Organization for the Harmonization of Business Law in Africa. The price of copper – the DRC’s primary export - plummeted in 2015 and remained at record lows during 2016, reducing government revenues, expenditures, and foreign exchange reserves.
Congo, Republic of the The economy is a mixture of subsistence farming and hunting, an industrial sector based largely on oil and support services, and government spending. Oil has supplanted forestry as the mainstay of the economy, providing a major share of government revenues and exports. Natural gas is increasingly being converted to electricity rather than being flared, greatly improving energy prospects. New mining projects, particularly iron ore, which entered production in late 2013, may add as much as $1 billion to annual government revenue.

Economic reform efforts have been undertaken with the support of international organizations, notably the World Bank and the IMF, including the recently concluded Article IV consultations. The current administration faces difficult economic challenges of stimulating recovery and reducing poverty. The recent drop in oil prices has constrained government spending; lower oil prices forced the government to cut more than $1 billion in planned spending. However, the government increased infrastructure spending for the September 2015 All-Africa Games and the March 2016 presidential election, which put further pressure on the budget. The fiscal deficit exceeded 18% of GDP in 2015. Substantial macroeconomic imbalances continued in 2016 following sustained low oil prices.
Cook Islands Like many other South Pacific island nations, the Cook Islands' economic development is hindered by the isolation of the country from foreign markets, the limited size of domestic markets, lack of natural resources, periodic devastation from natural disasters, and inadequate infrastructure. Agriculture, employing more than one-quarter of the working population, provides the economic base with major exports of copra and citrus fruit. Black pearls are the Cook Islands' leading export. Manufacturing activities are limited to fruit processing, clothing, and handicrafts. Trade deficits are offset by remittances from emigrants and by foreign aid overwhelmingly from New Zealand. In the 1980s and 1990s, the country became overextended, maintaining a bloated public service and accumulating a large foreign debt. Subsequent reforms, including the sale of state assets, the strengthening of economic management, the encouragement of tourism, and a debt restructuring agreement, have rekindled investment and growth.
Coral Sea Islands no economic activity
Costa Rica Since 2010, Costa Rica has enjoyed strong and stable economic growth - 4.3% in 2016. Exports of bananas, coffee, sugar, and beef are the backbone of its commodity exports. Various industrial and processed agricultural products have broadened exports in recent years, as have high value-added goods, including medical devices. Costa Rica's impressive biodiversity also makes it a key destination for ecotourism.

Foreign investors remain attracted by the country's political stability and relatively high education levels, as well as the incentives offered in the free-trade zones; Costa Rica has attracted one of the highest levels of foreign direct investment per capita in Latin America. The US-Central American-Dominican Republic Free Trade Agreement (CAFTA-DR), which became effective for Costa Rica in 2009, helped increase foreign direct investment in key sectors of the economy, including insurance and telecommunication. However, poor infrastructure, high energy costs, a complex bureaucracy, weak investor protection, and uncertainty of contract enforcement impede greater investment.

Costa Rica’s economy also faces challenges due to a rising fiscal deficit, rising public debt, and relatively low levels of domestic revenue. Poverty has remained around 20-25% for nearly 20 years, and the government’s strong social safety net has eroded due to increased constraints on its expenditures. Costa Rica’s credit rating was downgraded from stable to negative in 2015, upping pressure on lending rates - which could hurt small business, on the budget deficit - which could hurt infrastructure development, and on the rate of return on investment - which could soften foreign direct investment (FDI). Unlike the rest of Central America, Costa Rica is not highly dependent on remittances - which represented just 0.7% of GDP in 2015, but instead relies on FDI - which accounted for 4% of GDP.
Cote d'Ivoire Cote d'Ivoire is heavily dependent on agriculture and related activities, which engage roughly two-thirds of the population. Cote d'Ivoire is the world's largest producer and exporter of cocoa beans and a significant producer and exporter of coffee and palm oil. Consequently, the economy is highly sensitive to fluctuations in international prices for these products and to climatic conditions. Cocoa, oil, and coffee are the country's top export revenue earners, but the country has targeted agricultural processing of cocoa, cashews, mangoes, and other commodities as a high priority. Mining gold and exporting electricity are growing industries outside agriculture.

Following the end of more than a decade of civil conflict in 2011, Cote d’Ivoire has experienced a boom in foreign investment and economic growth. In June 2012, the IMF and the World Bank announced $4.4 billion in debt relief for Cote d'Ivoire under the Highly Indebted Poor Countries Initiative. For the last 5 years Cote d'Ivoire's growth rate has been among the highest in the world.
Croatia Though still one of the wealthiest of the former Yugoslav republics, Croatia's economy suffered badly during the 1991-95 war. The country's output during that time collapsed, and Croatia missed the early waves of investment in Central and Eastern Europe that followed the fall of the Berlin Wall. Between 2000 and 2007, however, Croatia's economic fortunes began to improve with moderate but steady GDP growth between 4% and 6%, led by a rebound in tourism and credit-driven consumer spending. Inflation over the same period remained tame and the currency, the kuna, stable.

Croatia experienced an abrupt slowdown in the economy in 2008 and is slowly recovering; economic growth was stagnant or negative in each year since 2009, but picked up in 2015-16. Difficult problems still remain including a stubbornly high unemployment rate, uneven regional development, and a challenging investment climate. In 2016 Croatia demonstrated a commitment to improving the business climate, simplifying its tax code to stimulate growth from domestic consumption and foreign investment. Even before 2016, Croatia has worked to become a regional energy player and plans to import liquefied natural gas through a prospective import terminal and re-export it to European consumers.

On 1 July 2013, Croatia joined the EU, following a decade-long application process. Croatia will be a member of the European Exchange Rate Mechanism, with its currency effectively pegged to the euro, until it meets the criteria for joining the Economic and Monetary Union and adopts the euro as its currency. EU accession has increased pressure on the government to reduce Croatia’s relatively high public debt, which triggered the EU’s excessive deficit procedure for fiscal consolidation. Zagreb has cut spending since 2012, and the government also raised additional revenues through more stringent tax collection and by raising the value-added tax. The government has also sought to accelerate privatization of non-strategic assets, with mixed success.
Cuba The government continues to balance the need for loosening its socialist economic system against a desire for firm political control. In April 2011, the government held the first Cuban Communist Party Congress in almost 13 years, during which leaders approved a plan for wide-ranging economic changes. Since then, the government has slowly and incrementally implemented limited economic reforms, including allowing Cubans to buy electronic appliances and cell phones, stay in hotels, and buy and sell used cars. The government has cut state sector jobs as part of the reform process, and it has opened up some retail services to "self-employment," leading to the rise of so-called "cuentapropistas" or entrepreneurs. Approximately 476,000 Cuban workers are currently registered as self-employed.

The Cuban regime has updated its economic model to include permitting the private ownership and sale of real estate and new vehicles, allowing private farmers to sell agricultural goods directly to hotels, allowing the creation of non-agricultural cooperatives, adopting a new foreign investment law, and launching a “Special Development Zone” around the Mariel port.

Since late 2000, Venezuela has provided petroleum products to Cuba on preferential terms, supplying nearly 100,000 barrels per day. Cuba has been paying for the oil, in part, with the services of Cuban personnel in Venezuela, including some 30,000 medical professionals.
Curacao Most of Curacao’s GDP results from services. Tourism, petroleum refining and bunkering, offshore finance, and transportation and communications are the mainstays of this small island economy, which is closely tied to the outside world. Curacao has limited natural resources, poor soil, and inadequate water supplies, and budgetary problems complicate reform of the health and education systems. Although GDP grew only slightly during the past decade, Curacao enjoys a high per capita income and a well-developed infrastructure compared to other countries in the region.

Curacao has an excellent natural harbor that can accommodate large oil tankers, and the port of Willemstad hosts a free trade zone and a dry dock. Venezuelan state-owned oil company PdVSA, under a contract in effect until 2019, leases the single refinery on the island from the government, directly employing some 1,000 people. Most of the oil for the refinery is imported from Venezuela and most of the refined products are exported to the US and Asia. Almost all consumer and capital goods are imported, with the US, the Netherlands, and Venezuela being the major suppliers.

The government is attempting to diversify its industry and trade. Curacao is an Overseas Countries and Territories (OCT) of the European Union. Nationals of Curacao are citizens of the European Union, even though it is not a member. Based on its OCT status, products that originate in Curacao have preferential access to the EU and are exempt from import duties. Curacao is a beneficiary of the Caribbean Basin Initiative and, as a result, products originating in Curacao can be imported tax free into the US if at least 35% has been added to the value of these products in Curacao. The island has state-of-the-art information and communication technology connectivity with the rest of the world, including a Tier IV datacenter. With several direct satellite and submarine optic fiber cables, Curacao has one of the best Internet speeds and reliability in the Western Hemisphere.
Cyprus The area of the Republic of Cyprus under government control has a market economy dominated by a services sector that accounts for more than four-fifths of GDP. Tourism, finance, shipping, and real estate have traditionally been the most important services. Cyprus has been a member of the EU since May 2004 and adopted the euro as its national currency in January 2008.

During the first five years of EU membership, the Cyprus economy grew at an average rate of about 4%, with unemployment between 2004 and 2008 averaging about 4%. However, the economy tipped into recession in 2009 as the ongoing global financial crisis and resulting low demand hit the tourism and construction sectors. An overextended banking sector with excessive exposure to Greek debt added to the contraction. Cyprus’ biggest two banks were among the largest holders of Greek bonds in Europe and had a substantial presence in Greece through bank branches and subsidiaries. Following numerous downgrades of its credit rating, Cyprus lost access to international capital markets in May 2011. In July 2012, Cyprus became the fifth euro-zone government to request an economic bailout program from the European Commission, European Central Bank and the International Monetary Fund - known collectively as the "Troika."

Shortly after the election of President Nikos ANASTASIADES in February 2013, Cyprus reached an agreement with the Troika on a $13 billion bailout that triggered a two-week bank closure and the imposition of capital controls that remained partially in place until April 2015. Cyprus' two largest banks merged and the combined entity was recapitalized through conversion of some large bank deposits to shares and imposition of losses on bank bondholders. As with other EU countries, the Troika conditioned the bailout on passing financial and structural reforms and privatizing state-owned enterprises. Despite downsizing and restructuring, the Cypriot financial sector throughout 2015 remained burdened by the largest stock of non-performing loans in the euro zone, equal to nearly half of all loans. Since the bailout, Cyprus has received positive appraisals by the Troika and outperformed fiscal targets but has struggled to overcome political opposition to bailout-mandated legislation, particularly regarding privatizations. Cyprus emerged from recession in 2015 and its economy grew an estimated 1.5% for the year, setting a positive tone for the scheduled end of the bailout program in March 2016. Growth recovered to 2.8% in 2016. The European Commission projects continued GDP growth in Cyprus of 2.5% in 2017 and an 11.1% reduction in unemployment, but the rate of non-performing loans (NPLs) is still very high at around 49%. If Cypriot banks can increase the pace of resolution of these NPLs, economic growth could exceed the projection.

In October 2013, a US-Israeli consortium completed preliminary appraisals of hydrocarbon deposits in Cyprus’ exclusive economic zone (EEZ), which estimated gross mean reserves of about 130 billion cubic meters. Though exploration continues in Cyprus’ EEZ, no additional commercially exploitable reserves were identified during the exploratory drilling in 2014/2015. Developing offshore hydrocarbon resources remains a critical component of the government’s economic recovery efforts, but development has been delayed as a result of regional developments and disagreements about exploitation methods.
Czechia Czechia is a prosperous market economy that boasts one of the highest GDP growth rates and lowest unemployment levels in the EU, but its dependence on exports makes economic growth vulnerable to contractions in external demand. Czechia’s exports comprise some 80% of GDP and largely consist of automobiles, the country’s single largest industry. Czechia acceded to the EU in 2004 but has yet to join the euro-zone. While the flexible koruna helps Czechia weather external shocks, its central bank (Czech National Bank - CNB) has since November 2013 intervened in the foreign exchange markets to cap the value of the koruna at 27/Euro, with a 2% inflation target. This intervention has also helped to keep exports competitively priced. After inflation exceeded the bank's 2% target in early 2017, the CNB indicated it expects to end its intervention in the first half of 2017, though it will continue to intervene as necessary to maintain stability of the currency.

After slowly recovering from a steep recession in 2009, the Czech economy again fell into recession in 2012 and 2013 because of a slump in demand within the EU and government austerity measures. Inflows of EU development funds underpinned a rebound in 2014-15. Real GDP growth reached 4.5% in 2015, in part due to last-minute spending of EU funds, and fell to 2.5% in 2016, still one of the highest rates in the EU. The Czech unemployment rate was 5.2% in 2016, one of the lowest rates in the EU.

Since coming to power in 2014, the new government has undertaken some reforms to try to reduce corruption, attract investment, and improve social welfare programs, which could help increase the government’s revenues and improve living conditions for Czechs. The government introduced in December 2016 an online tax reporting system intended to reduce tax evasion and increase revenues. The government also plans to remove labor market rigidities to improve the business climate, bring procurement procedures in line with EU best practices, and boost wages. The country's low unemployment rate has led to steady increases in salaries – 4-5% in each of the past two years, and the government is facing pressure from businesses to allow greater migration of qualified workers, at least from Ukraine and neighboring Central European countries.

Long-term challenges include dealing with a rapidly aging population, a shortage of skilled workers, a lagging education system, funding an unsustainable pension and health care system, and diversifying away from manufacturing and toward a more high-tech, services-based, knowledge economy.
Denmark This thoroughly modern market economy features a high-tech agricultural sector, advanced industry with world-leading firms in pharmaceuticals, maritime shipping, and in renewable energy, and a high dependence on foreign trade. Denmark is a net exporter of food, oil, and gas and enjoys a comfortable balance of payments surplus, but depends on imports of raw materials for the manufacturing sector. Danes enjoy a high standard of living, and the Danish economy is characterized by extensive government welfare measures and an equitable distribution of income. An aging population will be a long-term issue.

Denmark is a member of the EU; Danish legislation and regulations conform to EU standards on almost all issues. Despite previously meeting the criteria to join the European Economic and Monetary Union, Denmark has negotiated an opt-out with the EU and is not required to adopt the euro. Within the EU, Denmark is among the strongest supporters of trade liberalization.

Denmark is experiencing a modest economic expansion. The economy grew by 1.6% in 2015 and an estimated 1.3% in 2016. The expansion is expected to continue at similar rates in 2017 and 2018. The labor market has strengthened since 2013, and unemployment stood at 4.2% in early 2017, based on the national measure. By early 2017, some sectors were experiencing difficulties attracting qualified labor. Productivity growth was significantly below the OECD average from the mid-1990s until 2011, but has increased in recent years. Improvement in productivity is needed to ensure continued growth.

Denmark maintained a healthy budget surplus for many years up to 2008, but the global financial crisis swung the budget balance into deficit. The 2016 deficit was 1.4%. The government projects lower deficits in 2017 and 2018, and public debt (EMU debt) as a share of GDP is expected to decline. In 2015, household indebtedness remained relatively high at more than 292% of net disposable income, while household net worth - from private pension schemes and other assets - amounted to 497% of net disposable income.
Dhekelia Economic activity is limited to providing services to the military and their families located in Dhekelia. All food and manufactured goods must be imported.
Djibouti Djibouti's economy is based on service activities connected with the country's strategic location as a deepwater port on the Red Sea. Three-fourths of Djibouti's inhabitants live in the capital city; the remainder are mostly nomadic herders. Scant rainfall and less than 4% arable land limits crop production to small quantities of fruits and vegetables, and most food must be imported.

Djibouti provides services as both a transit port for the region and an international transshipment and refueling center. Imports, exports, and reexports represent 70% of port activity at Djibouti's container terminal. Reexports consist primarily of coffee from landlocked neighbor Ethiopia. Djibouti has few natural resources and little industry. The nation is, therefore, heavily dependent on foreign assistance to support its balance of payments and to finance development projects. An official unemployment rate of nearly 50% - with youth unemployment near 80% - continues to be a major problem. Inflation was a modest 3% in 2014-2016, due to low international food prices and a decline in electricity tariffs.

Djibouti’s reliance on diesel-generated electricity and imported food and water leave average consumers vulnerable to global price shocks, though in mid-2015 Djibouti passed new legislation to liberalize the energy sector. The government has emphasized infrastructure development for transportation and energy and Djibouti – with the help of foreign partners, particularly China – has begun to increase and modernize its port capacity.
Dominica The Dominican economy has been dependent on agriculture - primarily bananas - in years past, but increasingly has been driven by tourism as the government seeks to promote Dominica as an "ecotourism" destination. Moreover, Dominica has an offshore medical education sector. In order to diversify the island's economy, the government is also attempting to foster an offshore financial industry and plans to sign agreements with the private sector to develop geothermal energy resources. In 2003, the government began a comprehensive restructuring of the economy - including the elimination of price controls, privatization of the state banana company, and tax increases - to address an economic and financial crisis and to meet IMF requirements. In 2009 and 2013, the economy contracted as a result of the global recession; growth remains anemic. Although public debt levels continue to exceed pre-recession levels, the debt burden declined from 78% of GDP in 2011 to approximately 70% in 2012.
Dominican Republic The Dominican Republic was for most of its history primarily an exporter of sugar, coffee, and tobacco, but in recent years the service sector has overtaken agriculture as the economy's largest employer, due to growth in construction, tourism, and free trade zones. The mining sector has also played a greater role in the export market since late 2012 with the commencement of the extraction phase of the Pueblo Viejo Gold and Silver mine, one of the largest gold mines in the world. The country suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GDP, while the richest 10% enjoys nearly 40% of GDP. High unemployment, a large informal sector, and underemployment remain important long-term challenges.

The economy is highly dependent upon the US, the destination for approximately half of exports. Remittances from the US amount to about 7% of GDP, equivalent to about a third of exports and two-thirds of tourism receipts. The Central America-Dominican Republic Free Trade Agreement came into force in March 2007, boosting investment and manufacturing exports.

The Dominican Republic's economy rebounded from the global recession in 2010-16, and the fiscal situation is improving. A tax reform package passed in November 2012, a reduction in government spending, and lower energy costs helped to narrow the central government budget deficit from 6.6% of GDP in 2012 to 2.6% in 2016. A liability management operation in January 2015, in which the government paid down over $4 billion of the country’s Petrocaribe debt at a discount of 52% with proceeds from the sale of $2.5 billion in global bonds, reduced the country’s debt load by approximately by 4% of GDP. Since 2015 the Dominican Republic has posted the fastest economic growth in Latin America.
Ecuador Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and approximately 25% of public sector revenues in recent years.

In 1999/2000, Ecuador's economy suffered from a banking crisis, with GDP contracting by 5.3% and poverty increasing significantly. In March 2000, the Congress approved a series of structural reforms that also provided for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and positive growth returned in the years that followed, helped by high oil prices, remittances, and increased non-traditional exports. The economy grew an average of 4.3% per year from 2002 to 2006, the highest five-year average in 25 years. After moderate growth in 2007, the economy reached a growth rate of 6.4% in 2008, buoyed by high global petroleum prices and increased public sector investment. President Rafael CORREA Delgado, who took office in January 2007, defaulted in December 2008 on Ecuador's sovereign debt, which, with a total face value of approximately US$3.2 billion, represented about 30% of Ecuador's public external debt. In May 2009, Ecuador bought back 91% of its "defaulted" bonds via an international reverse auction.

Economic policies under the CORREA administration - for example, an announcement in late 2009 of its intention to terminate 13 bilateral investment treaties, including one with the US - have generated economic uncertainty and discouraged private investment. China has become Ecuador's largest foreign lender since Quito defaulted in 2008, allowing the government to maintain a high rate of social spending; Ecuador contracted with the Chinese government for more than $9.9 billion in forward oil sales, project financing, and budget support loans as of December 2013.

The level of foreign investment in Ecuador continues to be one of the lowest in the region as a result of an unstable regulatory environment, weak rule of law, and the crowding-out effect of public investments. Faced with a 2013 trade deficit of $1.1 billion, Ecuador erected technical barriers to trade in December 2013, causing tensions with its largest trading partners. Ecuador also decriminalized intellectual property rights violations in February 2014. In March, 2015 Ecuador imposed tariff surcharges from 5% to 45% on an estimated 32% of imports. In 2014, oil output increased slightly and production remained steady in 2015 however the oil price decrease from 2014 onward affected government revenue. Ecuador’s economy fell in to recession in 2015 and remained in recession in 2016. As a result, CORREA cut the budget twice in 2015, and reduced it further in 2016.
Egypt Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but opened up considerably under former Presidents Anwar EL-SADAT and Mohamed Hosni MUBARAK.

Cairo from 2004 to 2008 pursued business climate reforms to attract foreign investment and facilitate growth. Poor living conditions and limited job opportunities for the average Egyptian contribute to public discontent, a major factor leading to the January 2011 revolution that ousted MUBARAK. The uncertain political, security, and policy environment since 2011 caused economic growth to slow significantly, hurting tourism, manufacturing, and other sectors and pushing up unemployment, which remains above 10%.

Weak growth and limited foreign exchange earnings have made public finances unsustainable, leaving authorities dependent on expensive borrowing for deficit finance and on Gulf allies to help cover the import bill. In 2015-16, higher levels of foreign investment contributed to a slight rebound in GDP growth after a particularly depressed post-revolution period. In 2016, Cairo enacted a value-added tax, implemented fuel and electricity subsidy cuts, and floated its currency, which led to a sharp depreciation of the pound and corresponding inflation. In November 2016, the IMF approved a $12 billion, three-year loan for Egypt and disbursed the first $2.75 billion tranche.
El Salvador The smallest country in Central America geographically, El Salvador has the fourth largest economy in the region. With the global recession, real GDP contracted in 2009 and economic growth has since remained low, averaging less than 2% from 2010 to 2014, but recovered somewhat in 2015-16 with an average annual growth rate of 2.4%. Remittances accounted for approximately 17.1% of GDP in 2016 and were received by about a third of all households.

In 2006, El Salvador was the first country to ratify the Dominican Republic-Central American Free Trade Agreement, which has bolstered the export of processed foods, sugar, and ethanol, and supported investment in the apparel sector amid increased Asian competition. In September 2015, El Salvador kicked off a five-year $277 million second compact with the Millennium Challenge Corporation - a US Government agency aimed at stimulating economic growth and reducing poverty - to improve El Salvador's competitiveness and productivity in international markets.

The Salvadoran Government maintained fiscal discipline during post-war reconstruction and rebuilding following earthquakes in 2001 and hurricanes in 1998 and 2005, but El Salvador's public debt, estimated at 61.1% of GDP in 2016, has been growing over the last several years. Total external debt was nearly 60% of GDP in 2016.
Equatorial Guinea Exploitation of oil and gas deposits, beginning in the 1990s, has driven economic growth in Equatorial Guinea; a recent rebasing of GDP resulted in an upward revision of the size of the economy by approximately 30%. Forestry and farming are minor components of GDP. Although preindependence Equatorial Guinea counted on cocoa production for hard currency earnings, the neglect of the rural economy since independence has diminished the potential for agriculture-led growth. Subsistence farming is the dominant form of livelihood. Declining revenue from hydrocarbon production, high levels of infrastructure expenditures, lack of economic diversification, and corruption have pushed the economy into decline in recent years and limited improvements in the general population’s living conditions. Equatorial Guinea’s real GDP growth has been weak in recent years, averaging -0.5% per year from 2010 to 2014, because of a declining hydrocarbon sector. Inflation remained very low in 2016, down from an average of 4% in 2014.

Foreign assistance programs by the World Bank and the IMF have been cut since 1993 because of corruption and mismanagement, and as a middle income country Equatorial Guinea is now ineligible for most low-income donor funding. The government has been widely criticized for its lack of transparency and misuse of oil revenues and has attempted to address this issue by working toward compliance with the Extractive Industries Transparency Initiative. US foreign assistance to Equatorial Guinea is limited in part because of US restrictions pursuant to the Trafficking Victims Protection Act.

Equatorial Guinea hosted two economic diversification symposia in 2014 that focused on attracting investment in five sectors: agriculture and animal ranching, fishing, mining and petrochemicals, tourism, and financial services. Undeveloped mineral resources include gold, zinc, diamonds, columbite-tantalite, and other base metals.
Eritrea Since formal independence from Ethiopia in 1993, Eritrea has faced many economic problems, including lack of financial resources and chronic drought, which have been exacerbated by restrictive economic policies. Eritrea has a command economy under the control of the sole political party, the People's Front for Democracy and Justice. Like the economies of many African nations, a large share of the population - nearly 80% in Eritrea - is engaged in subsistence agriculture, but the sector only produces a small share of the country's total output.

Since the conclusion of the Ethiopia-Eritrea war in 2000, the government has expanded military- and party-owned businesses to complete President ISAIAS's development agenda. The government has strictly controlled the use of foreign currency by limiting access and availability; new regulations in 2013 aimed at relaxing currency controls have had little economic effect. Few large private enterprises exist in Eritrea and most operate in conjunction with government partners, including a number of large international mining ventures, which began production in 2013. In late 2015, the Government of Eritrea introduced a new currency, retaining the name nakfa, and restricted the amount of hard currency individuals could withdraw from banks per month. The changeover has resulted in exchange fluctuations and the scarcity of hard currency available in the market.

While reliable statistics on Eritrea are difficult to obtain, erratic rainfall and the percentage of the labor force tied up in national service continue to interfere with agricultural production and economic development. Eritrea's harvests generally cannot meet the food needs of the country without supplemental grain purchases. Copper, potash, and gold production are likely to continue to drive economic growth and government revenue over the next few years, but military spending will continue to compete with development and investment plans.
Estonia Estonia, a member of the EU since 2004 and the euro zone since 2011, has a modern market-based economy and one of the higher per capita income levels in Central Europe and the Baltic region, but its economy is highly dependent on trade, leaving it vulnerable to external shocks. Estonia's successive governments have pursued a free market, pro-business economic agenda, and sound fiscal policies that have resulted in balanced budgets and low public debt.

The economy benefits from strong electronics and telecommunications sectors and strong trade ties with Finland, Sweden, Germany, and Russia. After two years of robust recovery in 2011 and 2012, the Estonian economy faltered in 2013 with only 1.6% GDP growth, mainly due to a continuing recession in much of the EU. GDP growth in 2014 picked up to 2.9% but dropped below 2% in 2015-16 due to lower demand in key Scandinavian and Russian export markets. In 2016, the government implemented modest increases in fiscal spending, which may contribute to GDP growth in 2017.

Estonia is challenged by a shortage of labor, both skilled and unskilled, although the government has amended its immigration law to allow easier hiring of highly qualified foreign workers.
Ethiopia Ethiopia - the second most populous country in Africa - is a one-party state with a planned economy. For more than a decade before 2016, Ethiopia grew at a rate between 8% and 11% annually – one of the fastest growing states among the 188 IMF member countries. This growth was driven by government investment in infrastructure, as well as sustained progress in the agricultural and service sectors. More than 70% of Ethiopia’s population is still employed in the agricultural sector, but services have surpassed agriculture as the principal source of GDP.

Ethiopia has the lowest level of income-inequality in Africa and one of the lowest in the world, with a Gini coefficient comparable to that of the Scandinavian countries. Yet despite progress toward eliminating extreme poverty, Ethiopia remains one of the poorest countries in the world, due both to rapid population growth and a low starting base. Changes in rainfall associated with world-wide weather patterns resulted in the worst drought in 30 years in 2015-16, creating food insecurity for millions of Ethiopians.

The state is heavily engaged in the economy. Ongoing infrastructure projects include power production and distribution, roads, rails, airports and industrial parks. Key sectors are state-owned, including telecommunications, banking and insurance, and power distribution. Under Ethiopia's constitution, the state owns all land and provides long-term leases to tenants. Title rights in urban areas, particularly Addis Ababa, are poorly regulated, and subject to corruption.

Ethiopia’s foreign exchange earnings are led by the services sector - primarily the state-run Ethiopian Airlines - followed by exports of several commodities. While coffee remains the largest foreign exchange earner, Ethiopia is diversifying exports, and commodities such as gold, sesame, khat, livestock and horticulture products are becoming increasingly important. Manufacturing represented less than 8% of total exports in 2016, but manufacturing exports should increase in future years due to a growing international presence.

The banking, insurance, telecommunications, and micro-credit industries are restricted to domestic investors, but Ethiopia has attracted roughly $8.5 billion in foreign direct investment, mostly from China, Turkey, India and the EU; US FDI is $567 million. Investment has been primarily in infrastructure, construction, agriculture/horticulture, agricultural processing, textiles, leather and leather products.

In the fall of 2015, the government finalized and published the current 2016-20 five-year plan, known as the Growth and Transformation Plan II, which emphasizes developing manufacturing in sectors where Ethiopia has a comparative advantage, such as textiles and garments, leather goods, and processed agricultural products. To support industrialization, Ethiopia plans to increase installed power generation capacity by 8,320 MW, up from a capacity of 2,000 MW, by building three more major dams and expanding to other sources of renewable energy.
European Union Internally, the 28 EU member states have adopted the framework of a single market with free movement of goods, services and capital. Internationally, the EU aims to bolster Europe's trade position and its political and economic weight.

Despite great differences in per capita income among member states (from $13,000 to $82,000) and in national attitudes toward issues like inflation, debt, and foreign trade, the EU has achieved a high degree of coordination of monetary and fiscal policies. A common currency – the euro – circulates among 19 of the member states, under the auspices of the European Economic and Monetary Union (EMU). Eleven member states introduced the euro as their common currency on 1 January 1999 (Greece did so two years later). Since 2004, 13 states acceded to the EU. Of the 13, Slovenia (2007), Cyprus and Malta (2008), Slovakia (2009), Estonia (2011), Latvia (2014), and Lithuania (2015) have adopted the euro; 7 other member states - not including the UK nor Denmark, which have formal opt-outs - are required by EU treaties to adopt the common currency upon meeting fiscal and monetary convergence criteria.

The EU economy is still recovering from the 2008-09 global economic crisis and the ensuing sovereign debt crisis in the euro zone in 2011. The bloc posted moderate GDP growth for 2014 through 2016, but the recovery has been uneven. Some EU member states (Czechia, Ireland and Spain) have recorded strong growth while others (Finland, Greece) are struggling to shake off recession. Only Greece remains under an EU rescue program, while Ireland, Portugal, Spain and Cyprus have successfully concluded their agreements. Overall, the EU’s recovery has been buoyed by lower commodities prices and accommodative monetary policy, which has lowered interest rates and the euro’s foreign exchange value. However, significant drags on growth remain, including persistently high unemployment in some member states, high levels of public and private debt loads, lackluster investment, and an aging population. These factors - in combination with low oil prices - have subdued inflation in the euro zone despite the European Central Bank’s (ECB) efforts to spur more lending and investment through its asset-buying program, negative interest rates, and long-term loan refinancing programs. The ECB in December 2016 announced it would extend its bond-buying program through 2017 to underpin the euro-zone economy and bring inflation to its statutory target of just under 2%.

Despite its fair performance, the EU economy is vulnerable to a slowdown of global trade and bouts of political and financial turmoil. In June 2016, the UK voted to withdraw from the EU, the first member country ever to attempt to secede. Uncertainty about the timing, scope, and implications of the UK’s exit could hurt consumer and investor confidence and dampen UK and euro-zone growth if trade, investment and demand suffers. Political disagreements between EU members on fiscal and economic policy may impair the EU’s ability to improve its crisis-prevention and resolution mechanisms. Risks also linger of a flareup between Greece and its euro-zone creditors that could be detrimental to a stronger recovery, especially if it damages the euro-zone’s credibility with international investors and sparks renewed fears of a broad dissolution of the single currency area. In addition, portions of the European banking sector, particularly in Italy and Portugal, are still struggling with bad loans, and the potential for mismanagement of ailing banks could lead to localized crises. Externally, the EU’s efforts to expand already large trade and investment flows through ambitious and comprehensive free trade agreements suffered some setbacks in 2016; for example, progress stalled on a US-EU deal and the European Commission’s exclusive competence to negotiate trade deals was curtailed by challenges from member states.
Falkland Islands (Islas Malvinas) The economy was formerly based on agriculture, mainly sheep farming, but fishing and tourism currently comprise the bulk of economic activity. In 1987, the government began selling fishing licenses to foreign trawlers operating within the Falkland Islands' exclusive fishing zone. These license fees net more than $40 million per year, which help support the island's health, education, and welfare system. The waters around the Falkland Islands are known for their squid, which account for around 75% of the annual 200,000-ton catch.

Dairy farming supports domestic consumption; crops furnish winter fodder. Foreign exchange earnings come from shipments of high-grade wool to the UK and from the sale of postage stamps and coins. In 2001, the government purchased 100 reindeer with the intent to increase the number to 10,000 over the following 20 years so that venison could be exported to Scandinavia and Chile.

Tourism, especially ecotourism, is increasing rapidly, with about 69,000 visitors in 2009. The British military presence also provides a sizable economic boost. The islands are now self-financing except for defense.

In 1993, the British Geological Survey announced a 200-mile oil exploration zone around the islands, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day. Political tensions between the UK and Argentina remain high following the start of oil drilling activities in the waters. Although production by a British exploration firm has yet to begin, the firm expects to be able to produce 60,000 barrels per day by 2020.
Faroe Islands The Faroese economy has experienced a period of significant growth since 2011, due to higher fish prices and increased salmon farming and catches in the pelagic fisheries. Nominal GDP, measured in current prices, grew 8.0% in 2015 and 7.8% in 2016. The fisheries sector accounts for about 97% of exports and half of GDP. Dependence on fishing makes the economy vulnerable to price fluctuations. Unemployment is low, estimated at 2.5% in early 2017. Aided by an annual subsidy from Denmark, which amounts to about 4% of Faroese GDP, Faroese have a standard of living equal to that of Denmark.

For the first time in 8 years, the Faroe Islands managed to generate a public budget surplus in 2016, a trend which is continuing in 2017. The local government intends to use this to reduce public debt, which reached 38% of GDP in 2015. Increasing public infrastructure investments are likely to lead to continued growth in the short term, but could contribute to overheating the economy. Signs of overheating led the Danish Central Bank in fall of 2016 to advise the Faroese local government to initiate measures to cool the economy, including postponing spending on infrastructure spending. The local government is planning to allocate part of the expected public surplus to a business-cycle-equalization fund.
Fiji Fiji, endowed with forest, mineral, and fish resources, is one of the most developed and connected of the Pacific island economies. Earnings from the tourism industry, with an estimated 792,300 tourists visiting in 2016, and remittances from Fijian’s working abroad are the country’s largest foreign exchange earners.

Fiji's sugar sector remains a significant industry and a major export, but crops and one of the sugar mills suffered damage during Cyclone Winston in 2016. The sector also faces the complete withdrawal of European Union preferential prices in 2017. Fiji’s trade imbalance continues to widen with increased imports and sluggish performance of domestic exports.

The return to parliamentary democracy and successful elections in September 2014 improved investor confidence, but increasing bureaucratic regulation, new taxes and lack of consultation with relevant stakeholders brought four consecutive years of decline for Fiji on the World Bank Ease of Doing Business index. Private sector investment in 2016 exceeded 20% of GDP, compared to 13% in 2013.
Finland Finland has a highly industrialized, largely free-market economy with per capita GDP almost as high as that of Austria and the Netherlands and slightly above that of Germany and Belgium. Trade is important, with exports accounting for over one-third of GDP in recent years. The government is open to, and actively takes steps to attract, foreign direct investment.

Finland is historically competitive in manufacturing - principally the wood, metals, engineering, telecommunications, and electronics industries. Finland excels in export of technology as well as promotion of startups in the information and communications technology, gaming, cleantech, and biotechnology sectors. Except for timber and several minerals, Finland depends on imports of raw materials, energy, and some components for manufactured goods. Because of the cold climate, agricultural development is limited to maintaining self-sufficiency in basic products. Forestry, an important export industry, provides a secondary occupation for the rural population.

Finland had been one of the best performing economies within the EU before 2009 and its banks and financial markets avoided the worst of global financial crisis. However, the world slowdown hit exports and domestic demand hard in that year, causing Finland’s economy to contract from 2012 to 2014. The recession affected general government finances and the debt ratio. The economy returned to growth in 2015, posting a 0.3% GDP increase before growing 1.4% in 2016.

Finland's main challenges will be reducing high labor costs and boosting demand for its exports. In June 2016, the government enacted a Competitiveness Pact aimed at reducing labor costs, increasing hours worked, and introducing more flexibility into the wage bargaining system. The Government was also seeking to reform the health care system and social services. In the long term, Finland must address a rapidly aging population and decreasing productivity in traditional industries that threaten competitiveness, fiscal sustainability, and economic growth.
France The French economy is diversified across all sectors. The government has partially or fully privatized many large companies, including Air France, France Telecom, Renault, and Thales. However, the government maintains a strong presence in some sectors, particularly power, public transport, and defense industries. Despite terrorist attacks, labor strikes, and bad weather, France is still the most visited country in the world with 83 million foreign tourists in 2016, including 530,000 who came for the 2016 Euro Cup. France's leaders remain committed to a capitalism in which they maintain social equity by means of laws, tax policies, and social spending that mitigate economic inequality.

France's real GDP grew by 1.1% in 2016, down from 1.3% the year before. The unemployment rate (including overseas territories) increased from 7.8% in 2008 to 10.2% in 2015, before slightly falling to 10% in 2016. Youth unemployment in metropolitan France decreased from 24.6% in the fourth quarter of 2014 to 24% in the fourth quarter of 2016.

Lower-than-expected growth and high spending have strained France's public finances. Despite measures to restore public finances since President Francois HOLLANDE took office in 2012, the budget deficit rose from 3.3% of GDP in 2008 to 7.5% of GDP in 2009 before improving to 3.4% of GDP in 2016. Meanwhile, France's public debt rose from 89.5% of GDP in 2012 to 96% in 2016.

President HOLLANDE’s policies aimed to enhance French industry’s competitiveness and to lower high jobless figures. The Competitiveness and Employment Tax Credit of 2012, the Responsibility and Solidarity Pact of 2014, the Investment Stimulus Plan, and the Emergency Jobs Plan represent more than $42.6 billion in support for businesses in 2017 by lowering French labor costs, but so far the results of these policies have been marginal on France’s competitiveness and job creation. In an effort to bolster social justice, the 2017 budget bill contained provisions to reduce income taxes for households and for small and medium sized enterprises.

During his mandate, President HOLLANDE oversaw two highly unpopular economic reforms that led to widespread protests. The “Macron Law” of 2015, enacted to boost economic growth, authorized businesses to open some Sundays of each month and allowed flexibility to negotiate pay and working hours. The “El Khomri law,” imposed by decree in 2016, aimed to make it easier for businesses to employ people and gave employers more leeway to negotiate hours, wages, and time off.
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.

After growing at an average yearly rate of 4.2% from 1997-2007, the economic and financial crisis in 2008 marked French Polynesia’s entry into recession. However, since 2014, French Polynesia has shown signs of recovery. Business turnover reached 1.8% year-on-year in September 2016, tourism increased 1.8% in 2015, and GDP grew 2.0% in 2015.

French Polynesia’s tourism-dominated service sector accounted for 85% of total value added for the economy in 2012. Tourism employs 17% of the workforce. Pearl farming is the second biggest industry, accounting for 54% of exports in 2015; however, the output has decreased to 12.5 tons – the lowest level since 2008. A small manufacturing sector predominantly processes commodities from French Polynesia’s primary sector - 8% of total economy in 2012 - including agriculture and fishing.

France has agreed to finance infrastructure, marine businesses, and cultural and ecological sites at roughly $80 million per year between 2015 and 2020. Japan, the US, and China are French Polynesia’s three largest trade partners.
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 relied on timber and manganese exports until oil was discovered offshore in the early 1970s. From 2010 to 2016, oil accounted for approximately 80% of Gabon’s exports, 45% of its GDP, and 60% of its state budget revenues.

Gabon faces fluctuating prices for its oil, timber, and manganese exports. A rebound of oil prices from 2001 to 2013 helped growth, but declining production, as some fields passed their peak production, has hampered Gabon from fully realizing potential gains. GDP grew nearly 6% per year over the 2010-14 period, but slowed significantly in 2015 as oil prices declined. Low oil prices also weakened government revenue and negatively affected the trade and current account balances.

Despite an abundance of natural wealth, poor fiscal management and over-reliance on oil has stifled the economy. Power cuts and water shortages are frequent. Significant cuts in budget expenditures - Gabon’s budget has contracted for four years in a row - have not extended to the government’s priority projects, like a new stadium for the Africa Cup of Nations.
Gambia, The The government has invested in the agriculture sector because three-quarters of the population depends on the sector for its livelihood and agriculture provides for about one-third of GDP, making The Gambia largely reliant on sufficient rainfall. The agricultural sector has untapped potential - less than half of arable land is cultivated and agricultural productivity is low. Small-scale manufacturing activity features the processing of cashews, groundnuts, fish, and hides. The Gambia's reexport trade accounts for almost 80% of goods exports and China has been its largest trade partner for both exports and imports for several years.

The Gambia has sparse natural resource deposits. It relies heavily on remittances from workers overseas and tourist receipts. Remittance inflows to The Gambia amount to about one-fifth of the country’s GDP. The Gambia's location on the ocean and proximity to Europe has made it one of the most frequented tourist destinations in West Africa, boosted by private sector investments in eco-tourism and facilities. Tourism normally brings in about 20% of GDP, but it suffered in 2014 from tourists’ fears of Ebola virus in neighboring West African countries. Unemployment and underemployment 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. International donors and lenders were concerned about the quality of fiscal management under the administration of former President Yahya JAMMEH, who reportedly stole hundreds of millions of dollars of the country’s funds during his 22 years in power, but anticipate significant improvements under the new administration of President Adama BARROW, who assumed power in early 2017. As of April 2017, the IMF, the World Bank, the European Union, and the African Development Bank were all negotiating with the new government of The Gambia to provide financial support in the coming months to ease the country’s financial crisis.

The country’s GDP contracted in 2016 largely as a result of the limited availability of foreign exchange, weak agricultural output, the border closure with Senegal during the first half of the year, and a slowdown in tourism during the political impasse that occurred at the height of the tourist season. The country faces a large fiscal deficit and a high domestic debt burden that has crowded out private sector investment and driven interest rates to new highs. The new government has committed to taking steps to reduce the deficit, including through expenditure caps, debt consolidation, and reform of state-owned enterprises.
Gaza Strip Israeli security measures and Israeli-Palestinian violence continue to degrade economic conditions in the Gaza Strip, the smaller of the two areas comprising the Palestinian territories. Israeli-imposed border controls became more restrictive after HAMAS seized control of the territory in June 2007. They have produced high unemployment, elevated poverty rates, and a sharp contraction of the private sector, which had relied primarily on export markets.

Egypt’s ongoing crackdown on the Gaza Strip’s extensive tunnel-based smuggling network has exacerbated fuel, construction material, and consumer goods shortages in the territory. The 51-day conflict in July 2014 that HAMAS and other Gaza-based militant groups fought with Israel further depressed the Gaza Strip’s already aid-dependent economy. Donor support for reconstruction and relaxed Israeli import restrictions in 2014 and 2015 have fallen short of postconflict needs, with almost 100,000 people remaining internally displaced because their homes have yet to be rebuilt or repaired.
Georgia Georgia's main economic activities include cultivation of agricultural products such as grapes, citrus fruits, and hazelnuts; mining of manganese, copper, and gold; and producing alcoholic and nonalcoholic beverages, metals, machinery, and chemicals in small-scale industries. The country imports nearly all of its needed supplies of natural gas and oil products. It has sizeable hydropower capacity that now provides most of its energy needs.

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. Construction of the Baku-T'bilisi-Ceyhan oil pipeline, the South Caucasus 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 hub for gas, oil, and other goods.

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 following the August 2008 conflict with Russia, and sunk to negative 4% in 2009 as foreign direct investment and workers' remittances declined in the wake of the global financial crisis. The economy rebounded in the period 2010-16, but FDI inflows, the engine of Georgian economic growth prior to the 2008 conflict, have not recovered fully. Unemployment has also remained high.

The country is pinning its hopes for renewed growth on a continued effort to liberalize the economy by reducing regulation, taxes, and corruption in order to attract foreign investment, with a focus on hydropower, agriculture, tourism, and textiles production. Georgia has historically suffered from a chronic failure to collect tax revenues; however, since 2004 the government has simplified the tax code, increased tax enforcement, and cracked down on petty corruption, leading to higher revenues. Georgia plans to improve the domestic investment environment through a four-year economic plan targeting the tax system, educational standards, infrastructure, and governance. The government has received high marks from the World Bank for improvements in business transparency. Since 2012, the Georgian Dream-led government has continued the previous administration's low-regulation, low-tax, free market policies, while modestly increasing social spending, strengthening anti-trust policy, and amending the labor code to comply with International Labor Standards. In mid-2014, Georgia signed an association agreement with the EU, paving the way to free trade and visa-free travel. Georgia is also seeking to expand trade with China, concluding substantive negotiations on a trade agreement in October 2016.
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 a large increase in net immigration are increasing pressure on the country's social welfare system and necessitate structural reforms.

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 and falling unemployment. 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. The German Government introduced a minimum wage in 2015 that increased to $9.79 (8.84 euros) in January 2017.

Stimulus and stabilization efforts initiated in 2008 and 2009 and tax cuts introduced in Chancellor Angela MERKEL's second term increased Germany's total budget deficit - including federal, state, and municipal - to 4.1% in 2010, but slower spending and higher tax revenues reduced the deficit to 0.8% in 2011 and in 2016 Germany reached a budget surplus of 0.6%. A constitutional amendment approved in 2009 limits the federal government to structural deficits of no more than 0.35% of GDP per annum as of 2016, though the target was already reached in 2012.

The German economy suffers from low levels of investment, and a government plan to invest 15 billion euros during 2016-18, largely in infrastructure, is intended to spur needed private investment. Following the March 2011 Fukushima nuclear disaster, Chancellor Angela MERKEL announced in May 2011 that eight of the country's 17 nuclear reactors would be shut down immediately and the remaining plants would close by 2022. Germany plans to replace nuclear power largely with renewable energy, which accounted for 29.5% of gross electricity consumption in 2016, up from 9% in 2000. Before the shutdown of the eight reactors, Germany relied on nuclear power for 23% of its electricity generating capacity and 46% of its base-load electricity production. Domestic consumption, bolstered by low energy prices and a weak euro, and exports are likely to drive German GDP growth again in 2017.
Ghana Ghana has a market-based economy with relatively few policy barriers to trade and investment in comparison with other countries in the region, and Ghana is well-endowed with natural resources. Ghana's economy was strengthened by a quarter century of relatively sound management, a competitive business environment, and sustained reductions in poverty levels, but in recent years has suffered the consequences of loose fiscal policy, high budget and current account deficits, and a depreciating currency.

Agriculture accounts for about 20% of GDP and employs more than half of the workforce, mainly small landholders. Gold and cocoa exports, and individual remittances, are major sources of foreign exchange. Expansion of Ghana’s nascent oil industry has boosted economic growth, but the fall in oil prices since 2015 reduced by half Ghana’s oil revenue. Production at Jubilee, Ghana's offshore oilfield, began in mid-December 2010. The country’s first gas processing plant at Atubao is also producing natural gas from the Jubilee field, providing power to several of Ghana’s thermal power plants.

As of 2016, key economic concerns facing the government include the lack of reliable electricity and the high debt burden, even amid strong GDP growth. While the MAHAMA administration attempted to ameliorate these concerns, little progress has been made, leaving much work to be done in 2017 by the incoming AKUFO-ADDO administration. Ghana signed a $920 million extended credit facility with the IMF in April 2015 to help it address its growing economic crisis. The IMF fiscal targets require Ghana to reduce the deficit by cutting subsidies, decreasing the bloated public sector wage bill, strengthening revenue administration, and boosting tax revenues. Priorities for the new administration include rescheduling some of Ghana’s $31 billion debt, stimulating economic growth, reducing inflation, and stabilizing the currency. Prospects for new oil and gas production, potentially higher global gold prices, and followthrough on tighter fiscal management are likely to help Ghana’s economy in 2017.
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. 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.

The financial sector, tourism (over 11 million visitors in 2012), 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%.
Greece Greece has a capitalist economy with a 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 18% 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 averaged growth of about 4% per year between 2003 and 2007, 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. By 2013, the economy had contracted 26%, compared with the pre-crisis level of 2007. Greece met the EU's Growth and Stability Pact budget deficit criterion of no more than 3% of GDP in 2007-08, but violated it in 2009, when the deficit reached 15% of GDP. Deteriorating public finances, inaccurate and misreported statistics, and consistent underperformance on reforms prompted major credit rating agencies to downgrade Greece's international debt rating in late 2009 and led the country into a financial crisis. Under intense pressure from the EU and international market participants, the government accepted a bailout program that called on Athens to cut government spending, decrease tax evasion, overhaul the civil-service, health-care, and pension systems, and reform the labor and product markets. Austerity measures reduced the deficit to 4.5% in 2016. Successive Greek governments, however, failed to push through many of the most unpopular reforms in the face of widespread political opposition, including from the country's powerful labor unions and the general public.

In April 2010, a leading credit agency assigned Greek debt its lowest possible credit rating, and in May 2010, the IMF and euro-zone governments provided Greece emergency short- and medium-term loans worth $147 billion so that the country could make debt repayments to creditors. Greece, however, struggled to meet the 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. European leaders and the IMF agreed in October 2011 to provide Athens a second bailout package of $169 billion. The second deal called for holders of Greek government bonds to write down a significant portion of their holdings to try to alleviate Greece’s government debt burden. However, Greek banks, saddled with a significant portion of sovereign debt, were adversely affected by the write down and $60 billion of the second bailout package was set aside to ensure the banking system was adequately capitalized.

In 2014, the Greek economy began to turn the corner on the recession. Greece achieved three significant milestones: balancing the budget - not including debt repayments; issuing government debt in financial markets for the first time since 2010; and generating 0.7% GDP growth — the first economic expansion since 2007.

Despite the nascent recovery, widespread discontent with austerity measures helped propel the far-left Coalition of the Radical Left (SYRIZA) party into government in national legislative elections in January 2015. Between January and July 2015, frustrations between the SYRIZA-led government and Greece’s EU and IMF creditors over the implementation of bailout measures and disbursement of funds led the Greek government to run up significant arrears to suppliers and Greek banks to rely on emergency lending, and also called into question Greece’s future in the euro zone. To stave off a collapse of the banking system, Greece imposed capital controls in June 2015 shortly before rattling international financial markets by becoming the first developed nation to miss a loan payment to the IMF. Unable to reach an agreement with creditors, Prime Minister Alexios TSIPRAS held a nationwide referendum on 5 July on whether to accept the terms of Greece’s bailout, campaigning for the ultimately successful “no” vote. The TSIPRAS government subsequently agreed, however, to a new $96 billion bailout in order to avert Greece’s exit from the monetary bloc. On 20 August, Greece signed its third bailout which allowed it to cover significant debt payments to its EU and IMF creditors and ensure the banking sector retained access to emergency liquidity. The TSIPRAS government — which retook office on 20 September after calling new elections in late August — successfully secured disbursal of two delayed tranches of bailout funds. Despite the economic turmoil, Greek GDP did not contract as sharply as feared, with official estimates of a -0.2% contraction in 2015, boosted in part by a strong tourist season.

In 2016, Greece saw slight improvements in GDP and unemployment. The economy remains stagnant, because of unfinished economic reforms, a massive non-performing loan problem, and ongoing uncertainty regarding the political direction of the country. Some estimates put Greece’s black market at 20- to 25% of GDP, as more people have stopped reporting their income to avoid paying taxes that, in some cases, have risen to 70% of an individual’s gross income. These issues will continue to be a drag on the economy in 2017 and further delay recovery from the financial crisis.
Greenland Greenland’s economy depends on exports of shrimp and fish, and on a substantial subsidy from the Danish Government. Fish account for over 90% of its exports, subjecting the economy to fluctuations in world demand. The subsidy from the Danish Government is budgeted to be about $535 million in 2017, more than 50% of government revenues, and 25% of GDP.

The economy is expanding after a period of decline. In 2016 the economy grew 4.6% compared to 1.1% in 2015 and negative growth in the years 2013-14. For 2017 the economy is expected to continue to expand at a more subdued rate. The expansion has been driven by larger quotas for shrimp, the predominant Greenlandic export, and also by increased activity in the construction sector, especially in Nuuk, the capital, where the harbor is being enlarged and a prison is under construction. Private consumption and tourism also are contributing to GDP growth more than in previous years. Tourism in Greenland has grown annually around 20% in 2015 and 2016, largely a result of increasing numbers of cruise lines now operating in Greenland's western and southern waters during the peak summer tourism season.

The public sector, including publicly owned enterprises and the municipalities, plays a dominant role in Greenland's economy. During the last decade the Greenland Home Rule Government pursued conservative fiscal and monetary policies, but public pressure has increased for better schools, health care, and retirement systems. The budget was in deficit in 2014 and 2016, but public debt remains low at about 5% of GDP. The government plans a balanced budget for the 2017–20 period.

Significant challenges face the island, including low levels of qualified labor, geographic dispersion, lack of industry diversification, the long-term sustainability of the public budget, and a declining population due to emigration. Catches in fisheries have been declining in recent years. Hydrocarbon exploration has ceased with declining oil prices and currently only three mines are under development. The island has potential for natural resource exploitation with rare-earth, uranium, and iron ore mineral projects proposed.
Grenada Grenada relies on tourism as its main source of foreign exchange especially since the construction of an international airport in 1985. Strong performance in construction and manufacturing, together with the development of tourism and higher education - especially in medicine - contributed to growth in national output; however, economic growth remained stagnant in the 2010-14 period, after a sizable contraction in 2009, because of the global economic slowdown's effects on tourism and remittances. Gross national saving – and wealth – has been declining since 2010.

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 about 110%, leaving the MITCHELL administration limited room to engage in public investments and social spending. MITCHELL in 2013 announced a structural adjustment program that includes a plan to increase tax revenue.
Guam US national defense spending is the main driver of Guam’s economy, followed by tourism and other services. Guam serves as a forward US base for the Western Pacific and is home to thousands of American military personnel. Total federal spending (defense and non-defense) amounted to $1.973 billion in 2014, or 40.4% of GDP. Of that total, federal grants amounted to $373.3 million in 2013, or 32.6% of Guam’s total revenues for the fiscal year. Service exports, mainly spending by foreign tourists to Guam, amounted to $651 million in 2013, or 13.3% of GDP. In 2013, Guam’s economy grew 0.6%. Despite slow growth, Guam’s economy has been stable over the last decade. National defense spending cushions the island’s economy against fluctuations in tourism.
Guatemala Guatemala is the most populous country in Central America with a GDP per capita roughly half the average for Latin America and the Caribbean. The agricultural sector accounts for 13.5% of GDP and 31% of the labor force; key agricultural exports include sugar, coffee, bananas, and vegetables. Guatemala is the top remittance recipient in Central America as a result of Guatemala's large expatriate community in the US. These inflows are a primary source of foreign income, equivalent to over one-half of the country's exports and one-tenth of its GDP.

The 1996 peace accords, which ended 36 years of civil war, removed a major obstacle to foreign investment, and Guatemala has since pursued important reforms and macroeconomic stabilization. The Dominican Republic-Central America Free Trade Agreement (CAFTA-DR) 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-DR 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 20% of the population accounting for more than 51% of Guatemala's overall consumption. More than half of the population is below the national poverty line, and 23% of the population lives in extreme poverty. Poverty among indigenous groups, which make up more than 40% of the population, averages 79%, with 40% of the indigenous population living in extreme poverty. Nearly one-half of Guatemala's children under age five are chronically malnourished, one of the highest malnutrition rates in the world.

Guatemala is facing growing fiscal pressures, exacerbated by multiple corruption scandals that led to the resignation of the president, vice president, and numerous high-level economic officials in 2015.
Guernsey Financial services account for about 40% 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. In October 2014, Guernsey signed an OECD agreement to automatically exchange some financial account information to limit tax avoidance and evasion.
Guinea-Bissau Guinea-Bissau is highly dependent on subsistence agriculture, cashew nut exports, and foreign assistance. Two out of three Bissau-Guineans remain below the absolute poverty line. The legal economy is based on cashews and fishing. Illegal logging and trafficking in narcotics also play significant roles. The combination of limited economic prospects, weak institutions, and favorable geography have made this West African country a way station for drugs bound for Europe.

Guinea-Bissau has substantial potential for development of mineral resources, including phosphates, bauxite, and mineral sands. Offshore oil and gas exploration has begun. The country’s climate and soil make it feasible to grow a wide range of cash crops, fruit, vegetables, and tubers; however, cashews generate more than 80% of export receipts and are the main source of income for many rural communities.

With renewed donor support following elections in April-May 2014 and a successful regional bond issuance, the Government of Guinea-Bissau began to make progress paying salaries, settling domestic arrears, and gaining more control over revenues and expenditures, but it was deposed by the president in August 2015. A political stalemate since then has resulted in weak governance and reduced donor support.

The country is participating in a three-year, IMF extended credit facility program that was suspended because of a planned bank bailout. The program was renewed in 2017, but the major donors of direct budget support (the EU, World Bank, and African Development Bank) have halted their programs indefinitely. Diversification of the economy remains a key policy goal, but Guinea-Bissau’s poor infrastructure and business climate will constrain this effort.
Guinea Guinea is a poor country of approximately 12.9 million people in 2016 that possesses the world's largest reserves of bauxite and largest untapped high-grade iron ore reserves, as well as gold and diamonds. In addition, Guinea has fertile soil, ample rainfall, and is the source of several West African rivers, including the Senegal, Niger, and Gambia. Guinea's hydro potential is enormous and the country could be a major exporter of electricity. The country also has tremendous agriculture potential. Gold, bauxite, and diamonds are Guinea’s main exports. International investors have shown interest in Guinea's unexplored mineral reserves, which have the potential to propel Guinea's future growth.

Following the death of long-term President Lansana CONTE in 2008 and the coup that followed, international donors, including the G-8, the IMF, and the World Bank, significantly curtailed their development programs in Guinea. However, the IMF approved a 3-year Extended Credit Facility arrangement in 2012, following the December 2010 presidential elections. In September 2012, Guinea achieved Heavily Indebted Poor Countries completion point status. Future access to international assistance and investment will depend on the government’s ability to be transparent, combat corruption, reform its banking system, improve its business environment, and build infrastructure. In April 2013, the government amended its mining code to reduce taxes and royalties. In 2014, Guinea also complied with requirements of the Extractive Industries Transparency Initiative by publishing its mining contracts and was found to be compliant. Guinea completed its program with the IMF in October 2016 even though some targeted reforms have been delayed. Currently Guinea is negotiating a new IMF program which will be based on Guinea’s new five-year economic plan, focusing on the development of higher value-added products, including from the agro-business sector and development of the rural economy.

The biggest threats to Guinea’s economy are political instability, a reintroduction of the Ebola virus epidemic, and low international commodity prices. Economic recovery will be a long process while the government adjusts to lower inflows of international donor aid following the surge of Ebola-related emergency support. Ebola stalled promising economic growth in the 2014-15 period and impeded several projects, such as offshore oil exploration and the Simandou iron ore project. The economy, however, grew by 5.2% in 2016, mainly due to growth from bauxite mining and thermal energy generation as well as the resiliency of the agricultural sector. The economy is projected to grow by 4.6% in 2017. The 240-megawatt Kaleta Dam, inaugurated in September 2015, has expanded access to electricity for residents of Conakry. An enduring legacy of corruption, inefficiency, and lack of government transparency, combined with fears of Ebola virus, continue to undermine Guinea's economic viability.

Guinea’s iron ore industry took a hit in 2016 when investors in the Simandou iron ore project announced plans to divest from the project. In 2017, agriculture output and public investment will boost economic growth while the mining sector continues to play a prominent role in economic performance.

Successive governments have failed to address the country's crumbling infrastructure. Guinea suffers from chronic electricity shortages; poor roads, rail lines and bridges; and a lack of access to clean water - all of which continue to plague economic development. The present government, led by President Alpha CONDE, is working to create an environment to attract foreign investment and hopes to have greater participation from western countries and firms in Guinea's economic development.
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. Much of Guyana's growth in recent years has come from a surge in gold production in response to global prices, although downward trends in gold prices may threaten future growth. In 2014, production of sugar dropped to a 24-year low.

Guyana's entrance into the Caricom Single Market and Economy in January 2006 broadened the country's export market, primarily in the raw materials sector. Guyana has experienced positive growth almost every year over the past decade. Inflation has been kept under control. Recent years have seen the government's stock of debt reduced significantly - with external debt now less than half of what it was in the early 1990s. Despite recent improvements, the government is still 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 21% of GDP, which along with other Highly Indebted Poor Country debt forgiveness, brought the debt-to-GDP ratio down from 183% in 2006 to 67% in 2015. Guyana had become heavily indebted as a result of the inward-looking, state-led development model pursued in the 1970s and 1980s. Chronic problems include a shortage of skilled labor and a deficient infrastructure.
Haiti Haiti is a free market economy with low labor costs and tariff-free access to the US for many of its exports. Two-fifths of all Haitians depend on the agricultural sector, mainly small-scale subsistence farming, which remains vulnerable to damage from frequent natural disasters. Poverty, corruption, vulnerability to natural disasters, and low levels of education for much of the population represent some of the most serious impediments to Haiti’s economic growth. Remittances are the primary source of foreign exchange, equivalent to more than a quarter of GDP, and nearly double the combined value of Haitian exports and foreign direct investment.

Currently the poorest country in the Western Hemisphere, with close to 60% of the population living under the national poverty line, Haiti’s GDP growth rose to 5.5% in 2011 as the Haitian economy began recovering from the devastating January 2010 earthquake that destroyed much of its capital city, Port-au-Prince, and neighboring areas. However, growth slowed to below 2% in 2015 and 2016 as political uncertainty, drought conditions, decreasing foreign aid, and the depreciation of the national currency took a toll on investment and economic growth. Hurricane Matthew, the fiercest Caribbean storm in nearly a decade, made landfall in Haiti on 4 October 2016, with 140 mile-per-hour winds, creating a new humanitarian emergency. An estimated 2.1 million people were affected by the category 4 storm, which caused extensive damage to crops, houses, livestock, and infrastructure across Haiti’s southern peninsula.

US economic engagement under the Caribbean Basin Trade Partnership Act (CBTPA) and the 2008 Haitian Hemispheric Opportunity through Partnership Encouragement Act (HOPE II) have contributed to an increase in apparel exports and investment by providing duty-free access to the US. The Haiti Economic Lift Program (HELP) Act of 2010 extended the CBTPA and HOPE II until 2020, while the Trade Preferences Extension Act of 2015 extended trade benefits provided to Haiti in the HOPE and HELP Acts through September 2025. Apparel sector exports in 2016 reached approximately $850 million and account for over 90% of Haitian exports and more than 10% of the GDP.

Investment in Haiti is hampered by the difficulty of doing business and weak infrastructure, including access to electricity. Haiti's outstanding external debt was cancelled by donor countries following the 2010 earthquake, but has since risen to above $2 billion as of December 2016, the majority of which is owed to Venezuela under the PetroCaribe program. Although the government has increased its revenue collection, it continues to rely on formal international economic assistance for fiscal sustainability, with over 20% of its annual budget coming from foreign aid or direct budget support.
Heard Island and McDonald Islands The islands have no indigenous economic activity, but the Australian Government allows limited fishing in the surrounding waters. Visits to Heard Island typically focus on terrestrial and marine research and infrequent private expeditions.
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. Moreover, an annual collection taken up in dioceses and from 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. Donations increased between 2010 and 2011.

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 publication sales. Its revenues increased between 2010 and 2011 because of expanded operating hours and a growing number of visitors. However, the Holy See has not escaped the financial difficulties engulfing other European countries; in 2012, it started a spending review to determine where to cut costs to reverse its 2011 budget deficit of $20 million. The Holy See generated a modest surplus in 2012 before recording a $32 million deficit in 2013, driven primarily by the decreasing value of gold. Most public expenditures go to wages and other personnel costs; the incomes and living standards of lay workers are comparable to those of counterparts who work in the city of Rome. In February 2014, Pope FRANCIS created the Secretariat of the Economy to oversee financial and administrative operations of the Holy See, part of a broader campaign to reform the Holy See’s finances.
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.

Honduras’s economy depends heavily on US trade and remittances. The US-Central America-Dominican Republic Free Trade Agreement came into force in 2006 and has helped foster foreign direct investment, but physical and political insecurity, as well as crime and perceptions of corruption, may deter potential investors; about 15% of foreign direct investment is from US firms.

The economy registered modest economic growth of 3.1%-3.6% from 2010 to 2016, insufficient to improve living standards for the nearly 65% of the population in poverty. In 2016, Honduras faced rising public debt but its economy has performed better than expected due to low oil prices and improved investor confidence. The IMF continues to monitor the three-year standby arrangement signed in December 2014, aimed at easing Honduras’s poor fiscal position.
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 reexports, is about four times GDP. Hong Kong has no tariffs on imported goods, and it levies excise duties on only four commodities, whether imported or produced locally: hard alcohol, tobacco, hydrocarbon oil, and methyl alcohol. There are no quotas or dumping laws. Hong Kong continues to link its currency closely to the US dollar, maintaining an arrangement established in 1983.

Hong Kong's open economy left it exposed to the global economic slowdown that began in 2008. Although increasing integration with China through trade, tourism, and financial links aided a more rapid initial recovery than many observers anticipated, its continued reliance on foreign trade and investment leaves it vulnerable to renewed global financial market volatility or a slowdown in the global economy.

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 9.4% of total system deposits in Hong Kong by the end of 2015. The government is pursuing efforts to introduce additional use of RMB in Hong Kong financial markets and is seeking to expand the RMB quota.

The mainland has long been Hong Kong's largest trading partner, accounting for about half of Hong Kong's total trade 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 47.3 million in 2014, outnumbering visitors from all other countries combined. Mainland visitors to Hong Kong declined 3% in 2015 to approximately 45.7 million, reflecting an overall drop of 2.5% in total visitors to Hong Kong. Hong Kong has also established itself as the premier stock market for Chinese firms seeking to list abroad. In 2015, mainland Chinese companies constituted about 51% of the firms listed on the Hong Kong Stock Exchange and accounted for about 62.1% 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. In 2014, Hong Kong and China signed a new agreement on achieving basic liberalization of trade in services in Guangdong Province under the Closer Economic Partnership Agreement, adopted in 2003 to forge closer ties between Hong Kong and the mainland. The new measures, effective March 2015, cover a negative list and a most-favored treatment provision, and will improve access to the mainland's service sector for Hong Kong-based companies.

Credit expansion and a tight housing supply have caused Hong Kong property prices to rise rapidly; consumer prices increased 4.4% in 2014, but slowed to 2.9% in 2015. Lower- and middle-income segments of the population are increasingly unable to afford adequate housing.

Hong Kong’s economic integration with the mainland continues to be most evident in the banking and finance sector. Initiatives like the Hong Kong-Shanghai Stock Connect, the Mutual Recognition of Funds, and The Hong Kong Shanghai Gold Connect are all important steps towards opening up the Mainland’s capital markets and has reinforced Hong Kong’s leading role as China’s offshore RMB market. Additional connect schemes from bonds to commodities and other investment products are also under exploration by Hong Kong authorities.
Hungary Hungary has transitioned from a centrally planned to a market-driven economy with a per capita income nearly two-thirds that of the EU-28 average; however, in recent years the government has become more involved in managing the economy. Budapest has implemented unorthodox economic policies to boost household consumption and has relied on EU-funded development projects to generate growth.

The economy is largely driven by exports, making it vulnerable to external market shocks. Following the fall of communism in 1990, Hungary experienced a drop-off in exports and financial assistance from the former Soviet Union. Hungary embarked on a series of economic reforms, including privatization of state-owned enterprises and reduction of social spending programs, to shift from a centrally planned to a market-driven economy, and to reorient its economy towards trade with the West. These efforts helped to spur growth, attract investment, and reduce Hungary’s debt burden and fiscal deficits. However, living conditions for the average Hungarian initially deteriorated as inflation increased and unemployment reached double digits. Conditions slowly improved over the 1990s as the reforms came to fruition and export growth accelerated. Economic policies instituted during that decade helped position Hungary to join the European Union in 2004; Hungary has yet to join the euro-zone, however. Hungary suffered a historic economic contraction as a result of the global economic slowdown in 2008-09 as export demand and domestic consumption dropped, prompting it to take an IMF-EU financial assistance package.

Since 2010, the government has backpedalled on reforms and taken a more nationalist and populist approach towards economic management. The government has favored national industries, and specifically government-linked businesses, through legislation, regulation, and public procurements. In 2010 and 2012, the government increased taxes on foreign-dominated sectors, such as banking and retail, because the move helped to raise revenues and decrease the budget deficit, thereby allowing Hungary to maintain access to EU development funds. The policy deterred private investment, however. In 2011 and 2014, Hungary nationalized private pension funds. The move squeezed financial service providers out of the system, but it also helped Hungary curb its public debt and lower its budget deficit to below 3% of GDP, as subsequent pension contributions have been channeled into the state-managed pension fund. Hungary’s public debt (at 73.9% of GDP) is still high compared to EU peers in Central Europe. Despite these reversals, real GDP growth has remained robust in the past several years because EU cyclical funding increased, EU demand for Hungarian exports rose, and domestic household consumption rebounded. To further boost household consumption ahead of an anticipated 2018 election, the government has announced plans to increase the minimum wage and public sector salaries, to decrease taxes on foodstuffs and services, to decrease personal income tax from 16% to 15%, as well as to introduce a uniform 9% business tax for both small and medium enterprises and large companies. Real GDP growth slowed in 2016 due to a cyclical fallback in EU funds, but is expected to increase to above 3% in 2017 and 2018.

Systemic economic challenges include long-term and youth unemployment, labor shortages, widespread poverty in rural areas, vulnerabilities to changes in demand for exports, and a heavy reliance on Russian energy imports.
Iceland Iceland's economy combines a capitalist structure and free-market principles with an extensive welfare system. Except for a brief period during the 2008 crisis, Iceland has achieved high growth, low unemployment, and a remarkably even distribution of income. The economy depends heavily on the fishing industry, which provides 40% of merchandise export earnings, more than 12% of GDP, and employs nearly 5% 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. Since 2010, tourism has become the main pillar of Icelandic economic growth, with the number of tourists reaching 4.5 times the Icelandic population in 2016.

Iceland's economy has been diversifying into manufacturing and service industries in the last decade, particularly within the fields of tourism, software production, and biotechnology. In fall 2013, the Icelandic Government approved a joint application by Icelandic, Chinese, and Norwegian energy firms to conduct oil exploration off Iceland’s northeast coast, although no exploration has yet taken place. Abundant geothermal and hydropower sources have attracted substantial foreign investment in the aluminum sector, boosted economic growth, and sparked some interest from high-tech firms looking to establish data centers using cheap green energy, although the financial crisis has put several investment projects on hold.

Following the privatization of the banking sector in the early 2000s, domestic banks expanded aggressively in foreign markets, and consumers and businesses borrowed heavily in foreign currencies. 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. Three new banks were established to take over the domestic assets of the collapsed banks. Two of them have majority ownership by the state, which intends to re-privatize them.

Since the collapse of Iceland's financial sector, government economic priorities have included stabilizing the krona, implementing capital controls, reducing Iceland's high budget deficit, containing inflation, addressing high household debt, restructuring the financial sector, and diversifying the economy. Capital controls were finally lifted in March 2017, but some financial protections (e.g., reserve requirements for specified investments connected to new inflows of foreign currency) remain in place. Iceland’s financial woes prompted an initial increase in public support to join the EU and the euro zone, with accession negotiations beginning in July 2010, but negotiations were suspended under the center-right government that took power in 2013. The current ruling coalition does not intend to restart accession talks, but has signaled that it would allow a vote on the question of EU membership, if a bill came before parliament near the end of the current parliamentary term. Most macroeconomic indicators and employment have rebounded to pre-crisis levels, driven primarily by the unprecedented growth in tourism – averaging over 20% annually – following the well-publicized volcanic eruption in 2010.
India India's diverse economy encompasses traditional village farming, modern agriculture, handicrafts, a wide range of modern industries, and a multitude of services. Slightly less than half of the workforce is in agriculture, but services are the major source of economic growth, accounting for nearly two-thirds of India's output but employing less than 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, business outsourcing services, and software workers.

India is developing into an open-market economy, yet traces of its past autarkic policies remain. Economic liberalization measures, including industrial deregulation, privatization of state-owned enterprises, and reduced controls on foreign trade and investment, began in the early 1990s and served to accelerate the country's growth, which averaged nearly 7% per year from 1997 to 2016. India's economic growth slowed in 2011 because of a decline in investment caused by high interest rates, rising inflation, and investor pessimism about the government's commitment to further economic reforms and about slow world growth. Rising macroeconomic imbalances in India and improving economic conditions in Western countries led investors to shift capital away from India, prompting a sharp depreciation of the rupee.

Growth rebounded in 2014 through 2016, exceeding 7% each year. Investors’ perceptions of India improved in early 2014, due to a reduction of the current account deficit and expectations of post-election economic reform, resulting in a surge of inbound capital flows and stabilization of the rupee. Since the election, the government has passed an important goods and services tax bill and raised foreign direct investment caps in some sectors, but most economic reforms have focused on administrative and governance changes largely because the ruling party remains a minority in India’s upper house of Parliament, which must approve most bills. Despite a high growth rate compared to the rest of the world, India’s government-owned banks faced mounting bad debt in 2015 and 2016, resulting in low credit growth and restrained economic growth.

The outlook for India's long-term growth is moderately positive due to a young population and corresponding low dependency ratio, healthy savings and investment rates, and increasing integration into the global economy. However, long-term challenges remain significant, including: India's discrimination against women and girls, an inefficient power generation and distribution system, ineffective enforcement of intellectual property rights, decades-long civil litigation dockets, inadequate transport and agricultural infrastructure, limited non-agricultural employment opportunities, high spending and poorly targeted subsidies, inadequate availability of quality basic and higher education, and accommodating rural-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, the largest economy in Southeast Asia, has seen a slowdown in growth since 2012, mostly due to the end of the commodities export boom. During the global financial crisis, Indonesia outperformed its regional neighbors and joined China and India as the only G20 members posting growth. Indonesia’s annual budget deficit is capped at 3% of GDP, and the Government of Indonesia lowered its debt-to-GDP ratio from a peak of 100% shortly after the Asian financial crisis in 1999 to less than 27 percent today. While Fitch and Moody's Investors upgraded Indonesia's credit rating to investment grade in December 2011, Standard & Poor’s has yet to raise Indonesia’s rating to this status amid several constraints to foreign direct investment in the country, such as a high level of protectionism.

Indonesia still struggles with poverty and unemployment, inadequate infrastructure, corruption, a complex regulatory environment, and unequal resource distribution among its regions. President Joko WIDODO - elected in July 2014 – seeks to develop Indonesia’s maritime resources and pursue other infrastructure development, including significantly increasing its electrical power generation capacity. Fuel subsidies were significantly reduced in early 2015, a move which has helped the government redirect its spending to development priorities. Indonesia, with the nine other ASEAN members, will continue to move towards participation in the ASEAN Economic Community, though full implementation of economic integration has not yet materialized.
Iran Iran's economy is marked by statist policies, inefficiencies, and reliance on oil and gas exports, but Iran also possesses significant agricultural, industrial, and service sectors. The Iranian government directly owns and operates hundreds of state-owned enterprises and indirectly controls many companies affiliated with the country's security forces. Distortions - including inflation, price controls, subsidies, and a banking system holding billions of dollars of non-performing loans - weigh down the economy, undermining the potential for private-sector-led growth.

Private sector activity includes small-scale workshops, farming, some manufacturing, and services, in addition to medium-scale construction, cement production, mining, and metalworking. Significant informal market activity flourishes and corruption is widespread.

Fiscal and monetary constraints, following the expansion of international sanctions in 2012 on Iran's Central Bank and oil exports, significantly reduced Iran's oil revenue, forced government spending cuts, and sparked a sharp currency depreciation. Iran’s economy contracted for the first time in two decades during both 2012 and 2013, but growth resumed in 2014. Iran's stock market plunged between 2013 and 2015. Iran continues to suffer from high unemployment and underemployment. Lack of job opportunities has prompted many educated Iranian youth to seek employment overseas, resulting in a significant "brain drain."

In June 2013, the election of President Hasan RUHANI generated widespread public expectations of economic improvement and greater international engagement. RUHANI has achieved some success, including reining in inflation and, in July of 2015, securing the promise of sanctions relief for Iran by signing the Joint Comprehensive Plan of Action (JCPOA) with the P5+1. The JCPOA, which severely limits Iran’s nuclear program in exchange for unfreezing Iranian assets and reopening Iran to international trade, should bolster foreign direct investment, increase trade, and stimulate growth.
Iraq Iraq's GDP grew by more than 10% in 2016, the best performance in the past decade, because of rising oil prices, a significant driver of Iraqi GDP. During 2016, security and financial stability throughout Iraq began to improve as Iraqi Security Forces made gains against the ongoing insurgency and oil prices slowly rose. The Iraqi Government entered into a Stand-By Arrangement (SBA) with the IMF in July 2016, which helped stabilize its finances by encouraging improved fiscal management, needed economic reform, and expenditure reduction. Iraq passed its first SBA review in December 2016, and additional progress on the program is critical to its long-term fiscal health. Diversification efforts – a key component to Iraq’s long-term economic development – require a strengthened investment climate to bolster private-sector engagement. Sustained improvements in the overall standard of living depend heavily on global oil prices, the central government passage of major policy reforms, and progress in the conflict with ISIL.

Iraq's largely state-run economy is dominated by the oil sector, which provides more than 90% of government revenue and 80% of foreign exchange earnings. Oil exports in 2016 averaged 3.3 million barrels per day from southern Iraq, up from 2015. Moreover, the slow recovery of global oil prices improved export revenues throughout 2016, although monthly revenue remained below 2015 levels. Iraq's contracts with major oil companies have the potential to further expand oil exports and revenues, but Iraq will need to make significant upgrades to its oil processing, pipeline, and export infrastructure to enable these deals to reach their economic potential.

Iraqi oil exports from northern fields are hampered by fundamental disagreements between the Iraqi Government and autonomous Kurdistan Regional Government (KRG) in Iraq’s Kurdistan region (IKR) on the roles of federal and regional authorities in the development and export of natural resources. In 2007, the KRG passed an oil law to develop IKR oil and gas reserves independent of the federal government. The KRG has signed about 50 contracts with foreign energy companies to develop its reserves, some of which lie in territories whose status is in dispute between Baghdad and Erbil. Some of the companies have left or returned blocks, citing lack of commercial prospects. In 2014, the KRG began exporting its oil unilaterally through its own pipeline to Turkey, which Baghdad claims is illegal. In the absence of a national hydrocarbons law, the two sides have entered into four provisional oil- and revenue-sharing deals since 2009, all of which collapsed. In September 2016, the two sides began implementing a fifth ad hoc agreement to split oil exports from Baghdad-controlled fields in Kirkuk.

Iraq is making slow progress enacting laws and developing the institutions needed to implement economic policy, and political reforms are still needed to assuage investors' concerns regarding the uncertain business climate. The Government of Iraq is eager to attract additional foreign direct investment, but it faces a number of obstacles, including a tenuous political system and concerns about security and societal stability. Rampant corruption, outdated infrastructure, insufficient essential services, skilled labor shortages, and antiquated commercial laws stifle investment and continue to constrain growth of private, nonoil sectors. Under the Iraqi constitution, some competencies relevant to the overall investment climate are either shared by the federal government and the regions or are devolved entirely to local governments. Investment in the IKR operates within the framework of the Kurdistan Region Investment Law (Law 4 of 2006) and the Kurdistan Board of Investment, which is designed to provide incentives to help economic development in areas under the authority of the KRG.

Inflation has remained under control since 2006. However, Iraqi leaders remain hard-pressed to translate macroeconomic gains into an improved standard of living for the Iraqi populace. Unemployment remains a problem throughout the country despite a bloated public sector. Encouraging private enterprise through deregulation would make it easier for Iraqi citizens and foreign investors to start new businesses. Rooting out corruption and implementing reforms - such as restructuring banks and developing the private sector - would be important steps in this direction.
Ireland Ireland is a small, modern, trade-dependent economy. Ireland was among the initial group of 12 EU nations that began circulating the euro on 1 January 2002. GDP growth averaged 6% in 1995-2007, but economic activity dropped sharply during the world financial crisis and the subsequent collapse of its domestic property market and construction industry. Faced with sharply reduced revenues and a burgeoning budget deficit from efforts to stabilize its fragile banking sector, the Irish Government introduced the first in a series of draconian budgets in 2009. These measures were not sufficient to stabilize Ireland’s public finances. In 2010, the budget deficit reached 32.4% of GDP - the world's largest deficit, as a percentage of GDP. In late 2010, the former COWEN government agreed to a $92 billion loan package from the EU and IMF to help Dublin recapitalize Ireland’s banking sector and avoid defaulting on its sovereign debt. In March 2011, the KENNY government intensified austerity measures to meet the deficit targets under Ireland's EU-IMF bailout program.

In late 2013, Ireland formally exited its EU-IMF bailout program, benefiting from its strict adherence to deficit-reduction targets and success in refinancing a large amount of banking-related debt. In 2014, the economy rapidly picked up and GDP grew by 5.2%. The recovering economy assisted lowering the deficit to 2.5% of GDP. In late 2014, the government introduced a fiscally neutral budget, marking the end of the austerity program. Continued growth of tax receipts has allowed the government to lower some taxes and increase public spending while keeping to its deficit-reduction targets. In 2015, GDP growth exceeded 26%, the highest growth in the EU for two consecutive years. This dramatic increase reflected one-off statistical revisions, multinational corporate restructurings, and the aircraft leasing sector, rather than gains in the on the ground economy. Growth moderated to around 4.2% in 2016.

In the wake of the collapse of the construction sector and the downturn in consumer spending and business investment, the export sector, dominated by foreign multinationals, has become an even more important component of Ireland's economy. Ireland’s low corporation tax of 12.5% and a talented pool of high-tech laborers have been key factors in encouraging business investment. Loose tax residency requirements made Ireland a common destination for international firms seeking to avoid taxation. In 2014, amid growing international pressure, the government announced it would phase in more stringent tax laws, effectively closing a commonly used loophole.
Isle of Man Financial services, 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. Online gambling sites provided about 10% of the islands income in 2014. The Isle of Man enjoys free access to EU markets and trade is mostly with the UK. In October 2014, the Isle of Man signed an OECD agreement to automatically exchange some financial account information to limit tax avoidance and evasion.
Israel Israel has a technologically advanced free market economy. Cut diamonds, high-technology equipment, and pharmaceuticals are among its leading exports. Its major imports include crude oil, grains, raw materials, and military equipment. Israel usually posts sizable trade deficits, which are offset by tourism and other service exports, as well as significant foreign investment inflows.

Between 2004 and 2013, growth averaged nearly 5% per year, led by exports. 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 resilient banking sector. Israel's economy also weathered the 2011 Arab Spring because strong trade ties outside the Middle East insulated the economy from spillover effects.

Slowing domestic and international demand and decreased investment resulting from Israel’s uncertain security situation reduced GDP growth to an average of roughly 2.6% per year during the period 2014-16. Natural gas fields discovered off Israel's coast since 2009 have brightened Israel's energy security outlook. The Tamar and Leviathan fields were some of the world's largest offshore natural gas finds in the last decade. Political and regulatory issues have delayed the development of the massive Leviathan field, but production from Tamar provided a 0.8% boost to Israel's GDP in 2013 and a 0.3% boost in 2014. One of the most carbon intense OECD countries, Israel generates about 57% of its power from coal and only 2.6% from renewable sources.

Income inequality and high housing and commodity prices continue to be a concern for many Israelis. Israel's income inequality and poverty rates are among the highest of OECD countries, and there is a broad perception among the public that a small number of "tycoons" have a cartel-like grip over the major parts of the economy. Government officials have called for reforms to boost the housing supply and to increase competition in the banking sector to address these public grievances. Despite calls for reforms, the restricted housing supply continues to impact the well-being of younger Israelis seeking to purchase homes. Tariffs and non-tariff barriers, coupled with guaranteed prices and customs tariffs for farmers kept food prices high in 2016. Private consumption is expected to drive growth through 2017 with consumers benefitting from low inflation and a strong currency.

In the long term, Israel faces structural issues, including low labor participation rates for its fastest growing social segments - the ultraorthodox and Arab-Israeli communities. Also, Israel's progressive, globally competitive, knowledge-based technology sector employs only about 8% of the workforce, with the rest mostly employed in manufacturing and services - sectors which face downward wage pressures from global competition. Expenditures on educational institutions remain low compared to most other OECD countries with similar GDP per capita.
Italy Italy has a diversified economy, which is divided into a developed industrial north, dominated by private companies, and a less-developed, highly subsidized, agricultural south, where unemployment is higher. 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 17% of GDP. These activities are most common within the agriculture, construction, and service sectors.

Italy is the third-largest economy in the euro zone, but its exceptionally high public debt and structural impediments to growth have rendered it vulnerable to scrutiny by financial markets. Public debt has increased steadily since 2007, reaching 133% of GDP in 2016. Investor concerns about Italy and the broader euro-zone crisis eased in 2013, bringing down Italy's borrowing costs on sovereign government debt from euro-era records. The government still faces pressure from investors and European partners to sustain its efforts to address Italy's longstanding structural impediments to growth, such as labor market inefficiencies, a sluggish judicial system, and a weak banking sector. Italy’s economy returned to modest growth in late 2014 for the first time since late 2011. In 2015-16, Italy’s economy grew 0.7% each year. In 2016, overall unemployment was 11.7%, but youth unemployment remains high at 37.1%.
Jamaica The Jamaican economy is heavily dependent on services, which accounts for more than 70% of GDP. The country continues to derive most of its foreign exchange from tourism, remittances, and bauxite/alumina. Earnings from remittances and tourism each account for about 15% of GDP, while bauxite/alumina exports have declined to less than 5% of GDP.

Jamaica's economy has grown on average less than 1% a year for the last three decades and many impediments remain to growth: a bloated public sector which crowds out spending on important projects; high crime and corruption; red-tape; and a high debt-to-GDP ratio. Jamaica, however, has made steady progress in reducing its debt-to-GDP ratio from a high of almost 150% in 2012 to about 115% in 2017, in close collaboration with the International Monetary Fund. The existing Stand By Agreement requires Jamaica to produce an annual primary surplus of 7%, in an attempt to reduce its debt burden below 60% by 2025.

Economic growth reached 1.6% in 2016. The HOLNESS administration faces the difficult prospect of maintaining fiscal discipline to make debt payments while simultaneously attacking a serious crime problem. High unemployment exacerbates the crime problem, including gang violence fueled by the drug trade.
Jan Mayen Jan Mayen is a volcanic island with no exploitable natural resources, although surrounding waters contain substantial fish stocks and potential untapped petroleum resources. Economic activity is limited to providing services for employees of Norway's radio and meteorological stations on the island.
Japan Over the past 70 years, government-industry cooperation, a strong work ethic, mastery of high technology, and a comparatively small defense allocation (slightly less than 1% of GDP) have helped Japan develop an advanced economy. Two notable characteristics of the post-World War II economy were the close interlocking structures of manufacturers, suppliers, and distributors, known as keiretsu, and the guarantee of lifetime employment for a substantial portion of the urban labor force. Both features have significantly eroded under the dual pressures of global competition and domestic demographic change.

Measured on a purchasing power parity basis that adjusts for price differences, Japan in 2016 stood as the fourth-largest economy in the world after first-place China, which surpassed Japan in 2001, and third-place India, which edged out Japan in 2012. For three postwar decades, overall real economic growth was impressive - a 10% average in the 1960s, 5% in the 1970s, and 4% in the 1980s. Growth slowed markedly in the 1990s, averaging just 1.7%, largely because of the aftereffects of inefficient investment and the collapse of an asset price bubble in the late 1980s, which entailed considerable time for firms to reduce excess debt, capital, and labor. Modest economic growth continued after 2000, but the economy has fallen into recession four times since 2008.

Japan enjoyed an uptick in growth in 2013 on the basis of Prime Minister Shinzo ABE’s “Three Arrows” economic revitalization agenda - dubbed “Abenomics” - of monetary easing, “flexible” fiscal policy, and structural reform. Led by the Bank of Japan’s aggressive monetary easing, Japan is making modest progress in ending deflation, but demographic decline – a low birthrate and an aging, shrinking population – poses a major long-term challenge for the economy. The government currently faces the quandary of balancing its efforts to stimulate growth and institute economic reforms with the necessity of addressing its sizable public debt, which stands at 235% of GDP. To help raise government revenue, Japan adopted legislation in 2012 to gradually raise the consumption tax rate. However, the first such increase, in April 2014, led to another recession, so Prime Minister ABE has twice postponed the next increase, now scheduled for October 2019. Structural reforms to unlock productivity are seen as central to strengthening the economy in the long-run.

Scarce in critical natural resources, Japan has long been dependent on imported energy and raw materials. After the complete shutdown of Japan’s nuclear reactors following the earthquake and tsunami disaster in 2011, Japan's industrial sector has become even more dependent than before on imported fossil fuels. However, ABE’s government is seeking to restart nuclear power plants that meet strict new safety standards and is emphasizing nuclear energy’s importance as a base-load electricity source. In August 2015, Japan successfully restarted one nuclear reactor at the Sendai Nuclear Power Plant in Kagoshima prefecture, and several other reactors around the country have since resumed operations; however, opposition from local governments has delayed several more restarts that remain pending. Reforms of the electricity and gas sectors, including full liberalization of Japan’s energy market in April 2016 and gas market in April 2017, constitute an important part of Prime Minister Abe’s economic program.

In October 2015, Japan and 11 trading partners reached agreement on the Trans-Pacific Partnership (TPP), a pact that had promised to open Japan's economy to increased foreign competition and create new export opportunities for Japanese businesses. Japan was the second country to ratify the TPP in December 2016; the United States signaled its withdrawal from the TPP on January 23, 2017, and as of April 2017 the agreement has not gone into effect.
Jersey Jersey's economy is based on international financial services, agriculture, and tourism. In 2010, the financial services sector accounted for about 50% of the island's output. Potatoes, cauliflower, tomatoes, and especially flowers are important export crops, shipped mostly to the UK. The Jersey breed of dairy cattle is known worldwide and represents an important export income earner. Tourism accounts for one-quarter of GDP. Living standards come close to those of the UK. In recent years, the government has encouraged light industry to locate in Jersey with the result that an electronics industry has developed, displacing more traditional industries. All raw material and energy requirements are imported as well as a large share of Jersey's food needs. Light taxes and death duties make the island a popular tax haven. In October 2014, Jersey signed an OECD agreement to automatically exchange some financial account information to limit tax avoidance and evasion.
Jordan Jordan's economy is among the smallest in the Middle East, with insufficient supplies of water, oil, and other natural resources, underlying the government's heavy reliance on foreign assistance. Other economic challenges for the government include chronic high rates of poverty, unemployment and underemployment, budget and current account deficits, and government debt.

King ABDALLAH, during the first decade of the 2000s, implemented significant economic reforms, such as expanding foreign trade and privatizing state-owned companies that attracted foreign investment and contributed to average annual economic growth of 8% for 2004 through 2008. The global economic slowdown and regional turmoil contributed to slower growth from 2010 to 2016 - with growth averaging 2.8% per year - and hurt export-oriented sectors, construction, and tourism. Since the onset of the civil war in Syria and resulting refugee crisis, one of Jordan’s most pressing socioeconomic challenges has been managing the influx of 650,000 UN-registered refugees, more than 80% of whom live in Jordan’s urban areas. Jordan’s own official census estimated the refugee number at 1.3 million as of early 2016.

Jordan is nearly completely dependent on imported energy—mostly natural gas—and energy consistently makes up 25-30 percent of Jordan’s imports. To diversify its energy mix, Jordan has secured several contracts for liquefied natural gas and is currently exploring nuclear power generation, exploitation of abundant oil shale reserves and renewable technologies, as well as the import of Israeli offshore gas. In August 2016, Jordan and the IMF agreed to a $723 million Extended Fund Facility that aims to build on the three-year, $2.1 billion IMF program that ended in August 2015 with the goal of helping Jordan correct budgetary and balance of payments imbalances.
Kazakhstan Kazakhstan, geographically the largest of the former Soviet republics, excluding Russia, possesses substantial fossil fuel reserves and other minerals and metals, such as uranium, copper, and zinc. It also has a large agricultural sector featuring livestock and grain. The government realizes that its economy suffers from an overreliance on oil and extractive industries and has made initial attempts to diversify its economy by targeting sectors like transport, pharmaceuticals, telecommunications, petrochemicals and food processing for greater development and investment.

Kazakhstan's vast hydrocarbon and mineral reserves form the backbone of its economy. Chevron-led Tengizchevroil announced a $36.8 billion expansion of Kazakhstan’s premiere Tengiz oil field in July 2016. Meanwhile, the super-giant Kashagan field finally launched production in October 2016 after years of delay and an estimated $55 billion in development costs.

Kazakhstan is landlocked and depends on Russia to export its oil to Europe. It also exports oil directly to China. In 2010, Kazakhstan joined Russia and Belarus to establish a Customs Union in an effort to boost foreign investment and improve trade. The Customs Union evolved into a Single Economic Space in 2012 and the Eurasian Economic Union (EAEU) in January 2015. In part due to weak commodity prices, Kazakhstan’s exports to EAEU countries declined 23.5% in 2016. Imports from EAEU countries to Kazakhstan declined 13.7%.

The economic downturn of its EAEU partner, Russia, and the decline in global commodity prices from 2014 to 2015 contributed to an economic slowdown in Kazakhstan, which continues to experience its slowest economic growth since the financial crises of 2008-09. In 2014, Kazakhstan devalued its currency, the tenge, and announced a stimulus package to cope with its economic challenges. In the face of further decline in the ruble, oil prices, and the regional economy, Kazakhstan announced in 2015 it would replace its currency band with a floating exchange rate, leading to a sharp fall in the value of the tenge. Since reaching a low of 391 to the dollar in January 2016, the tenge has modestly appreciated, helped by somewhat higher oil prices.

Despite some positive institutional and legislative changes in the last several years, investors remain concerned about corruption, bureaucracy, and arbitrary law enforcement, especially at the regional and municipal levels. An additional concern is the condition of the country’s banking sector, which suffers from low liquidity, poor asset quality, and a lack of transparency. Investors also question the potentially negative effects on the economy of a contested presidential succession as Kazakhstan’s first president, Nursultan NAZARBAYEV, who turns 77 in 2017, has not announced whether he will seek reelection in 2019.
Kenya Kenya is the economic, financial, and transport hub of East Africa. Kenya’s real GDP growth has averaged over 5% for the last eight years. Since 2014, Kenya has been ranked as a lower middle income country because its per capita GDP crossed a World Bank threshold. While Kenya has a growing entrepreneurial middle class and steady growth, its economic and development trajectory could be impaired by weak governance and corruption. Although reliable numbers are hard to find, unemployment and under-employment are extremely high, and could be near 40% of the population.

Agriculture remains the backbone of the Kenyan economy, contributing one-third of GDP. About 75% of Kenya’s population of roughly 44.2 million work at least part-time in the agricultural sector, including livestock and pastoral activities. Over 75% of agricultural output is from small-scale, rain-fed farming or livestock production.

Inadequate infrastructure continues to hamper Kenya’s efforts to improve its annual growth to the 8%-10% range so that it can meaningfully address poverty and unemployment. The KENYATTA administration has been successful in courting external investment for infrastructure development. International financial institutions and donors remain important to Kenya's economic growth and development, but Kenya has also successfully raised capital in the global bond market. Kenya issued its first sovereign bond offering in mid-2014. Nairobi has contracted with a Chinese company to construct a new standard gauge railway connecting Mombasa and Nairobi, with completion expected in June 2017. In 2013, the country adopted a devolved system of government with the creation of 47 counties, and is in the process of devolving state revenues and responsibilities to the counties. Inflationary pressures and sharp currency depreciation peaked in early 2012 but have since abated following low global food and fuel prices and monetary interventions by the Central Bank. Drought-like conditions in parts of the country have pushed March 2017 inflation above 9%. Chronic budget deficits, including a shortage of funds in mid-2015, hampered the government’s ability to implement proposed development programs, but the economy is back in balance with many indicators, including foreign exchange reserves, interest rates, and FDI moving in the right direction. Underlying weaknesses were exposed in the banking sector in 2016 when the government was forced to take over three small and undercapitalized banks. In 2016, the government enacted legislation that limits interest rates banks can charge on loans and set a rate that banks must pay their depositors. This measure led to a sharp shrinkage of credit in the economy.

Tourism holds a significant place in Kenya’s economy. A spate of terrorist attacks by the Somalia-based group al-Shabaab reduced international tourism earning after their deadly 2013 attack on Nairobi’s Westgate mall, which killed 67 people, but the sector is now recovering. In 2016, tourist arrivals grew by 17% while revenues from tourism increased by 37%.
Kiribati A remote country of 33 scattered coral atolls, Kiribati has few natural resources and is one of the least developed Pacific Island countries. Commercially viable phosphate deposits were exhausted by the time of independence from the United Kingdom in 1979. Earnings from fishing licenses and seafarer remittances are important sources of income, however, remittances and the number of seafarers employed declined in the global crisis, but has since improved. In 2013, fishing license revenues contributed close to half of government’s total revenue and total remittances from seafarers were equivalent to 6% of GDP.

Economic development is constrained by a shortage of skilled workers, weak infrastructure, and remoteness from international markets. The public sector dominates economic activity, with ongoing capital projects in infrastructure including road rehabilitation, water and sanitation projects, and renovations to the international airport, spurring some growth. Public debt increased from less than 10% of GDP in 2014 to 23% of GDP at the end of 2015 due to the Bonriki International Airport repair and upgrade project financed by development partner concessional loans.

Kiribati is dependent on foreign aid, which was estimated to have contributed over 43% in 2013 to the government’s finances. The country’s sovereign fund, the Revenue Equalization Reserve Fund (RERF), which is held offshore, had an estimated balance of $571 million (A$756 million) in 2015, equivalent to 344% of GDP. The RERF seeks to avoid exchange rate risk by holding investments in more than 20 currencies, including the Australian dollar, US dollar, the Japanese yen, and the Euro. Drawdowns from the RERF helped finance the government’s annual budget.
Korea, North North Korea, one of the world's most centrally directed and least open economies, faces chronic economic problems. Industrial capital stock is nearly beyond repair as a result of years of underinvestment, shortages of spare parts, and poor maintenance. Large-scale military spending and development of its ballistic missile and nuclear program severely draws off resources needed for investment and civilian consumption. Industrial and power outputs have stagnated for years at a fraction of pre-1990 levels. Frequent weather-related crop failures aggravated chronic food shortages caused by on-going systemic problems, including a lack of arable land, collective farming practices, poor soil quality, insufficient fertilization, and persistent shortages of tractors and fuel.

The mid 1990s were marked by severe famine and widespread starvation. Significant food aid was provided by the international community through 2009. Since that time, food assistance has declined significantly. In the last few years, domestic corn and rice production has improved, although domestic production does not fully satisfy demand. A large portion of the population continues to suffer from prolonged malnutrition and poor living conditions. Since 2002, the government has allowed semi-private markets to begin selling a wider range of goods, allowing North Koreans to partially make up for diminished public distribution system rations. It also implemented changes in the management process of communal farms in an effort to boost agricultural output.

In December 2009, North Korea carried out a redenomination of its currency, capping the amount of North Korean won that could be exchanged for the new notes, and limiting the exchange to a one-week window. A concurrent crackdown on markets and foreign currency use yielded severe shortages and inflation, forcing Pyongyang to ease the restrictions by February 2010. In response to the sinking of the South Korean warship Cheonan and the shelling of Yeonpyeong Island in 2010, South Korea’s government cut off most aid, trade, and bilateral cooperation activities. In February 2016, South Korea ceased its remaining bilateral economic activity by closing the Kaesong Industrial Complex in response to North Korea’s fourth nuclear test a month earlier. This nuclear test and another in September 2016 resulted in two United Nations Security Council Resolutions that targeted North Korea’s foreign currency earnings, particularly coal and other mineral exports. Over the last decade, China has been North Korea’s primary trading partner.

The North Korean Government continues to stress its goal of improving the overall standard of living, but has taken few steps to make that goal a reality for its populace. In 2016, the regime used two mass mobilizations — one totaling 70 days and another 200 days — to spur the population to increase production and complete construction projects quickly. The regime released a five-year economic development strategy in May 2016 that outlined plans for promoting growth across sectors. Firm political control remains the government’s overriding concern, which likely will inhibit formal changes to North Korea’s current economic system.
Korea, South South Korea over the past four decades has demonstrated incredible economic growth and global integration to become a high-tech industrialized economy. In the 1960s, GDP per capita was comparable with levels in the poorer countries of Africa and Asia. In 2004, South Korea joined the trillion-dollar club of world economies.

A system of close government and business ties, including directed credit and import restrictions, initially made this success possible. The government promoted the import of raw materials and technology at the expense of consumer goods and encouraged savings and investment over consumption.

The Asian financial crisis of 1997-98 exposed longstanding weaknesses in South Korea's development model, including high debt/equity ratios and massive short-term foreign borrowing. GDP plunged by 7% in 1998, and then recovered by 9% in 1999-2000. South Korea adopted numerous economic reforms following the crisis, including greater openness to foreign investment and imports. Growth moderated to about 4% annually between 2003 and 2007.

South Korea's export-focused economy was hit hard by the 2008 global economic downturn, but quickly rebounded in subsequent years, reaching over 6% growth in 2010. The US-Korea Free Trade Agreement was ratified by both governments in 2011 and went into effect in March 2012. Between 2012 and 2016, the economy experienced slow growth – 2%-3% per year - due to sluggish domestic consumption, a drop in foreign demand for South Korean exports, increased competition from regional rivals such as China and Japan, and declining investment. The administration in 2016 faced the challenge of balancing heavy reliance on exports with domestic restructuring efforts in the country’s shipbuilding and shipping industries.

The South Korean economy's short-term challenges include a potential loss of consumer confidence due to issues with its mobile phone industry, as well as uncertainty stemming from a tumultuous domestic political situation. In the long-term, South Korea must deal with a rapidly aging population, inflexible labor market, dominance of large conglomerates (chaebols), and the heavy reliance on exports, which comprise more than 40% of GDP. South Korea’s low overall unemployment rate masks problems with high youth unemployment, low worker productivity, high labor underutilization, and low female participation in the workforce. The government has tried to implement structural reforms, but continues to face significant headwind from vested interests. Finally, the country could eventually face an unprecedented financial burden in the event the unification of the Korean Peninsula were to occur.
Kosovo Kosovo's economy has shown progress in transitioning to a market-based system and maintaining macroeconomic stability, but it is still highly dependent on the international community and the diaspora for financial and technical assistance. Remittances from the diaspora - located mainly in Germany, Switzerland, and the Nordic countries - are estimated to account for about 17% of GDP and international donor assistance accounts for approximately 10% of GDP. With international assistance, Kosovo has been able to privatize a majority of its state-owned enterprises.

Kosovo's citizens are the second poorest in Europe, after Moldova, with a per capita GDP (PPP) of $9,600 in 2016. An unemployment rate of 33%, and a youth unemployment rate near 60%, in a country where the average age is 26, encourages emigration and fuels a significant informal, unreported economy. Emigration remains challenging, however, because Kosovo lacks visa-free travel to the EU. Most of Kosovo's population lives in rural towns outside of the capital, Pristina. Inefficient, near-subsistence farming is common - the result of small plots, limited mechanization, and a lack of technical expertise. Kosovo enjoys lower labor costs than the rest of the region. However, high levels of corruption, little contract enforcement, and unreliable electricity supply have discouraged potential investors. The official currency of Kosovo is the euro, but the Serbian dinar is also used illegally in Serb majority communities. Kosovo's tie to the euro has helped keep core inflation low.

Minerals and metals production - including lignite, lead, zinc, nickel, chrome, aluminum, magnesium, and a wide variety of construction materials - once the backbone of industry, has declined because of aging equipment and insufficient investment, problems exacerbated by competing and unresolved ownership claims of Kosovo’s largest mines. A limited and unreliable electricity supply is a major impediment to economic development, but Kosovo has received technical assistance to help improve the sector’s performance. In 2012, Kosovo privatized its electricity supply and distribution network. The US Government is cooperating with the Ministry of Economic Development (MED) and the World Bank to conclude a commercial tender for the construction of Kosovo C, a new lignite-fired power plant that would leverage Kosovo’s large lignite reserves. MED also has plans for the rehabilitation of an older coal power plant, Kosovo B, and the development of a coal mine that could supply both plants.

In June 2009, Kosovo joined the World Bank and International Monetary Fund, and began servicing its share of the former Yugoslavia's debt. In order to help integrate Kosovo into regional economic structures, UNMIK signed (on behalf of Kosovo) its accession to the Central Europe Free Trade Area (CEFTA) in 2006. Kosovo joined the European Bank for Reconstruction and Development in 2012 and the Council of Europe Development Bank in 2013. In 2016, Kosovo implemented the Stabilization and Association Agreement (SAA) negotiations with the EU, focused on trade liberalization. Under the SAA, Kosovo — which gets approximately 58% of government revenue from tariffs on imports — is required to phase out tariffs on EU goods over the next seven years. In 2014, nearly 60% of customs duty-eligible imports into Kosovo were EU goods. In 2015, Kosovo negotiated a $185 million Stand-by Arrangement (SBA) with the IMF following the conclusion of its previous SBA in 2014. The IMF requested an extension of the current SBA to August 2017 to facilitate policy continuity and allow sufficient time for ongoing structural reforms to progress. In August 2015, as part of its EU-facilitated normalization process with Serbia, Kosovo signed agreements on telecommunications and energy distribution, but disagreements over who owns economic assets, such as the Trepca mining conglomerate, within Kosovo continue.

Kosovo experienced its first federal budget deficit in 2012, when government expenditures climbed sharply. In May 2014, the government introduced a 25% salary increase for public sector employees and an equal increase in certain social benefits. Central revenues could not sustain these increases, and the government was forced to reduce its planned capital investments. The government, led by Prime Minister MUSTAFA - a trained economist - recently made several changes to its fiscal policy, expanding the list of duty-free imports, decreasing the Value Added Tax (VAT) for basic food items and public utilities, and increasing the VAT for all other goods.

While Kosovo’s economy continued to make progress, it needs further reform and investment to enable the level of growth required to reduce unemployment and raise living standards in a meaningful way.
Kuwait Kuwait has a geographically small, but wealthy, relatively open economy with crude oil reserves of about 102 billion barrels - more than 6% of world reserves. Kuwaiti officials plan to increase production to 4 million barrels of oil equivalent per day by 2020. Petroleum accounts for over half of GDP, 92% of export revenues, and 90% of government income.

In 2015, Kuwait, for the first time in 15 years, realized a budget deficit after decades of high oil prices; in 2016, the deficit grew to 16.5% of GDP. Kuwaiti authorities announced cuts to fuel subsidies in August 2016, provoking outrage among the public and National Assembly, and the Amir dissolved the government for the seventh time in ten years. Despite Kuwait’s dependence on oil, the government has cushioned itself against the impact of lower oil prices, by saving annually at least 10% of government revenue in the Fund for Future Generations.

Kuwait has failed to diversify its economy or bolster the private sector, because of a poor business climate, a large public sector that employs about 76% of citizens, and an acrimonious relationship between the National Assembly and the executive branch that has stymied most economic reforms. The Kuwaiti Government has made little progress on its long-term economic development plan first passed in 2010. While the government planned to spend up to $104 billion over four years to diversify the economy, attract more investment, and boost private sector participation in the economy, many of the projects did not materialize because of an uncertain political situation or delays in awarding contracts.
Kyrgyzstan Kyrgyzstan is a landlocked, mountainous, lower middle income country with an economy dominated by minerals extraction, agriculture, and reliance on remittances from citizens working abroad. Cotton, wool, and meat are the main agricultural products, although only cotton is exported in any quantity. Other exports include gold, mercury, uranium, natural gas, and - in some years - electricity. The country has sought to attract foreign investment to expand its export base, including construction of hydroelectric dams, but a difficult investment climate and an ongoing legal battle with a Canadian firm over the joint ownership structure of the nation’s largest gold mine deter potential investors. Remittances from Kyrgyz migrant workers, predominantly in Russia and Kazakhstan, are equivalent to over one-quarter of Kyrgyzstan’s GDP.

Following independence, Kyrgyzstan rapidly implemented market reforms, such as improving the regulatory system and instituting land reform. In 1998, Kyrgyzstan was the first Commonwealth of Independent States country to be accepted into the World Trade Organization. The government has privatized much of its ownership shares in public enterprises. Despite these reforms, the country suffered a severe drop in production in the early 1990s and has again faced slow growth in recent years as the global financial crisis, declining oil prices, and regional economic headwinds have damaged economies across Central Asia. The Kyrgyz government remains dependent on foreign donor support to finance its annual budget deficit of approximately 4 to 5% of GDP.

Kyrgyz leaders hope the country’s August 2015 accession to the Eurasian Economic Union (EAEU) will bolster trade and investment, but slowing economies in Russia and China and low commodity prices continue to hamper economic growth. While joining the EAEU has increased Kyrgyz labor mobility within member states, large-scale trade and investment pledged by Kyrgyz leaders has been slow in developing since accession. Kyrgyz entrepreneurs and politicians alike often contend that non-tariff measures imposed by other EAEU member states, particularly Kazakhstan, are negatively impacting sectors of the Kyrgyz economy that enjoy a comparative advantage, such as meat and dairy production. Since acceding to the EAEU, the Kyrgyz Republic has continued harmonizing its laws and regulations to conform to EAEU standards, though many local entrepreneurs have criticized this process as disjointed and incomplete. The keys to future growth include progress in fighting corruption, improving administrative transparency, restructuring and diversifying domestic industries, and attracting foreign aid and investment.
Laos The government of Laos, one of the few remaining one-party communist states, began decentralizing control and encouraging private enterprise in 1986. Economic growth averaged more than 6% per year in the period 1988-2008, and Laos' growth has more recently been amongst the fastest in Asia, averaging nearly 8% per year for most of the last decade. However, growth has declined over the past year and is expected to be about 6.8% in 2017, according to the IMF.

Nevertheless, Laos remains a country with an underdeveloped infrastructure, particularly in rural areas. It has a basic, but improving, road system, and limited external and internal land-line telecommunications. Electricity is available to 83% of the population. Agriculture, dominated by rice cultivation in lowland areas, accounts for about 25% of GDP and 73% of total employment. Recently, the country has faced a persistent current account deficit, falling foreign currency reserves, and growing public debt, as slow recovery of the global economy, especially that of China, has driven down the prices of its mineral exports.

Laos' economy is heavily dependent on capital-intensive natural resource exports. The economy has benefited from high-profile foreign direct investment in hydropower dams along the Mekong River, copper and gold mining, logging, and construction, although some projects in these industries have drawn criticism for their environmental impacts.

Laos gained Normal Trade Relations status with the US in 2004 and applied for Generalized System of Preferences trade benefits in 2013 after being admitted to the World Trade Organization earlier in the year. Laos held the chairmanship of ASEAN in 2016. Laos is in the process of implementing a value-added tax system. The government appears committed to raising the country's profile among foreign investors and has developed special economic zones replete with generous tax incentives, but a limited labor pool, a small domestic market, and corruption remain impediments to investment. Laos also has ongoing problems with the business environment, including onerous registration requirements, a gap between legislation and implementation, and unclear or conflicting regulations.
Latvia Latvia is a small, open economy with exports contributing more than half of GDP. Due to its geographical location, transit services are highly-developed, along with timber and wood-processing, agriculture and food products, and manufacturing of machinery and electronics industries. Corruption continues to be an impediment to attracting foreign direct investment and Latvia's low birth rate and decreasing population are major challenges to its long-term economic vitality.

Latvia's economy experienced GDP growth of more than 10% per year during 2006-07, but entered a severe recession in 2008 as a result of an unsustainable current account deficit and large debt exposure amid the slowing world economy. Triggered by the collapse of the second largest bank, GDP plunged 18% in 2009. The economy has yet to return to pre-crisis levels in real terms despite strong growth, especially in the export sector. Continued gains in competitiveness and investment will be key to maintaining economic growth, especially in light of unfavorable demographic trends.

The IMF, EU, and other international donors provided substantial financial assistance to Latvia as part of an agreement to defend the currency's peg to the euro in exchange for the government's commitment to stringent austerity measures. The IMF/EU program successfully concluded in December 2011, although, the austerity measures have imposed large social costs. The majority of companies, banks, and real estate have been privatized, although the state still holds sizable stakes in a few large enterprises, including 80% ownership of the Latvian national airline. Latvia officially joined the World Trade Organization in February 1999 and the EU in May 2004. Latvia also joined the euro zone in 2014 and the OECD in 2016.
Lebanon Lebanon has a free-market economy and a strong laissez-faire commercial tradition. The government does not restrict foreign investment; however, the investment climate suffers from red tape, corruption, arbitrary licensing decisions, complex customs procedures, high taxes, tariffs, and fees, archaic legislation, and weak intellectual property rights. The Lebanese economy is service-oriented; main growth sectors include banking and tourism.

The 1975-90 civil war seriously damaged Lebanon's economic infrastructure, cut national output by half, and derailed Lebanon's position as a Middle Eastern entrepot and banking hub. Following the civil war, Lebanon rebuilt much of its war-torn physical and financial infrastructure by borrowing heavily, mostly from domestic banks, which saddled the government with a huge debt burden. Pledges of economic and financial reforms made at separate international donor conferences during the 2000s have mostly gone unfulfilled, including those made during the Paris III Donor Conference in 2007, following the July 2006 war.

Spillover from the Syrian conflict, including the influx of more than 1.1 million registered Syrian refugees, has increased internal tension and slowed economic growth to the 1-2% range in 2011-16, after four years of averaging 8% growth. Syrian refugees have increased the labor supply, but are blamed for pushing more Lebanese into unemployment. Chronic fiscal deficits have increased Lebanon’s debt-to-GDP ratio, the third highest in the world; most of the debt is held internally by Lebanese banks. Weak economic growth limits tax revenues, while the largest government expenditures remain debt servicing, salaries for government workers, and transfers to the electricity sector. These limitations constrain other government spending, limiting its ability to invest in necessary infrastructure improvements, such as water, electricity, and transportation.
Lesotho Small, mountainous, and completely landlocked by South Africa, Lesotho depends on a narrow economic base of textile manufacturing, agriculture, remittances, and regional customs revenue. About three-fourths of the people live in rural areas and engage in animal herding and subsistence agriculture, although Lesotho produces less than 20% of the nation's demand for food. Agriculture is vulnerable to weather and climate variability.

Lesotho relies on South Africa for much of its economic activity; Lesotho imports 90% of the goods it consumes from South Africa, including most agricultural inputs. Households depend heavily on remittances from family members working in South Africa in mines, on farms, and as domestic workers, though mining employment has declined substantially since the 1990s. Lesotho is a member of the Southern Africa Customs Union (SACU), and revenues from SACU accounted for roughly 44% of total government revenue in 2014. Lesotho also gains royalties from the South African Government for water transferred to South Africa from a dam and reservoir system in Lesotho. However, the government continues to strengthen its tax system to reduce dependency on customs duties and other transfers.

The government maintains a large presence in the economy - government consumption accounted for 27% of GDP in 2016. The government remains Lesotho's largest employer; in 2014-15, the government wage bill rose to 21% of GDP – the largest in sub-Saharan Africa. Lesotho's largest private employer is the textile and garment industry - approximately 36,000 Basotho, mainly women, work in factories producing garments for export to South Africa and the US. Diamond mining in Lesotho has grown in recent years and accounts for nearly 9% of GDP. Lesotho managed steady GDP growth at an average of 4.5% from 2010 to 2014 but poverty remains widespread around 57% of the total population.
Liberia Liberia is a low-income country that relies heavily on foreign assistance and remittances from the diaspora. It is richly endowed with water, mineral resources, forests, and a climate favorable to agriculture. Its principal exports are iron ore, rubber, diamonds, and gold. Palm oil and cocoa are emerging as new export products. The government has attempted to revive raw timber extraction and is encouraging oil exploration.

In the 1990s and early 2000s, civil war and government mismanagement destroyed much of Liberia's economy, especially infrastructure in and around the capital. Much of the conflict was fueled by control over Liberia’s natural resources. With the conclusion of fighting and the installation of a democratically elected government in 2006, businesses that had fled the country began to return. The country achieved high growth during the period 2010-13 due to favorable world prices for its commodities. However, during the 2014-2015 Ebola crisis, the economy declined and many foreign-owned businesses departed with their capital and expertise. The epidemic forced the government to divert scarce resources to combat the spread of the virus, reducing funds available for needed public investment. The cost of addressing the Ebola epidemic coincided with decreased economic activity reducing government revenue, although higher donor support significantly offset this loss. During the same period, global commodities prices for key exports fell and have yet to recover to pre-Ebola levels.

In 2017, gold is expected to be a key driver of growth, as a new mining project begins its first full year of production, and iron ore exports are also expected to improve as Arcelor Mittal opens new mines at Mount Gangra. The completion of the rehabilitation of the Mount Coffee Hydroelectric Dam in 2017 will increase electricity production to support ongoing and future economic activity, although electricity tariffs remain high relative to other countries in the region and transmission infrastructure is limited. Scheduled presidential and legislative elections in October 2017 will generate election-related spending pressures. Revitalizing the economy in the future will depend on economic diversification, increasing investment and trade, higher global commodity prices, sustained foreign aid and remittances, development of infrastructure and institutions, combating corruption, and maintaining political stability and security.
Libya Libya's economy, almost entirely dependent on oil and gas exports, has struggled since 2014 as the country plunged into civil war and world oil prices dropped to seven-year lows. In early 2015, armed conflict between rival forces for control of the country’s largest oil terminals caused a decline in Libyan crude oil production, which never recovered to more than one-third of the average pre-Revolution highs of 1.6 million barrels per day. The Central Bank of Libya continued to pay government salaries to a majority of the Libyan workforce and to fund subsidies for fuel and food, resulting in an estimated budget deficit of about 20% of GDP in 2016.

Libya’s economic transition away from QADHAFI’s notionally socialist model has completely stalled as political chaos persists and security continues to deteriorate. Libya’s leaders have hindered economic development by failing to use its financial resources to invest in national infrastructure. The country suffers from widespread power outages in its largest cities, caused by shortages of fuel for power generation. Living conditions, including access to clean drinking water, medical services, and safe housing, have all declined as the civil war has forced more people to become internally displaced, further straining local resources.

Extremists affiliated with the Islamic State of Iraq and the Levant (ISIL) attacked Libyan oilfields in the first half of 2015; ISIL has a presence in many cities across Libya including near oil infrastructure, threatening future government revenues from oil and gas.
Liechtenstein Despite its small size and lack of natural resources, Liechtenstein has developed into a prosperous, highly industrialized, free-enterprise economy with a vital financial service sector and the third highest per capita income in the world, after Qatar and Luxembourg. The Liechtenstein economy is widely diversified with a large number of small businesses. Low business taxes - a flat tax of 12.5% on the income is applied - and easy incorporation rules have induced many holding companies to establish nominal offices in Liechtenstein, providing 30% of state revenues.

The country participates in a customs union with Switzerland and uses the Swiss franc as its national currency. It imports more than 90% of its energy requirements. Liechtenstein has been a member of the European Economic Area (an organization serving as a bridge between the European Free Trade Association and the EU) since May 1995. The government is working to harmonize its economic policies with those of an integrated Europe.

Since 2008, Liechtenstein has faced renewed international pressure - particularly from Germany and the US - to improve transparency in its banking and tax systems. In December 2008, Liechtenstein signed a Tax Information Exchange Agreement with the US. Upon Liechtenstein's conclusion of 12 bilateral information-sharing agreements, the OECD in October 2009 removed the principality from its "grey list" of countries that had yet to implement the organization's Model Tax Convention. By the end of 2010, Liechtenstein had signed 25 Tax Information Exchange Agreements or Double Tax Agreements. In 2011, Liechtenstein joined the Schengen area, which allows passport-free travel across 26 European countries.
Lithuania After the country declared independence from the Soviet Union in 1990, Lithuania faced an initial dislocation that is typical during transitions from a planned economy to a free-market economy. Macroeconomic stabilization policies, including privatization of most state-owned enterprises, and a strong commitment to a currency board arrangement led to an open and rapidly growing economy and rising consumer demand. Foreign investment and EU funding aided in the transition. Lithuania joined the WTO in May 2001, the EU in May 2004, and the euro zone in January 2015, and is now working to complete the OECD accession roadmap it received in July 2015.

The Lithuanian economy was severely hit by the 2008-09 global financial crisis, but it has rebounded and become one of the fastest growing in the EU. In 2015, Russia was Lithuania’s largest trading partner, followed by Poland, Germany, and Latvia; goods and services trade between the US and Lithuania totaled $2.2 billion.

Lithuania’s ongoing recovery hinges on improving the business environment, especially by liberalizing labor laws, and improving competitiveness and export growth, the latter of which has been hampered by economic slowdowns in the EU and Russia. In addition, a steady outflow of young and highly educated people is causing a shortage of skilled labor. Lithuania opened a self-financed liquefied natural gas terminal in January 2015, providing the first non-Russian supply of natural gas to the Baltic States and reducing Lithuania’s dependence on Russian gas from 100% to approximately 30% in 2016.
Luxembourg This small, stable, high-income economy has historically featured solid growth, low inflation, and low unemployment. Luxembourg, the only Grand Duchy in the world, is a landlocked country in northwestern Europe surrounded by Belgium, France, and Germany. Despite its small landmass and small population, Luxembourg is the second-wealthiest country in the world when measured on a gross domestic product (PPP) per capita basis. Luxembourg has one of the highest current account surpluses as a share of GDP in the euro zone, and it maintains a healthy budgetary position and the lowest public debt level in the region.

Since 2002, the Luxembourg Government has proactively implemented policies and programs to support economic diversification and to attract foreign direct investment. The government focused on key innovative industries that showed promise for supporting economic growth: logistics, information and communications technology (ICT); health technologies, including biotechnology and biomedical research; clean energy technologies;, and most recently, space technology and financial services technologies. The economy has evolved and flourished, posting a strong GDP growth rate – projected at 4.5% in 2017-2018, far outpacing the European average of 1.8%.

Luxembourg remains a financial powerhouse – the financial sector accounts for more than 35% of GDP - due to the exponential growth of the investment fund sector through the launch and development of cross-border funds (UCITS) in the 1990s. Luxembourg is the world’s second-largest investment fund asset domicile, after the US, with $4 trillion of assets in custody in financial institutions.

Luxembourg has lost some of its advantage as a favorable tax location because of OECD and EU pressure, as well as the “LuxLeaks” scandal, which revealed advantageous tax treatments offered to foreign corporations. In 2015, the government’s compliance with EU requirements to implement automatic exchange of tax information on savings accounts - thus ending banking secrecy - has constricted banking activity. Likewise, changes to the way EU members collect taxes from e-commerce has cut Luxembourg’s sales tax revenues, requiring the government to raise additional levies and to reduce some direct social benefits as part of the tax reform package of 2017.
Macau Since opening up its locally-controlled casino industry to foreign competition in 2001, Macau has attracted tens of billions of dollars in foreign investment, transforming the territory into one of the world's largest gaming centers. Macau's gaming and tourism businesses were fueled by China's decision to relax travel restrictions on Chinese citizens wishing to visit Macau. In 2016, Macau's gaming-related taxes accounted for more than 76% of total government revenue.

Macau's economy slowed dramatically in 2009 as a result of the global economic slowdown, but strong growth resumed in the 2010-13 period, largely on the back of tourism from mainland China and the gaming sectors. In 2015, this city of 646,800 hosted nearly 30.7 million visitors. Almost 67% came from mainland China. Macau's traditional manufacturing industry has slowed greatly since the termination of the Multi-Fiber Agreement in 2005. Services export — primarily gaming — increasingly has driven Macau’s economic performance. Mainland China’s ongoing anti-corruption campaign has brought Macau’s gambling boom to a halt, with spending in casinos contracting 34.3% in 2015. As a result, Macau's inflation-adjusted GDP contracted 20.3% in 2015, down from double-digit expansion rates in the period 2010-13, and another 4.7% in 2016.

Macau continues to face the challenges of managing its growing casino industry, risks from money-laundering activities, and the need to diversify the economy away from heavy dependence on gaming revenues. Macau's currency, the pataca, is closely tied to the Hong Kong dollar, which is also freely accepted in the territory.
Macedonia Since its independence in 1991, Macedonia has made progress in liberalizing its economy and improving its business environment. Its low tax rates and free economic zones have helped to attract foreign investment, which is still low relative to the rest of Europe. Corruption and weak rule of law remain significant problems. Some businesses complain of opaque regulations and unequal enforcement of the law.

Macedonia’s economy is closely linked to Europe as a customer for exports and source of investment, and has suffered as a result of prolonged weakness in the euro zone. Unemployment has remained consistently high at about 23%, but may be overstated based on the existence of an extensive gray market, estimated to be between 20% and 45% of GDP, which is not captured by official statistics.

Macedonia is working to build a country-wide natural gas pipeline and distribution network. Currently, Macedonia receives its small natural gas supplies from Russia via Bulgaria. In 2016, Macedonia signed a memorandum of understanding with Greece to build an interconnector that could connect to the Trans-Adriatic Pipeline that will traverse the region once complete, or to an LNG import terminal in Greece.

Macedonia maintained macroeconomic stability through the global financial crisis by conducting prudent monetary policy, which keeps the domestic currency pegged to the euro, and inflation at a low level. However, in the last two years, the internal political crisis has hampered economic performance, with GDP slowing in 2016, and both domestic private and public investments declining. Fiscal policies were lax, with unproductive public expenditures, including subsidies and pension increases, and rising guarantees for the debt of state owned enterprises, and fiscal targets were consistently missed. In 2016, public debt reached 50.5% of GDP before being revised down to 47.8% of GDP by year’s end, still relatively low compared to its Western Balkan neighbors and the rest of Europe. In 2016, Macedonia issued a Eurobond worth approximately $495 million to finance 2016 and part of 2017 budget needs.
Madagascar Madagascar is a free market economy with many untapped natural resources, but no capital markets, a weak judicial system, poorly enforced contracts, and rampant government corruption. The economy faces long-term challenges to improve education, healthcare, and the environment. Agriculture, including fishing and forestry, is a mainstay of the economy, accounting for more than one-fourth of GDP and employing roughly 80% of the population. Deforestation and erosion, aggravated by bushfire and the use of firewood as the primary source of fuel, are serious concerns.

After discarding socialist economic policies in the mid-1990s, Madagascar followed a World Bank- and IMF-led policy of privatization and liberalization until the onset of a political crisis, which lasted from 2009 to 2013. The free market strategy had placed the country on a slow and steady growth path from an extremely low starting point. Exports of apparel boomed after gaining duty-free access to the US in 2000; however, Madagascar's failure to comply with the requirements of the African Growth and Opportunity Act (AGOA) led to the termination of the country's duty-free access in January 2010, a sharp fall in textile production, and a loss of more than 100,000 jobs.

Madagascar regained AGOA access in January 2015 following the democratic election of a new president the previous year. In November 2015, the IMF approved a Rapid Credit Facility to Madagascar worth about $42.1 million to help the government meet its balance of payments needs. The IMF judged that Madagascar had demonstrated satisfactory performance on macroeconomic performance and structural reforms, and in mid-2016 approved another $304 million extended credit facility for the country. GDP growth is expected around 2.8% per year in 2016-17, due to underperformance in agriculture.
Malawi Landlocked Malawi ranks among the world's most densely populated and least developed countries. The country’s economic performance has historically been constrained by policy inconsistency, macroeconomic instability, limited connectivity to the region and the world, poor infrastructure, rampant corruption, high population growth, and poor health and education outcomes that limit labor productivity. The economy is predominately agricultural with about 80% of the population living in rural areas. Agriculture accounts for about one-third of GDP and 80% of export revenues. The performance of the tobacco sector is key to short-term growth as tobacco accounts for more than half of exports.

The economy depends on substantial inflows of economic assistance from the IMF, the World Bank, and individual donor nations. In 2006, Malawi was approved for relief under the Heavily Indebted Poor Countries (HIPC) program but recent increases in domestic borrowing mean that debt servicing in 2016 exceeded the levels prior to HIPC debt relief. President MUTHARIKA launched the Public Financial Management and Public Sector reform programs upon taking office in 2014 to increase accountability following the 2013 “Cashgate” scandal.

Heavily dependent on rain-fed agriculture, with corn being the staple crop, Malawi’s economy was hit hard by the El Nino-driven drought in 2015 and 2016. The drought also slowed economic activity, led to two consecutive years of declining economic growth, and contributed to high inflation rates. Following a successful humanitarian response in 2016 and 2017 providing food assistance to 6.7 million people - 40% of the population - and increased transparency by agricultural parastatals, the economy has stabilized and inflation is dropping.
Malaysia Malaysia, an upper middle-income country, has transformed itself since the 1970s from a producer of raw materials into a multi-sector economy. Under current Prime Minister NAJIB, Malaysia is attempting to achieve high-income status by 2020 and to move further up the value-added production chain by attracting investments in high technology, knowledge-based industries and services. NAJIB's Economic Transformation Program is a series of projects and policy measures intended to accelerate the country's economic growth. The government has also taken steps to liberalize some services sub-sectors. Malaysia is vulnerable to a fall in world commodity prices or a general slowdown in global economic activity.

The NAJIB administration is continuing efforts to boost domestic demand and reduce the economy's dependence on exports. Domestic demand continues to anchor economic growth, supported mainly by private consumption, which accounts for 53% of GDP. Nevertheless, exports - particularly of electronics, oil and gas, and palm oil - remain a significant driver of the economy. In 2015, gross exports of goods and services were equivalent to 73% of GDP. The oil and gas sector supplied about 22% of government revenue in 2015, down significantly from prior years amid a decline in commodity prices and diversification of government revenues. Malaysia has embarked on a fiscal reform program aimed at achieving a balanced budget by 2020, including rationalization of subsidies and the 2015 introduction of a 6% value added tax. Sustained low commodity prices throughout the period not only strained government finances, but also shrunk Malaysia’s current account surplus and weighed heavily on the Malaysian ringgit, which was among the region’s worst performing currencies during 2015. The ringgit rebounded in early 2016, but hit new lows following the US presidential election amid a broader selloff of emerging market assets.

Bank Negara Malaysia (the central bank) maintains adequate foreign exchange reserves; a well-developed regulatory regime has limited Malaysia's exposure to riskier financial instruments, although it remains vulnerable to volatile global capital flows. In order to increase Malaysia’s competitiveness, Prime Minister NAJIB raised possible revisions to the special economic and social preferences accorded to ethnic Malays under the New Economic Policy of 1970, but retreated in 2013 after he encountered significant opposition from Malay nationalists and other vested interests. In September 2013 NAJIB launched the new Bumiputra Economic Empowerment Program, policies that favor and advance the economic condition of ethnic Malays.

Malaysia signed the 12-nation Trans-Pacific Partnership (TPP) free trade agreement in February 2016, although the future of the TPP remains unclear following the US withdrawal from the agreement. Along with nine other ASEAN members, Malaysia established the ASEAN Economic Community in 2015, which aims to advance regional economic integration.
Maldives Maldives has quickly become a middle-income country, driven by the rapid growth of its tourism and fisheries sectors, but the country still contends with a large and growing fiscal deficit. Economic growth slowed to 2.8% in 2015, mainly because of a decline in tourists from China and Russia. Despite lower growth, tourism-related tax receipts increased by 13% in 2015 because of higher tax rates. This increase in tax receipts led to higher usable foreign exchange reserves that helped partially fund increases in construction related imports.

In 2015, Maldives’ Parliament passed a constitutional amendment legalizing foreign ownership of land; foreign land-buyers must reclaim at least 70% of the desired land from the ocean and invest at least $1 billion in a construction project approved by Parliament.

Diversifying the economy beyond tourism and fishing, reforming public finance, increasing employment opportunities, and combating corruption, cronyism, and a growing drug problem are near-term challenges facing the government. Over the longer term, Maldivian authorities worry about the impact of erosion and possible global warming on their low-lying country; 80% of the area is 1 meter or less above sea level.
Mali Among the 25 poorest countries in the world, landlocked Mali depends on gold mining and agricultural exports for revenue. The country's fiscal status fluctuates with gold and agricultural commodity prices and the harvest; cotton and gold exports make up around 80% of export earnings. Mali remains dependent on foreign aid.

Economic activity is largely confined to the riverine area irrigated by the Niger River; about 65% of Mali’s land area is desert or semidesert. About 10% of the population is nomadic and about 80% of the labor force is engaged in farming and fishing. Industrial activity is concentrated on processing farm commodities. The government subsidizes the production of cereals to decrease the country’s dependence on imported foodstuffs and to reduce its vulnerability to food price shocks.

Mali is developing its iron ore extraction industry to diversify foreign exchange earnings away from gold, but the pace will depend on global price trends. Although the political coup in 2012 slowed Mali’s growth, the economy has since bounced back, with GDP growth above 5% in 2014-16, although physical insecurity, high population growth, corruption, weak infrastructure, and low levels of human capital continue to constrain economic development. Higher rainfall should help boost cotton output in 2017, and the country’s 2017 budget calls for a more than 10% increase in spending, much of which will be devoted to infrastructure and agriculture. However, strong downside risks exist in the form of renewed political turmoil. Corruption is endemic.
Malta Malta’s free market economy – the smallest economy in the euro-zone – relies heavily on trade in both goods and services, principally with Europe. Malta produces less than a quarter of its food needs, has limited fresh water supplies, and has few domestic energy sources. Malta's economy is dependent on foreign trade, manufacturing, and tourism. Malta joined the EU in 2004 and adopted the euro on 1 January 2008.

Malta has weathered the euro-zone crisis better than most EU member states due to a low debt-to-GDP ratio and financially sound banking sector. It maintains one of the lowest unemployment rates in Europe, and growth has fully recovered since the 2009 recession. In 2014 through 2016, Malta led the euro zone in growth, expanding more than 4.5% per year.

Malta’s services sector continues to grow, with sustained growth in the financial services and online gaming sectors. Advantageous tax schemes remained attractive to foreign investors, though EU discussions of anti-tax avoidance measures have raised concerns among Malta’s financial services and insurance providers, as the measures could have a significant impact on those sectors. The tourism sector also continued to grow, with 2016 showing record-breaking numbers of both air and cruise passenger arrivals.

Malta’s GDP growth remains strong and is supported by a strong labor market. The government has implemented new programs, including free childcare, to encourage increased labor participation. The high cost of borrowing and small labor market remain potential constraints to future economic growth. Increasingly, other EU and European migrants are relocating to Malta for employment, though wages have remained low compared to other European countries. Inflation remains low.
Marshall Islands US assistance and lease payments for the use of Kwajalein Atoll as a US military base are the mainstay of this small island country. Agricultural production, primarily subsistence, is concentrated on small farms; the most important commercial crops are coconuts and breadfruit. Industry is limited to handicrafts, tuna processing, and copra. Tourism holds some potential. The islands and atolls have few natural resources, and imports exceed exports.

The Marshall Islands received roughly $1 billion in aid from the US during the period 1986-2001 under the original Compact of Free Association (Compact). In 2002 and 2003, the US and the Marshall Islands renegotiated the Compact's financial package for a 20-year period, 2004 to 2024. Under the amended Compact, the Marshall Islands will receive roughly $1.5 billion in direct US assistance. Under the amended Compact, the US and Marshall Islands are also jointly funding a Trust Fund for the people of the Marshall Islands that will provide an income stream beyond 2024, when direct Compact aid ends.
Mauritania Mauritania's economy is dominated by extractive industries (oil and mines), fisheries and agriculture. Half the population still depends on farming and raising livestock, even though many nomads and subsistence farmers were forced into the cities by recurrent droughts in the 1970s, 1980s and 2000s. Recently, GDP growth has been driven largely by foreign investment in the mining and oil sectors.

Mauritania's extensive mineral resources include iron ore, gold, copper, gypsum, and phosphate rock, and exploration is ongoing for tantalum, uranium, crude oil, and natural gas. Extractive commodities make up about three-quarters of Mauritania's total exports, subjecting the economy to price swings in world commodity markets. Mining is also a growing source of government revenue, rising from 13% to 30% of total revenue from 2006 to 2016. The nation's coastal waters are among the richest fishing areas in the world, and fishing accounts for about 20% of budget revenues, 45% of foreign currency earnings. Mauritania processes a total of 1,800,000 tons of fish per year, but overexploitation by foreign and national fleets threaten the sustainability of this key source of revenue.

The economy is highly sensitive to international food and extractive commodity prices. Other risks to Mauritania's economy include its recurring droughts, dependence on foreign aid and investment, and insecurity in neighboring Mali, as well as significant shortages of infrastructure, institutional capacity, and human capital. Mauritania has sought additional IMF support by focusing efforts on poverty reduction. Investment in agriculture and infrastructure are the largest components of the country’s public expenditures.
Mauritius Since independence in 1968, Mauritius has undergone a remarkable economic transformation from a low-income, agriculturally based economy to a diversified, upper middle-income economy with growing industrial, financial, and tourist sectors. Mauritius has achieved steady growth over the last several decades, resulting in more equitable income distribution, increased life expectancy, lowered infant mortality, and a much-improved infrastructure.

The economy currently depends on sugar, tourism, textiles and apparel, and financial services, but is expanding into fish processing, information and communications technology, and hospitality and property development. Sugarcane is grown on about 90% of the cultivated land area and accounts for 15% of export earnings. The government's development strategy centers on creating vertical and horizontal clusters of development in these sectors. Mauritius has attracted more than 32,000 offshore entities, many aimed at commerce in India, South Africa, and China. Investment in the banking sector alone has reached over $1 billion. Mauritius’ textile sector has taken advantage of the Africa Growth and Opportunity Act, a preferential trade program that allows duty free access to the US market, with Mauritian exports to the US growing by 40% from 2000 to 2014.

Mauritius' sound economic policies and prudent banking practices helped mitigate negative effects of the global financial crisis in 2008-09. GDP grew in the 3-4% per year range in 2010-16, and the country continues to expand its trade and investment outreach around the globe. Growth in the US and Europe fostered goods and services exports, including tourism, while lower oil prices kept inflation low in 2016. Mauritius continues to rank first in sub-Saharan Africa on the World Bank’s Doing Business Report.
Mexico Mexico's $2.2 trillion economy has become increasingly oriented toward manufacturing since the North American Free Trade Agreement (NAFTA) entered into force in 1994. Per capita income is roughly one-third that of the US; income distribution remains highly unequal.

Mexico has become the US' second-largest export market and third-largest source of imports. In 2016, two-way trade in goods and services exceeded $579 billion. Mexico has free trade agreements with 46 countries, putting more than 90% of trade under free trade agreements. In 2012, Mexico formed the Pacific Alliance with Peru, Colombia, and Chile.

Mexico's current government, led by President Enrique PENA NIETO, has emphasized economic reforms, passing and implementing sweeping energy, financial, fiscal, and telecommunications reform legislation, among others, with the long-term aim to improve competitiveness and economic growth across the Mexican economy. Mexico began holding public auctions of exploration and development rights to select oil and gas resources in 2015 as a part of reforms that allow for private investment in the oil, gas, and electricity sectors. Mexico held its fourth auction in December 2016 and allocated 8 of 10 deepwater fields, demonstrating Mexico’s capacity to attract investment amid low oil prices. The government will allocate additional fields in 2017.

Since 2013, Mexico’s economic growth has averaged 2% annually, falling short of private-sector expectations that President PENA NIETO’s sweeping reforms would bolster economic prospects. Growth is predicted to remain below potential given falling oil production, weak oil prices, structural issues such as low productivity, high inequality, a large informal sector employing over half of the workforce, weak rule of law, and corruption. Over the medium-term, the economy is vulnerable to global economic pressures, such as lower external demand, rising interest rates, and low oil prices - approximately 10% of government revenue comes from the state-owned oil company, PEMEX.
Micronesia, Federated States of Economic activity consists largely of subsistence farming and fishing, and government, which employs two-thirds of the adult working population and receives funding largely - 58% in 2013 – from Compact of Free Association assistance provided by the US. The islands have few commercially valuable mineral deposits. The potential for tourism is limited by isolation, lack of adequate facilities, and limited internal air and water transportation.

Under the terms of the original Compact, the US provided $1.3 billion in grants and aid from 1986 to 2001. The US and the Federated States of Micronesia (FSM) negotiated a second (amended) Compact agreement in 2002-03 that took effect in 2004. The amended Compact runs for a 20-year period to 2023; during which the US will provide roughly $2.1 billion to the FSM. The amended Compact also develops a trust fund for the FSM that will provide a comparable income stream beyond 2024 when Compact grants end.

The country's medium-term economic outlook appears fragile because of dependence on US assistance and lackluster performance of its small and stagnant private sector.
Moldova Despite recent progress, Moldova remains one of the poorest countries in Europe. With a moderate climate and productive farmland, Moldova's economy relies heavily on its agriculture sector, featuring fruits, vegetables, wine, and tobacco. Moldova also depends on annual remittances of about $1.12 billion from the roughly one million Moldovans working in Europe, Russia, and other former Soviet Bloc countries.

With few natural energy resources, Moldova imports almost all of its energy supplies from Russia and Ukraine. Moldova's dependence on Russian energy is underscored by a more than $5 billion debt to Russian natural gas supplier Gazprom, largely the result of unreimbursed natural gas consumption in the breakaway region of Transnistria. Moldova and Romania inaugurated the Ungheni-Iasi natural gas interconnector project in August 2014. The 43-kilometer pipeline between Moldova and Romania, allows for both the import and export of natural gas. Several technical and regulatory delays kept gas from flowing into Moldova until March 2015. Romanian gas exports to Moldova are largely symbolic. Moldova hopes to build a pipeline connecting Ungheni to Chisinau, bringing the gas to Moldovan population centers.

The government's stated goal of EU integration has resulted in some market-oriented progress. Moldova experienced better than expected economic growth in 2014 due to increased agriculture production, to economic policies adopted by the Moldovan government since 2009, and to the receipt of EU trade preferences. During fall 2014, Moldova signed an Association Agreement and a Deep and Comprehensive Free Trade Agreement with the EU, connecting Moldovan products to the world’s largest market. Still, a $1 billion asset-stripping heist of Moldovan banks in late 2014 delivered a significant shock to the economy in 2015; a subsequent bank bailout increased inflationary pressures and contributed to the depreciation of the leu. Moldova’s growth has also been hampered by endemic corruption and a Russian import ban on Moldova’s agricultural products. The government’s push to restore stability and implement meaningful reform led to the approval of a $179 million three-year IMF program focused on improving the banking and fiscal environments.

Over the longer term, Moldova's economy remains vulnerable to corruption, political uncertainty, weak administrative capacity, vested bureaucratic interests, higher fuel prices, Russian political and economic pressure, and unresolved separatism in Moldova's Transnistria region.
Monaco Monaco, bordering France on the Mediterranean coast, is a popular resort, attracting tourists to its casino and pleasant climate. The principality also is a banking center and has successfully sought to diversify into services and small, high-value-added, nonpolluting industries. The state retains monopolies in a number of sectors, including tobacco, the telephone network, and the postal service. Living standards are high, roughly comparable to those in prosperous French metropolitan areas.

The state has no income tax and low business taxes and thrives as a tax haven both for individuals who have established residence and for foreign companies that have set up businesses and offices. Monaco, however, is not a tax-free shelter; it charges nearly 20% value-added tax, collects stamp duties, and companies face a 33% tax on profits unless they can show that three-quarters of profits are generated within the principality. Monaco was formally removed from the OECD's "grey list" of uncooperative tax jurisdictions in late 2009, but continues to face international pressure to abandon its banking secrecy laws and help combat tax evasion. In October 2014, Monaco officially became the 84th jurisdiction participating in the OECD’s Multilateral Convention on Mutual Administrative Assistance in Tax Matters, an effort to combat offshore tax avoidance and evasion.

Monaco's reliance on tourism and banking for its economic growth has left it vulnerable to a downturn in France and other European economies which are the principality's main trade partners. In 2009, Monaco's GDP fell by 11.5% as the euro-zone crisis precipitated a sharp drop in tourism and retail activity and home sales. A modest recovery ensued in 2010 and intensified in 2013, with GDP growth of more than 9%, but Monaco's economic prospects remain uncertain, and tied to future euro-zone growth.
Mongolia Foreign direct investment in Mongolia's extractive industries – which are based on extensive deposits of copper, gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten - has transformed Mongolia's landlocked economy from its traditional dependence on herding and agriculture. Exports now account for more than 40% of GDP. Mongolia depends on China for more than 60% of its external trade - China receives some 90% of Mongolia's exports and supplies Mongolia with more than one-third of its imports. Mongolia also relies on Russia for 90% of its energy supplies, leaving it vulnerable to price increases. Remittances from Mongolians working abroad, particularly in South Korea, are significant.

Soviet assistance, at its height one-third of GDP, disappeared almost overnight in 1990 and 1991 at the time of the dismantlement of the USSR. The following decade saw Mongolia endure both deep recession, because of political inaction, and natural disasters, as well as strong economic growth, because of market reforms and extensive privatization of the formerly state-run economy. The country opened a fledgling stock exchange in 1991. Mongolia joined the WTO in 1997 and seeks to expand its participation in regional economic and trade regimes.

Growth averaged nearly 9% per year in 2004-08 largely because of high copper prices globally and new gold production. By late 2008, Mongolia was hit by the global financial crisis and Mongolia's real economy contracted 1.3% in 2009. In early 2009, the IMF reached a $236 million Stand-by Arrangement with Mongolia and it emerged from the crisis with a stronger banking sector and better fiscal management. In October 2009, Mongolia passed long-awaited legislation on an investment agreement to develop the Oyu Tolgoi (OT) mine, among the world's largest untapped copper-gold deposits. However, a dispute with foreign investors developing OT called into question the attractiveness of Mongolia as a destination for foreign investment. This caused a severe drop in FDI, and a slowing economy, leading to the dismissal of Prime Minister ALTANKHUYAG in November 2014. The economy had grown more than 10% per year between 2011 and 2013 - largely on the strength of commodity exports and high government spending - before slowing to 7.8% in 2014, 2.3% in 2015, and 1% in 2016.

The May 2015 agreement with Rio Tinto to restart the OT mine and the subsequent $4.4 billion finance package signing in December 2015 stemmed the loss of investor confidence. The current government has made restoring investor trust and reviving the economy its top priority, but has failed to invigorate the economy in the face of the large dropoff in foreign direct investment, mounting external debt, and a sizeable budget deficit. However, Mongolia reached staff-level agreement with the IMF in February 2017 on an Extended Fund Facility program, and once approved by the IMF Board, the program is expected to improve Mongolia’s long-term fiscal and economic stability.
Montenegro Montenegro's economy is transitioning to a market system. As of 2015, around 90% of Montenegrin state-owned companies have been privatized, including 100% of banking, telecommunications, and oil distribution. Tourism, which accounts for roughly 20% of Montenegro’s GDP, brings in three times as many visitors as Montenegro’s total population every year. Several new luxury tourism complexes are in various stages of development along the coast, and a number are being offered in connection with nearby boating and yachting facilities. In addition to tourism, energy and agriculture are considered two distinct pillars of the economy. Only 20% of Montenegro’s hydropower potential is utilized. Montenegro plans to become a net energy exporter, and the construction of an underwater cable to Italy, which will be completed by 2018, will help meet its goal.

Montenegro uses the euro as its domestic currency, though it is not an official member of the euro zone. In January 2007, Montenegro joined the World Bank and IMF, and in December 2011, the WTO. Montenegro began negotiations to join the EU in 2012, having met the conditions set down by the European Council, which called on Montenegro to take steps to fight corruption and organized crime.

The government recognizes the need to remove impediments in order to remain competitive and open the economy to foreign investors. The biggest foreign investors in Montenegro are Russia, Italy, Cyprus, Denmark, Hungary and Serbia. Net foreign direct investment in 2016 reached $755 million and investment per capita is one of the highest in Europe.

Montenegro is currently planning major overhauls of its road and rail networks, and possible expansions of its air transportation system. In 2014, the Government of Montenegro selected two Chinese companies to construct a 41 km-long section of the country’s highway system. Construction will cost around $1.1 billion. Cheaper borrowing costs have stimulated Montenegro’s growing debt, which currently sits at 65.9% of GDP. Montenegro first instituted a value-added tax (VAT) in April 2003, and introduced differentiated VAT rates of 17% and 7% (for tourism) in January 2006. In May 2013, the Montenegrin Government raised the higher level VAT rate to 19%.
Montserrat Severe volcanic activity, which began in July 1995, has put a damper on this small, open economy. A catastrophic eruption in June 1997 closed the airport and seaports, causing further economic and social dislocation. Two-thirds of the 12,000 inhabitants fled the island. Some began to return in 1998 but lack of housing limited the number. The agriculture sector continued to be affected by the lack of suitable land for farming and the destruction of crops.

Prospects for the economy depend largely on developments in relation to the volcanic activity and on public sector construction activity. Half of the island remains uninhabitable. In January 2013, the EU announced the disbursement of a $55.2 million aid package to Montserrat in order to boost the country's economic recovery, with a specific focus on public finance management, public sector reform, and prudent economic management.
Morocco Morocco has capitalized on its proximity to Europe and relatively low labor costs to work towards building a diverse, open, market-oriented economy. Key sectors of the economy include agriculture, tourism, aerospace, automotive, phosphates, textiles, apparel, and subcomponents. Morocco has increased investment in its port, transportation, and industrial infrastructure to position itself as a center and broker for business throughout Africa. Industrial development strategies and infrastructure improvements - most visibly illustrated by a new port and free trade zone near Tangier - are improving Morocco's competitiveness.

In the 1980s, Morocco was a heavily indebted country before pursuing austerity measures and pro-market reforms, overseen by the IMF. Since taking the throne in 1999, King MOHAMMED VI has presided over a stable economy marked by steady growth, low inflation, and gradually falling unemployment, although poor harvests and economic difficulties in Europe contributed to an economic slowdown. To boost exports, Morocco entered into a bilateral Free Trade Agreement with the US in 2006 and an Advanced Status agreement with the EU in 2008. In late 2014, Morocco eliminated subsidies for gasoline, diesel, and fuel oil, dramatically reducing outlays that weighted on the country’s budget and current account. Subsidies on butane gas and certain food products remain in place. Morocco also seeks to expand its renewable energy capacity with a goal of making renewable more than 50% of installed electricity generation capacity by 2030.

Despite Morocco's economic progress, the country suffers from high unemployment, poverty, and illiteracy, particularly in rural areas. Key economic challenges for Morocco include reforming the education system and the judiciary.
Mozambique At independence in 1975, Mozambique was one of the world's poorest countries. Socialist policies, economic mismanagement, and a brutal civil war from 1977 to 1992 further impoverished the country. In 1987, the government embarked on a series of macroeconomic reforms designed to stabilize the economy. These steps, combined with donor assistance and with political stability since the multi-party elections in 1994, propelled the country’s GDP from $4 billion in 1993, following the war, to about $35 billion in 2016. Fiscal reforms, including the introduction of a value-added tax and reform of the customs service, have improved the government's revenue collection abilities.

In spite of these gains, more than half the population remains below the poverty line. Subsistence agriculture continues to employ the vast majority of the country's work force. Citizens rioted in September 2010 after fuel, water, electricity, and bread price increases were announced. In an attempt to lessen the negative impact on the population, the government implemented subsidies, decreased taxes and tariffs, and instituted other fiscal measures.

A substantial trade imbalance persists, although aluminum production from the Mozal Aluminum Smelter has significantly boosted export earnings in recent years. In 2012, the Mozambican Government took over Portugal's last remaining share in the Cahora Bassa Hydroelectricity Company, a significant contributor to the Southern African Power Pool. The government has plans to expand the Cahora Bassa Dam and build additional dams to increase its electricity exports and fulfill the needs of its burgeoning domestic industries.

Mozambique's once substantial foreign debt was reduced through forgiveness and rescheduling under the IMF's Heavily Indebted Poor Countries (HIPC) and Enhanced HIPC initiatives. However, in 2016, information surfaced revealing that the Mozambican Government was responsible for over $2 billion in government-backed loans originally secured between 2012-14 by state-owned defense and security companies without parliamentary approval or national budget inclusion, which prompted the IMF and international donors to halt direct budget support to the Government of Mozambique. This sizable external debt burden, donor withdrawal, elevated inflation, and currency depreciation contributed to weak growth in 2016 and forebode weaker economic growth in the next few years.

Mozambique grew at an average annual rate of 6%-8% in the decade leading up to 2015, one of Africa's strongest performances, but growth slowed in 2016 to about 3.5% as low commodity prices reduced export earnings. However, many forecasts predict an increase in growth in 2017 as coal exports grow. Two major international consortiums are seeking approval to develop massive natural gas deposits off the coast of Cabo Delgado province, in what has the potential to become the largest infrastructure project in Africa. The government predicts sales of liquefied natural gas from these projects could generate several billion dollars in revenues annually sometime after 2022.
Namibia Namibia’s economy is heavily dependent on the extraction and processing of minerals for export. Mining accounts for 11.5% of GDP, but provides more than 50% of foreign exchange earnings. Rich alluvial diamond deposits make Namibia a primary source for gem-quality diamonds. Marine diamond mining is increasingly important as the terrestrial diamond supply has dwindled. The rising cost of mining diamonds, especially from the sea, combined with increased diamond production in Russia and China, has reduced profit margins. Namibian authorities have emphasized the need to add value to raw materials, do more in-country manufacturing, and exploit the services market, especially in the logistics and transportation sectors.

Namibia is the world's fifth-largest producer of uranium. The Chinese-owned Husab uranium mine is expected to start producing uranium ore in 2017. Once the Husab mine reaches full production, Namibia is expected to become the world’s second-largest producer of uranium. Namibia also produces large quantities of zinc and is a smaller producer of gold and copper. Namibia's economy remains vulnerable to world commodity price fluctuations and drought.

Namibia normally imports about 50% of its cereal requirements; in drought years, food shortages are problematic in rural areas. A high per capita GDP, relative to the region, obscures one of the world's most unequal income distributions. A priority of the current government is poverty eradication. Despite a drought, real GDP growth remained strong in 2015 around 5.3% because of construction in the mining and housing sectors coupled with expansionary fiscal policy. GDP growth in 2016 slowed to 1%, however, due to contractions in both the construction and mining sectors, as well as the ongoing drought. Growth is expected to recover modestly in 2017 and 2018.

A five-year Millennium Challenge Corporation compact ended in September 2014. As an upper middle income country, Namibia is ineligible for a second compact. The Namibian economy is closely linked to South Africa with the Namibian dollar pegged one-to-one to the South African rand. Namibia receives 30%-40% of its revenues from the Southern African Customs Union (SACU); volatility in the size of Namibia's annual SACU allotment and global mineral prices complicates budget planning.
Nauru Revenues of this tiny island - a coral atoll with a land area of 21 square kilometers - traditionally have come from exports of phosphates. Few other resources exist, with most necessities being imported, mainly from Australia, its former occupier and later major source of support. Primary reserves of phosphates were exhausted and mining ceased in 2006, but mining of a deeper layer of "secondary phosphate" in the interior of the island began the following year. The secondary phosphate deposits may last another 30 years. Earnings from Nauru’s export of phosphate remains an important source of income. Few comprehensive statistics on the Nauru economy exist; estimates of Nauru's GDP vary widely.

The rehabilitation of mined land and the replacement of income from phosphates are serious long-term problems. In anticipation of the exhaustion of Nauru's phosphate deposits, substantial amounts of phosphate income were invested in trust funds to help cushion the transition and provide for Nauru's economic future.

Although revenue sources for government are limited, the opening of the Australian Regional Processing Center for asylum seekers since 2012 has sparked growth in the economy. Revenue derived from fishing licenses under the "vessel day scheme" has also boosted government income. Housing, hospitals, and other capital plant are deteriorating. The cost to Australia of keeping the Nauruan government and economy afloat continues to climb.
Navassa Island Subsistence fishing and commercial trawling occur within refuge waters.
Nepal Nepal is among the poorest and least developed countries in the world, with about one-quarter of its population living below the poverty line. Nepal is heavily dependent on remittances, which amount to as much as 30% of GDP. Agriculture is the mainstay of the economy, providing a livelihood for almost two-thirds of the population but accounting for only one-third of GDP. Industrial activity mainly involves the processing of agricultural products, including pulses, jute, sugarcane, tobacco, and grain.

Nepal has considerable scope for exploiting its potential in hydropower, with an estimated 42,000 MW of commercially feasible capacity. Nepal and India signed trade and investment agreements in 2014 that increase Nepal’s hydropower potential, but political uncertainty and a difficult business climate have hampered foreign investment.

Nepal was hit by massive earthquakes in early 2015, which damaged or destroyed infrastructure and homes and set back economic development. Political gridlock in the past several years and recent public protests, predominantly in the southern Tarai region, have hindered post-earthquake recovery and prevented much-needed economic reform. Additional challenges to Nepal's growth include its landlocked geographic location, persistent power shortages, and underdeveloped transportation infrastructure.
Netherlands The Netherlands, the sixth-largest economy in the European Union, plays an important role as a European transportation hub, with a persistently high trade surplus, stable industrial relations, and low unemployment. Industry focuses on food processing, chemicals, petroleum refining, and electrical machinery. A highly mechanized agricultural sector employs only 2% of the labor force but provides large surpluses for food-processing and underpins the country’s status as the world’s second largest agricultural exporter.

The Netherlands is part of the euro zone, and as such, its monetary policy is controlled by the European Central Bank. The Dutch financial sector is highly concentrated, with four commercial banks possessing over 80% of banking assets, and is four times the size of Dutch GDP.

In 2008, during the financial crisis, the government budget deficit hit 5.3% of GDP. Following a protracted recession from 2009 to 2013, during which unemployment doubled to 7.4% and household consumption contracted for four consecutive years, economic growth began inching forward in 2014. Since 2010, Prime Minister Mark RUTTE’s government has implemented significant austerity measures to improve public finances and has instituted broad structural reforms in key policy areas, including the labor market, the housing sector, the energy market, and the pension system. In 2016, the government budget returned to a surplus of 0.3% of GDP, with economic growth of 2.1%, and GDP per capita finally surpassed pre-crisis levels. The Dutch government projects steady but modest economic growth of 2.1% in 2017 and unemployment decreasing to 4.9%.
New Caledonia New Caledonia has 11% of the world's nickel reserves, representing the second largest reserves on the planet. Only a small amount of the land is suitable for cultivation, and food accounts for about 20% of imports. In addition to nickel, substantial financial support from France - equal to more than 15% of GDP - and tourism are keys to the health of the economy.

During 2009-10, France sent more development assistance to New Caledonia than to any of its other overseas territories. In October 2014, French Prime Minister Manuel VALLS confirmed financial support to New Caledonia totaling $500 million for the period 2016-20. The new government, which inherited a $112 million deficit in 2013, is expected to focus on bringing the territory’s budget back into balance.

With the gradual increase in the production of two new nickel plants in 2015, average production of metallurgical goods stood at a record level of 94 thousand tons. However, the sector is exposed to the high volatility of nickel prices. In April 2016, PM VALLS committed $180 million to support New Caledonia’s main nickel company, Societe Le Nickel.
New Zealand Over the past 40 years, the government has transformed New Zealand from an agrarian economy, dependent on concessionary British market access, to a more industrialized, free market economy that can compete globally. This dynamic growth has boosted real incomes, but left behind some at the bottom of the ladder and broadened and deepened the technological capabilities of the industrial sector.

Per capita income rose for 10 consecutive years until 2007 in purchasing power parity terms, but fell in 2008-09. Debt-driven consumer spending drove robust growth in the first half of the decade, fueling a large balance of payments deficit that posed a challenge for policymakers. Inflationary pressures caused the central bank to raise its key rate steadily from January 2004 until it was among the highest in the OECD in 2007 and 2008. The higher rate attracted international capital inflows, which strengthened the currency and housing market while aggravating the current account deficit. Rising house prices, especially in Auckland, have become a political issue in recent years, as well as a policy challenge in 2016 and 2017, as the ability to afford housing has declined for many.

The economy fell into recession before the start of the global financial crisis and contracted for five consecutive quarters in 2008 and 2009. In line with global peers, the central bank cut interest rates aggressively and the government developed fiscal stimulus measures. The economy pulled out of recession in 2009, and achieved 2%-3% growth from 2011 to 2016. Nevertheless, key trade sectors remain vulnerable to weak external demand and lower commodity prices. In the aftermath of the 2010 Canterbury earthquakes, the government has continued programs to expand export markets, develop capital markets, invest in innovation, raise productivity growth, and develop infrastructure, while easing its fiscal austerity. Expanding New Zealand’s network of free trade agreements remains a top foreign policy priority.
Nicaragua Nicaragua, the poorest country in Central America and the second poorest in the Western Hemisphere, has widespread underemployment and poverty. GDP growth of 4.7% in 2016 was insufficient to make a significant difference. Textiles and agriculture combined account for nearly 50% of Nicaragua's exports. Beef, coffee, and gold are Nicaragua’s top three export commodities.

The Dominican Republic-Central America-United States Free Trade Agreement has been in effect since April 2006 and has expanded export opportunities for many Nicaraguan agricultural and manufactured goods.

In 2013, the government granted a 50-year concession with the option for an additional 50 years to a newly formed Chinese-run company to finance and build an inter-oceanic canal and related projects, at an estimated cost of $50 billion. The canal construction has not started.
Nigeria Nigeria is one of Sub Saharan Africa’s largest economies and relies heavily on oil as its main source of foreign exchange earnings and government revenues. Following the 2008-09 global financial crises, the banking sector was effectively recapitalized and regulation enhanced. Since then, Nigeria’s economic growth has been driven by growth in agriculture, telecommunications, and services. Economic diversification and strong growth have not translated into a significant decline in poverty levels; however, over 62% of Nigeria's 170 million people still live in extreme poverty.

Despite its strong fundamentals, oil-rich Nigeria has been hobbled by inadequate power supply, lack of infrastructure, delays in the passage of legislative reforms, an inefficient property registration system, restrictive trade policies, an inconsistent regulatory environment, a slow and ineffective judicial system, unreliable dispute resolution mechanisms, insecurity, and pervasive corruption. Regulatory constraints and security risks have limited new investment in oil and natural gas, and Nigeria's oil production has contracted every year since 2012.

President BUHARI, elected in March 2015, has established a cabinet of economic ministers that includes several technocrats, and he has announced plans to increase transparency, diversify the economy away from oil, and improve fiscal management, but his reliance on the Central Bank governor has led to overwhelmingly protectionist policies aimed at defending the naira from further devaluation. President BUHARI ran on an anti-corruption platform, and has made some headway in alleviating corruption, such as an implementation of a Treasury Single Account that allows the government to better manage its resources. The government also is working to develop stronger public-private partnerships for roads, agriculture, and power.

Partly because of lower oil prices, Nigeria entered a recession in 2016. However, the medium-term outlook for Nigeria is positive, assuming oil output stabilizes and oil prices recover.
Niger Niger is a landlocked, sub-Saharan nation, whose economy centers on subsistence crops, livestock, and some of the world's largest uranium deposits. Agriculture contributes approximately 25% of GDP and provides livelihood for 87% of the population. The UN ranked Niger as the second least developed country in the world in 2016 due to multiple factors such as food insecurity, lack of industry, high population growth, a weak educational sector, and few prospects for work outside of subsistence farming and herding.

Since 2011 public debt has increased due to efforts to scale-up public investment, particularly that related to infrastructure, as well as due to increased security spending. The government relies on foreign donor resources for a large portion of its fiscal budget. The economy in recent years has been hurt by terrorist activity and kidnappings near its uranium mines and by instability in Mali and in the Diffa region of the country; concerns about security have resulted in increased support from regional and international partners on defense. Low uranium prices, demographics, and security expenditures may continue to put pressure on the government’s finances.

Future growth may be sustained by exploitation of oil, gold, coal, and other mineral resources. Although Niger has sizable reserves of oil, the prolonged drop in oil prices has reduced profitability. Food insecurity and drought remain perennial problems for Niger, and the government plans to invest more in irrigation. Niger’s three-year $131 million IMF Extended Credit Facility (ECF) agreement for the years 2012-15 was extended until the end of 2016. In February 2017, the IMF approved a new 3-year $134 million ECF. A $437 million Millennium Challenge Account compact for Niger, commencing in FY17, will focus on large-scale irrigation infrastructure development and community-based, climate-resilient agriculture, while promoting sustainable increases in agricultural productivity and sales.

Formal private sector investment needed for economic diversification and growth remains a challenge, given the country’s limited domestic markets, access to credit, and competitiveness. Although President ISSOUFOU is courting foreign investors, including those from the US, as of April 2017, there were no US firms operating in Niger.
Niue The economy suffers from the typical Pacific island problems of geographic isolation, few resources, and a small population. The agricultural sector consists mainly of subsistence gardening, although some cash crops are grown for export. Industry consists primarily of small factories for processing passion fruit, lime oil, honey, and coconut cream. The sale of postage stamps to foreign collectors is an important source of revenue.

Government expenditures regularly exceed revenues, and the shortfall is made up by critically needed grants from New Zealand that are used to pay wages to public employees. Economic aid allocation from New Zealand in FY13/14 was US$10.1 million. Niue has cut government expenditures by reducing the public service by almost half.

The island in recent years has suffered a serious loss of population because of emigration to New Zealand. Efforts to increase GDP include the promotion of tourism and financial services, although the International Banking Repeal Act of 2002 resulted in the termination of all offshore banking licenses.
Norfolk Island Norfolk Island is suffering from a severe economic downturn. Tourism, the primary economic activity, is the main driver of economic growth. The agricultural sector has become self-sufficient in the production of beef, poultry, and eggs.
Northern Mariana Islands The Northern Mariana Islands' economy benefits substantially from financial assistance from the US. In fiscal year 2013, federal grants accounted for 35.4% of the Commonwealth’s total revenues. A small agriculture sector consists of cattle ranches and small farms producing coconuts, breadfruit, tomatoes, and melons.

The Commonwealth’s economy continued to recover in 2013. Real GDP increased 4.4%, following a 2.1% gain in 2012. Economic growth in 2013 reflected increases in consumer spending and exports of services, mainly spending by foreign tourists.

Tourism continued to grow in 2013, after posting double-digit growth in 2012. The tourist industry employs approximately a quarter of the work force and accounts for roughly one-fourth of GDP. The Commonwealth is making a concerted effort to broaden its tourism by extending casino gambling from the small Islands of Tinian and Rota to the main Island of Saipan, its political and commercial center.
Norway Norway has a stable economy with a vibrant private sector, a large state sector, and an extensive social safety net. Norway opted out of the EU during a referendum in November 1994; nonetheless, as a member of the European Economic Area, it contributes sizably to the EU budget.

The country is richly endowed with natural resources in addition to oil and gas, including hydropower, fish, forests, and minerals. Norway is a leading producer and the world’s second largest exporter of seafood, after China. The government manages the country’s petroleum resources through extensive regulation. The petroleum sector provides about 9% of jobs, 12% of GDP, 13% of the state’s revenue, and 37% of exports, according to official national estimates. Norway is one of the world's leading petroleum exporters, though oil production in 2016 was close to 50% below its peak in 2000; annual gas production, conversely, more than doubled over the same time period. After a continual decline from 2001 to 2013, oil production rose in 2016 for the third year running, due to the higher production of existing oil fields and to new fields coming on stream.

In anticipation of eventual declines in oil and gas production, Norway saves state revenue from petroleum sector activities in the world's largest sovereign wealth fund, valued at almost $900 billion as of early 2017. To help balance the federal budget each year, the government follows a “fiscal rule,” which states that spending of revenues from petroleum and fund investments shall correspond to the expected real rate of return on the fund, an amount it estimates is sustainable over time. In February 2017, the government revised the expected rate of return for the fund downward from 4% to 3%.

After solid GDP growth in the 2004-07 period, the economy slowed in 2008, and contracted in 2009, before returning to modest, positive growth from 2010 to 2016. Lower oil prices in 2015 and 2016 caused growth to slow, increased unemployment, and weakened the Norwegian krone. The latter trend has mitigated the negative impact of lower oil and gas prices by making Norwegian exports cheaper for foreign buyers. The government has expressed willingness to increase public spending from the sovereign wealth fund to help prevent a recession.
Oman Oman is heavily dependent on its dwindling oil resources, which generate 84% of government revenue. In 2016, low global oil prices drove Oman’s budget deficit to $11.5 billion, or approximately 19% of GDP. Oman has limited foreign assets and is issuing debt to cover its deficit.

Oman is using enhanced oil recovery techniques to boost production, but has simultaneously pursued a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil sector's contribution to GDP from 46% at present to 9% by 2020 in accordance with Oman’s ninth five-year development plan. Tourism and gas-based industries are key components of the government's diversification strategy.

Muscat also has notably focused on creating more Omani jobs to employ the rising number of nationals entering the workforce. However, high social welfare benefits — that had increased in the wake of the 2011 Arab Spring — have challenged the government's ability to effectively balance its budget in light of low export oil prices. In response, Omani officials imposed austerity measures to its gasoline and diesel subsidies in 2016, with further subsidy cuts planned for electricity and liquid petroleum gas. The spending cuts have faced some public opposition, which could hinder their implementation.
Pacific Ocean The Pacific Ocean is a major contributor to the world economy and particularly to those nations its waters directly touch. It provides low-cost sea transportation between East and West, extensive fishing grounds, offshore oil and gas fields, minerals, and sand and gravel for the construction industry. In 1996, over 60% of the world's fish catch came from the Pacific Ocean. Exploitation of offshore oil and gas reserves is playing an ever-increasing role in the energy supplies of the US, Australia, NZ, China, and Peru. The high cost of recovering offshore oil and gas, combined with the wide swings in world prices for oil since 1985, has led to fluctuations in new drillings.
Pakistan Decades of internal political disputes and low levels of foreign investment have led to slow growth and underdevelopment in Pakistan. Pakistan has a large English-speaking population. Nevertheless, a challenging security environment, electricity shortages, and a burdensome investment climate have deterred investors. Agriculture accounts for one-fifth of output and two-fifths of employment. Textiles and apparel account for most of Pakistan's export earnings; Pakistan's failure to diversify its exports has left the country vulnerable to shifts in world demand. Pakistan’s GDP growth has gradually increased since 2012. Official unemployment was 6.1% in 2016, but this fails to capture the true picture, because much of the economy is informal and underemployment remains high. Human development continues to lag behind most of the region.

In 2013, Pakistan embarked on a $6.3 billion IMF Extended Fund Facility, which focused on reducing energy shortages, stabilizing public finances, increasing revenue collection, and improving its balance of payments position. The program concluded in September 2016. Although Pakistan missed several structural reform criteria, it restored macroeconomic stability, improved its credit rating, and boosted growth. The Pakistani rupee, after heavy depreciation in 2013, remained relatively stable against the US dollar in 2016. Low global oil prices in 2016 contributed to a narrowing current account deficit and lower inflation. Remittances from overseas workers continued to be a key revenue source, also mitigating the impact of the lack of foreign investment and a growing trade deficit on the country’s current account.

Pakistan must continue to address several longstanding issues, including expanding investment in education and healthcare, adapting to the effects of climate change and natural disasters, improving the country’s business environment, reducing dependence on foreign donors, and widening the country’s tax base. Given demographic challenges, Pakistan’s leadership will be pressed to implement economic reforms, promote further development of the energy sector, and attract foreign investment to support sufficient economic growth necessary to employ its growing and rapidly urbanizing population, much of which is under the age of 25.

In an effort to boost development, Pakistan and China are implementing the “China-Pakistan Economic Corridor,” a $46 billion investment program targeted towards the energy sector and other infrastructure projects that Islamabad and Beijing had agreed on in early 2013.
Palau The economy is dominated by tourism, fishing, and subsistence agriculture. Government is a major employer of the work force relying on financial assistance from the US under the Compact of Free Association (Compact) with the US that took effect after the end of the UN trusteeship on 1 October 1994. The US provided Palau with roughly $700 million in aid for the first 15 years following commencement of the Compact in 1994 in return for unrestricted access to its land and waterways for strategic purposes. The population enjoys a per capita income roughly double that of the Philippines and much of Micronesia.

Business and leisure tourist arrivals reached a record 167,966 in 2015, a 14.4% increase over the previous year, but fell to 138,408 in 2016. Long-run prospects for tourism have been bolstered by the expansion of air travel in the Pacific, the rising prosperity of industrial East Asia, and the willingness of foreigners to finance infrastructure development. Proximity to Guam, the region's major destination for tourists from East Asia, and a regionally competitive tourist infrastructure enhance Palau's advantage as a destination.
Panama Panama's dollar-based economy rests primarily on a well-developed services sector that accounts for more than three-quarters of GDP. Services include operating the Panama Canal, logistics, banking, the Colon Free Trade Zone, insurance, container ports, flagship registry, and tourism and Panama is a center for offshore banking. Panama's transportation and logistics services sectors, along with infrastructure development projects, have boosted economic growth; however, public debt surpassed $37 billion in 2016 because of excessive government spending and public works projects. The US-Panama Trade Promotion Agreement was approved by Congress and signed into law in October 2011, and entered into force in October 2012.

Future growth will be bolstered by the Panama Canal expansion project that began in 2007 and was completed in 2016 at a cost of $5.3 billion - about 10-15% of current GDP. The expansion project will more than double the Canal's capacity, enabling it to accommodate high-capacity vessels such as tankers and neopanamax vessels that are too large to traverse the existing canal. The US and China are the top users of the Canal.

Strong economic performance has not translated into broadly shared prosperity, as Panama has the second worst income distribution in Latin America. About one-fourth of the population lives in poverty; however, from 2006 to 2012 poverty was reduced by 10 percentage points.
Papua New Guinea Papua New Guinea (PNG) is richly endowed with natural resources, but exploitation has been hampered by rugged terrain, land tenure issues, and the high cost of developing infrastructure. The economy has a small formal sector, focused mainly on the export of those natural resources, and an informal sector, employing the majority of the population. Agriculture provides a subsistence livelihood for 85% of the people. The global financial crisis had little impact because of continued foreign demand for PNG's commodities.

Mineral deposits, including copper, gold, and oil, account for nearly two-thirds of export earnings. Natural gas reserves amount to an estimated 155 billion cubic meters. Following construction of a $19 billion liquefied natural gas (LNG) project, PNG LNG, a consortium led by ExxonMobil, began exporting liquefied natural gas to Asian markets in May 2014. The project was delivered on time and only slightly above budget. The success of the project has encouraged other companies to look at similar LNG projects. French supermajor Total is expected to begin construction on the Papua LNG project by 2020. Due to lower global commodity prices, resource revenues of all types have fallen dramatically. PNG’s government has recently been forced to adjust spending levels downward.

Numerous challenges still face the government of Peter O'NEILL, including providing physical security for foreign investors, regaining investor confidence, restoring integrity to state institutions, promoting economic efficiency by privatizing moribund state institutions, and maintaining good relations with Australia, its former colonial ruler. Other socio-cultural challenges could upend the economy including chronic law and order and land tenure issues.
Paracel Islands The islands have the potential for oil and gas development. Waters around the islands support commercial fishing, but the islands themselves are not populated on a permanent basis.
Paraguay Landlocked Paraguay has a market economy distinguished by a large informal sector, featuring re-export of imported consumer goods to neighboring countries, as well as the activities of thousands of microenterprises and urban street vendors. A large percentage of the population, especially in rural areas, derives its living from agricultural activity, often on a subsistence basis. Because of the importance of the informal sector, accurate economic measures are difficult to obtain.

On a per capita basis, real income has grown steadily over the past decade. The economy grew rapidly between 2003 and 2008 as strong world demand for commodities, combined with high prices and favorable weather, supported Paraguay's commodity-based export expansion. Paraguay is the sixth largest soy producer in the world. Drought hit in 2008, reducing agricultural exports and slowing the economy even before the onset of the global recession. The economy fell 3.8% in 2009, as lower world demand and commodity prices caused exports to contract. Severe drought and outbreaks of hoof-and-mouth disease in 2012 led to a brief drop in beef and other agricultural exports. Since 2014, however, Paraguay’s economy has grown at a 4% average annual rate due to strong production and high global prices, at a time when other countries in the region have contracted.

The Paraguayan Government recognizes the need to diversify its economy and has taken steps in recent years to do so. In addition to looking for new commodity markets in the Middle East and Europe, Paraguayan officials have promoted the country’s low labor costs, cheap energy from its massive Itaipu Hydroelectric Dam, and single-digit tax rate on foreign firms. As a result, the number of factories operating in the country – mostly transplants from Brazil - has tripled since 2014.

Political uncertainty, corruption, limited progress on structural reform, and deficient infrastructure are the main obstacles to long-term growth. Paraguay has been adverse to public debt throughout its history, but has recently changed its anti-debt policies to finance infrastructure improvements to attract foreign investment. Judicial corruption is endemic and is seen as the greatest barrier to attracting more foreign investment.
Peru Peru's economy reflects its varied topography - an arid lowland coastal region, the central high sierra of the Andes, and the dense forest of the Amazon. A wide range of important mineral resources are found in the mountainous and coastal areas, and Peru's coastal waters provide excellent fishing grounds. Peru is the world's second largest producer of silver and copper.

The Peruvian economy grew by an average of 5.6% per year from 2009-13 with a stable exchange rate and low inflation, which in 2013 was just below the upper limit of the Central Bank target range of 1% to 3%. This growth was due partly to high international prices for Peru's metals and minerals exports, which account for 55% of the country's total exports. Growth slipped from 2014 to 2016, due to weaker world prices for these resources. Despite Peru's strong macroeconomic performance, dependence on minerals and metals exports and imported foodstuffs makes the economy vulnerable to fluctuations in world prices.

Peru's rapid expansion coupled with cash transfers and other programs have helped to reduce the national poverty rate by over 35 percentage points since 2004, but inequality persists and continued to pose a challenge for the Ollanta HUMALA administration, which championed a policy of social inclusion and a more equitable distribution of income. Poor infrastructure hinders the spread of growth to Peru's non-coastal areas. The HUMALA administration passed several economic stimulus packages in 2014 to bolster growth, including reforms to environmental regulations in order to spur investment in Peru’s lucrative mining sector, a move that was opposed by some environmental groups. However, in 2015, mining investment fell as global commodity prices remained low and social conflicts plagued the sector.

Peru's free trade policy continued under the HUMALA administration; since 2006, Peru has signed trade deals with the US, Canada, Singapore, China, Korea, Mexico, Japan, the EU, the European Free Trade Association, Chile, Thailand, Costa Rica, Panama, Venezuela, Honduras, concluded negotiations with Guatemala and the Trans-Pacific Partnership, and begun trade talks with El Salvador, India, and Turkey. Peru also has signed a trade pact with Chile, Colombia, and Mexico, called the Pacific Alliance, that seeks integration of services, capital, investment and movement of people. Since the US-Peru Trade Promotion Agreement entered into force in February 2009, total trade between Peru and the US has doubled. President Pedro Pablo KUCZYNSKI succeeded HUMALA in July 2016 and is focusing on economic reforms and free market policies aimed at boosting investment in Peru. Mining output increased significantly in 2016, which helped Peru attain one of the highest GDP growth rates in Latin America, and Peru should maintain strong growth in 2017. However, 2016 economic performance fell short of initial projections depressed by delays in infrastructure mega-projects and the start of a corruption scandal associated with a Brazilian firm, which have lowered 2017 growth estimates. Massive flooding in early 2017 may also be a drag on growth, offset somewhat by additional public spending aimed at recovery efforts.
Philippines The economy has been relatively resilient to global economic shocks due to less exposure to troubled international securities, lower dependence on exports, relatively resilient domestic consumption, large remittances from about 10 million overseas Filipino workers and migrants, and a rapidly expanding outsourcing industry. During 2016, the current account balance narrowed to its lowest level since the 2008 global financial crisis, but nevertheless mustered a surplus for a 14th consecutive year. International reserves remain at comfortable levels and the banking system is stable.

Efforts to improve tax administration and expenditures management have helped ease the Philippines' debt burden and tight fiscal situation. The Philippines received investment-grade credit ratings on its sovereign debt under the former AQUINO administration and has had little difficulty financing its budget deficits. However, weak absorptive capacity and implementation bottlenecks have prevented the government from maximizing its expenditure plans. Although it has improved, the low tax-to-GDP ratio remains a constraint to supporting increasingly higher spending levels and sustaining high and inclusive growth over the longer term.

Economic growth has accelerated, averaging 6.1% per year from 2011 to 2016, compared with 4.5% under the MACAPAGAL-ARROYO government; and competitiveness rankings have improved. Although 2016 saw a record year for net foreign direct investment inflows, FDI to the Philippines has continued to lag regional peers, in part because the Philippine constitution and other laws restrict foreign ownership in important activities/sectors - such as land ownership and public utilities.

Although the economy grew at a faster pace under the AQUINO government, challenges to achieving more inclusive growth remain. Wealth is concentrated in the hands of the rich. The unemployment rate declined from 7.3% to 5.5% between 2010 and 2016 but the jobs are low paying and tedious. Underemployment hovers at around 18% to 19% of the employed. At least 40% of the employed work in the informal sector. Poverty afflicts more than a fifth of the population. More than 60% of the poor reside in rural areas, where the incidence of poverty (about 30%) is more severe - a challenge to raising rural farm and non-farm incomes. Continued efforts are needed to improve governance, the judicial system, the regulatory environment, the infrastructure, and the overall ease of doing business.

2016 saw the election of President Rodrigo DUTERTE, who has pledged to make inclusive growth and poverty reduction his top priority. DUTERTE believes that illegal drug use, crime and corruption are key barriers to economic development among the lower income class. This administration wants to reduce the poverty rate to 14% and graduate the economy to upper-middle income status by the end of President DUTERTE’s term in 2022. Key themes under the government’s Ten-Point Socioeconomic Agenda include continuity of macroeconomic policy, tax reform, higher investments in infrastructure and human capital development, and improving competitiveness and the overall ease of doing business. The administration has vowed to address spending bottlenecks and is pushing for congressional passage of a Comprehensive Tax Reform Program to help finance more aggressive infrastructure and social spending, starting in 2018. The government also supports relaxing restrictions on foreign ownership, except for land.
Pitcairn Islands The inhabitants of this tiny isolated economy exist on fishing, subsistence farming, handicrafts, and postage stamps. The fertile soil of the valleys produces a wide variety of fruits and vegetables, including citrus, sugarcane, watermelons, bananas, yams, and beans. Bartering is an important part of the economy. The major sources of revenue are the sale of postage stamps to collectors and the sale of handicrafts to passing ships.
Poland Poland has the sixth-largest economy in the EU and has long had a reputation as a business-friendly country with largely sound macroeconomic policies. Since 1990, Poland has pursued a policy of economic liberalization. During the 2008-09 economic slowdown Poland was the only EU country to avoid a recession, in part because of the government’s loose fiscal policy combined with a commitment to rein in spending in the medium-term. However, since 2015 Warsaw’s prioritization of spending on social welfare programs has prompted investors to decrease Poland’s economic growth projections for the next few years.

The Polish economy performed well during the 2014-16 period, with the real GDP growth rate exceeding 3%, in part because of the government’s fiscal prudence. Poland’s economic growth in 2017 is projected by some credit rating agencies to slow, however, because of Poland’s government’s increase in social spending since 2015, including the provision of cash transfers for low income families, families with more than one child, and the reduction of the retirement age which will take effect in October 2017. The government has tried to introduce new taxes and boost tax compliance to offset the costs of the social spending programs and relieve upward pressure on the budget deficit. Some credit ratings agencies estimate that Poland will exceed the EU’s 3%-of-GDP limit on budget deficits, possibly impacting its access to future EU funds.

Poland faces several systemic challenges, which include addressing some of the remaining deficiencies in its road and rail infrastructure, business environment, rigid labor code, commercial court system, government red tape, and burdensome tax system, especially for entrepreneurs. Additional long-term challenges include diversifying Poland’s energy mix, strengthening investments in innovation, research, and development, as well as stemming the outflow of educated young Poles to other EU member states, especially in light of a coming demographic contraction due to emigration, persistently low fertility rates, and the aging of the Solidarity-era baby boom generation.
Portugal Portugal has become a diversified and increasingly service-based economy since joining the European Community - the EU's predecessor - in 1986. Over the following two decades, successive governments privatized many state-controlled firms and liberalized key areas of the economy, including the financial and telecommunications sectors. The country joined the Economic and Monetary Union in 1999 and began circulating the euro on 1 January 2002 along with 11 other EU members.

The economy grew by more than the EU average for much of the 1990s, but the rate of growth slowed in 2001-08. The economy contracted in 2009, and fell again from 2011 to 2013, as the government implemented spending cuts and tax increases to comply with conditions of an EU-IMF financial rescue package, signed in May 2011. Portugal successfully exited its EU-IMF program in May 2014. A modest recovery gathered steam in 2015 due to strong export performance and a rebound in private consumption. Growth slowed slightly in the first half of 2016, but rebounded in the last two quarters of the year to register at 1.4 percent for the year. Unemployment remains high, at 10.2%, at the end of 2016, but has improved steadily since peaking at 18% in 2013.

The center-left minority Socialist government has unwound some unpopular austerity measures while managing to remain within most EU fiscal targets. The budget deficit fell from 11.2% of GDP in 2010 to 2.0% in 2016, the country’s lowest since democracy was restored in 1974, and surpassing the EU and IMF projections of 3%. Portugal is expected to exit the EU’s excessive deficit procedure by mid-2017.
Puerto Rico Puerto Rico had one of the most dynamic economies in the Caribbean region until 2006; however, growth has been negative for each of the last 11 years. The downturn coincided with the phaseout of tax preferences that had led US firms to invest heavily in the Commonwealth since the 1950s, and a steep rise in the price of oil, which generates most of the island's electricity.

Diminished job opportunities prompted a sharp rise in outmigration, as many Puerto Ricans sought jobs on the US mainland. Unemployment reached 16% in 2011, but declined to 13.7% in December 2014. US minimum wage laws apply in Puerto Rico, hampering job expansion. Per capita income is about two-thirds that of the US mainland.

The industrial sector greatly exceeds agriculture as the locus of economic activity and income. Tourism has traditionally been an important source of income with estimated arrivals of more than 3.6 million tourists in 2008. Puerto Rico's merchandise trade surplus is exceptionally strong, with exports nearly 50% greater than imports, and its current account surplus about 10% of GDP.

Closing the budget deficit while restoring economic growth and employment remain the central concerns of the government. The gap between revenues and expenditures amounted to 0.6% of GDP in 2016, although analysts believe that not all expenditures have been accounted for in the budget and a better accounting of costs would yield an overall deficit of roughly 5% of GDP. Public debt declined to 92.5% of GDP in 2016, about $17,000 per person, or nearly three times the per capita debt of the State of Connecticut, the highest in the US. Much of that debt was issued by state-run schools and public corporations, including water and electric utilities. In June 2015, Governor Alejandro GARCIA Padilla announced that the island could not pay back at least $73 billion in debt and that it would seek a deal with its creditors.
Qatar Qatar’s oil and natural gas resources are the country’s main economic engine and government revenue source, driving Qatar’s high economic growth and per capita income levels, robust state spending on public entitlements, and booming construction spending, particularly as Qatar prepares to host the World Cup in 2022. Although the government has maintained high capital spending levels for ongoing infrastructure projects, low oil and natural gas prices in recent years have led the Qatari Government to tighten some spending to help stem a $12 billion budget deficit in 2016 - 7.8% of GDP.

Qatar’s reliance on oil and natural gas is likely to persist for the foreseeable future. Proved natural gas reserves exceed 25 trillion cubic meters - 13% of the world total and, among countries, third largest in the world. Proved oil reserves exceed 25 billion barrels, allowing production to continue at current levels for about 56 years. Despite the dominance of oil and natural gas, Qatar has made significant gains in strengthening non-oil sectors, such as manufacturing, construction, and financial services, leading non-oil GDP to steadily rise in recent years to just over half the total.
Romania Romania, which joined the EU on 1 January 2007, began the transition from communism in 1989 with a largely obsolete industrial base and a pattern of output unsuited to the country's needs. Romania's macroeconomic gains have only recently started to spur creation of a middle class and to address Romania's widespread poverty. Corruption and red tape continue to permeate the business environment.

In the aftermath of the global financial crisis, Romania signed a $26 billion emergency assistance package from the IMF, the EU, and other international lenders, but GDP contracted until 2011. In March 2011, Romania and the IMF/EU/World Bank signed a 24-month precautionary standby agreement, worth $6.6 billion, to promote fiscal discipline, encourage progress on structural reforms, and strengthen financial sector stability; no funds were drawn. In September 2013, Romanian authorities and the IMF/EU agreed to a follow-on standby agreement, worth $5.4 billion, to continue with reforms. This agreement expired in September 2015, and no funds were drawn. Progress on structural reforms has been uneven, and the economy still is vulnerable to external shocks.

Economic growth rebounded in the 2013-16 period, driven by strong industrial exports and excellent agricultural harvests, and the fiscal deficit was reduced substantially. Industry outperformed other sectors of the economy in 2016. Exports remained an engine of economic growth, led by trade with the EU, which accounts for roughly 70% of Romania trade. Domestic demand was a second driver, due to the mid-2015 cut, from 24% to 9%, of the VAT levied upon foodstuffs. In 2015, the Government of Romania succeeded in meeting its annual target for the budget deficit, the external deficit remained low, even if it rose due to increasing imports. For the first time since 1989, inflation turned into deflation, allowing for a gradual loosening of monetary policy throughout the period.

An aging population, significant tax evasion, insufficient health care, and an aggressive loosening of the fiscal package jeopardize the low fiscal deficit and public debt and are the economy's top vulnerabilities.
Russia Russia has undergone significant changes since the collapse of the Soviet Union, moving from a centrally planned economy towards a more market-based system. Both economic growth and reform have stalled in recent years, however, and Russia remains a predominantly statist economy with a high concentration of wealth in officials' hands. Economic reforms in the 1990s privatized most industry, with notable exceptions in the energy, transportation, banking, and defense-related sectors. The protection of property rights is still weak, and the state continues to interfere in the free operation of the private sector.

Russia is one of the world's leading producers of oil and natural gas, and is also a top exporter of metals such as steel and primary aluminum. Russia's reliance on commodity exports makes it vulnerable to boom and bust cycles that follow the volatile swings in global prices. The economy, which had averaged 7% growth during the 1998-2008 period as oil prices rose rapidly, has seen diminishing growth rates since then due to the exhaustion of Russia’s commodity-based growth model.

A combination of falling oil prices, international sanctions, and structural limitations pushed Russia into a deep recession in 2015, with the GDP falling by close to 4%. The downturn continued through 2016, with GDP contracting by 0.6%. Government support for import substitution has increased recently in an effort to diversify the economy away from extractive industries. Russia is heavily dependent on the movement of world commodity prices and the Central Bank of Russia estimates that if oil prices remain below $40 per barrel in 2017, the resulting shock would cause GDP to fall by up to 5%.
Rwanda Rwanda is a rural, agrarian country with about 35% of the population engaged in subsistence agriculture, and with some mineral and agro-processing. Population density is high but not concentrated in large metropolises – its 13 million people are spread out on a small amount of land (about the size of Vermont and New Hampshire combined). Tourism, minerals, coffee, and tea are Rwanda's main sources of foreign exchange. Despite Rwanda's fertile ecosystem, food production often does not keep pace with demand, requiring food imports. Energy shortages, instability in neighboring states, and lack of adequate transportation linkages to other countries continue to handicap private sector growth.

The 1994 genocide decimated Rwanda's fragile economic base, severely impoverished the population, particularly women, and temporarily stalled the country's ability to attract private and external investment. However, Rwanda has made substantial progress in stabilizing and rehabilitating its economy beyond pre-1994 levels. GDP has rebounded with an average annual growth of 6%-8% since 2003 and inflation has been reduced to single digits. In 2015, 39% of the population lived below the poverty line, according to government statistics, compared to 57% in 2006. Mining profits in 2015 were reduced by almost half, owing to the drop in global demand for minerals.

Africa's most densely populated country is trying to overcome the limitations of its small, landlocked economy by leveraging regional trade; Rwanda joined the East African Community and is aligning its budget, trade, and immigration policies with its regional partners. The government has embraced an expansionary fiscal policy to reduce poverty by improving education, infrastructure, and foreign and domestic investment. In recognition of Rwanda's successful management of its macro economy, the IMF graduated Rwanda to a Policy Support Instrument in 2010.

The Rwandan Government is seeking to become a regional leader in information and communication technologies. In 2012, Rwanda completed the first modern Special Economic Zone (SEZ) in Kigali. The SEZ seeks to attract investment in all sectors, but specifically in agribusiness, information and communications, trade and logistics, mining, and construction. In 2016, the government launched an online system to give investors information about public land and its suitability for agricultural development.
Saint Barthelemy The economy of Saint Barthelemy is based upon high-end tourism and duty-free luxury commerce, serving visitors primarily from North America. The luxury hotels and villas host 70,000 visitors each year with another 130,000 arriving by boat. The relative isolation and high cost of living inhibits mass tourism. The construction and public sectors also enjoy significant investment in support of tourism. With limited fresh water resources, all food must be imported, as must all energy resources and most manufactured goods. The tourism sector creates a strong employment demand and attracts labor from Brazil and Portugal. The country’s currency is the euro.
Saint Helena, Ascension, and Tristan da Cunha The economy depends largely on financial assistance from the UK, which amounted to about $27 million in FY06/07 or more than twice the level of annual budgetary revenues. The local population earns income from fishing, raising livestock, and sales of handicrafts. Because there are few jobs, 25% of the work force has left to seek employment on Ascension Island, on the Falklands, and in the UK.
Saint Kitts and Nevis The economy of Saint Kitts and Nevis depends on tourism; since the 1970s, tourism has replaced sugar as the economy’s traditional mainstay. Roughly 200,000 tourists visited the islands in 2009, but reduced tourism arrivals and foreign investment led to an economic contraction in the 2009-2013 period, and the economy returned to growth only in 2014. Like other tourist destinations in the Caribbean, Saint Kitts and Nevis is vulnerable to damage from natural disasters and shifts in tourism demand.

Following the 2005 harvest, the government closed the sugar industry after several decades of losses. To compensate for lost jobs, the government has embarked on a program to diversify the agricultural sector and to stimulate other sectors of the economy, such as export-oriented manufacturing and offshore banking. The government has made notable progress in reducing its public debt, from 154% of GDP in 2011 to 83% in 2013, although it still faces one of the highest levels in the world, largely attributable to public enterprise losses. Saint Kitts and Nevis is among other countries in the Caribbean that supplement their economic activity through economic citizenship programs, whereby foreigners can obtain citizenship from Saint Kitts and Nevis by investing there.
Saint Lucia The island nation has been able to attract foreign business and investment, especially in its offshore banking and tourism industries. Tourism is Saint Lucia's main source of jobs and income - accounting for 65% of GDP - and the island's main source of foreign exchange earnings. The manufacturing sector is the most diverse in the Eastern Caribbean area. Crops such as bananas, mangos, and avocados continue to be grown for export, but St. Lucia's once solid banana industry has been devastated by strong competition.

Saint Lucia is vulnerable to a variety of external shocks, including volatile tourism receipts, natural disasters, and dependence on foreign oil. Furthermore, high public debt - 77% of GDP in 2012 - and high debt servicing obligations constrain the CHASTANET administration's ability to respond to adverse external shocks.

St. Lucia has experienced anemic growth since the onset of the global financial crisis in 2008, largely because of a slowdown in tourism - airlines cut back on their routes to St. Lucia in 2012. Also, St. Lucia introduced a value added tax in 2012 of 15%, becoming the last country in the Eastern Caribbean to do so. In 2013, the government introduced a National Competitiveness and Productivity Council to address St. Lucia's high public wages and lack of productivity.
Saint Martin The economy of Saint Martin centers on tourism with 85% of the labor force engaged in this sector. Over one million visitors come to the island each year with most arriving through the Princess Juliana International Airport in Sint Maarten. The financial sector is also important to Saint Martin’s economy as it facilitates financial mediation for its thriving tourism sector. No significant agriculture and limited local fishing means that almost all food must be imported. Energy resources and manufactured goods are also imported, primarily from Mexico and the US. Saint Martin is reported to have one of the highest per capita income in the Caribbean. As with the rest of the Caribbean, Saint Martin’s financial sector is having to deal with losing correspondent banking relationships.
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.

The government hopes an expansion of tourism will boost economic prospects. Fish farming, crab fishing, and agriculture are being developed to diversify the local economy. Recent test drilling for oil may pave the way for development of the energy sector.
Saint Vincent and the Grenadines Success of the economy hinges upon seasonal variations in agriculture, tourism, and construction activity, as well as remittances. Much of the workforce is employed in banana production and tourism. Saint Vincent and the Grenadines is home to a small offshore banking sector and continues to fully adopt international regulatory standards.

This lower-middle-income country remains vulnerable to natural and external shocks. The economy has shown some signs of recovery due to increased tourist arrivals, falling oil prices and renewed growth in the construction sector. The much anticipated international airport opened in early 2017 with hopes for increased airlift and tourism activity. The government's ability to invest in social programs and respond to external shocks is constrained by its high public debt burden, which was 67% of GDP at the end of 2013.
Samoa The economy of Samoa has traditionally been dependent on development aid, family remittances from overseas, tourism, agriculture, and fishing. It has a nominal GDP of $830 million. Agriculture, including fishing, employs roughly two-thirds of the labor force and furnishes 90% of exports, featuring fish, coconut oil, nonu products, and taro. The manufacturing sector mainly processes agricultural products. One factory in the Foreign Trade Zone employs over 700 people to make automobile electrical harnesses for an assembly plant in Australia, and accounts for 65% of total exports, but it is set to close by yearend 2017. Industry accounts for nearly 24% of GDP while employing less than 6% of the work force. The service sector accounts for nearly three-quarters of GDP and employs approximately 50% of the labor force. Tourism is an expanding sector accounting for 25% of GDP; 132,000 tourists visited the islands in 2013.

The country is vulnerable to devastating storms. In September 2009, an earthquake and the resulting tsunami severely damaged Samoa and nearby American Samoa, disrupting transportation and power generation, and resulting in about 200 deaths. In December 2012, extensive flooding and wind damage from Tropical Cyclone Evan killed four people, displaced over 6,000, and damaged or destroyed an estimated 1,500 homes on Samoa's Upolu Island.

The Samoan Government has called for deregulation of the country's financial sector, encouragement of investment, and continued fiscal discipline, while at the same time protecting the environment. Foreign reserves are relatively healthy and inflation is low, but external debt is approximately 45% of GDP. Samoa became the 155th member of the WTO in May 2012, and graduated from least developed country status in January 2014.
San Marino San Marino's economy relies heavily on tourism, banking, and the manufacture and export of ceramics, clothing, fabrics, furniture, paints, spirits, tiles, and wine. The manufacturing and financial sectors account for more than half of San Marino's GDP. The per capita level of output and standard of living are comparable to those of the most prosperous regions of Italy.

San Marino's economy has been contracting since 2008, largely due to weakened demand from Italy - which accounts for nearly 90% of its export market - and financial sector consolidation. Difficulties in the banking sector, the recent global economic downturn, and the sizable decline in tax revenues have contributed to negative real GDP growth. The government has adopted measures to counter the downturn, including subsidized credit to businesses and is seeking to shift its growth model away from a reliance on bank and tax secrecy. San Marino does not issue public debt securities; when necessary, it finances deficits by drawing down central bank deposits.

The economy benefits from foreign investment due to its relatively low corporate taxes and low taxes on interest earnings. The income tax rate is also very low, about one-third the average EU level. San Marino continues to work towards harmonizing its fiscal laws with EU and international standards. In September 2009, the OECD removed San Marino from its list of tax havens that have yet to fully adopt global tax standards, and in 2010 San Marino signed Tax Information Exchange Agreements with most major countries. In 2013, the San Marino Government signed a Double Taxation Agreement with Italy, but a referendum on EU membership failed to reach the quorum needed to bring it to a vote.
Sao Tome and Principe This small, poor island economy has become increasingly dependent on cocoa since independence in 1975. Cocoa production has substantially declined in recent years because of drought and mismanagement. Sao Tome and Principe has to import fuels, most manufactured goods, consumer goods, and food, making it vulnerable to fluctuations in global commodity prices. Maintaining control of inflation, fiscal discipline, and increasing flows of foreign direct investment into the nascent oil sector are major economic problems facing the country. The government also has attempted to reduce price controls and subsidies.

Over the years, Sao Tome and Principe has had difficulty servicing its external debt and has relied heavily on concessional aid and debt rescheduling. It benefited from $200 million in debt relief in December 2000 under the Highly Indebted Poor Countries program, which helped bring down the country's $300 million debt burden. In April 2011, the country completed a Threshold Country Program with The Millennium Challenge Corporation to help increase tax revenues, reform customs, and improve the business environment. In 2016, Sao Tome and Portugal signed a five-year cooperation agreement worth approximately $64 million, some of which will be provided as loans.

Considerable potential exists for development of a tourist industry, and the government has taken steps to expand facilities in recent years. Potential also exists for the development of petroleum resources in Sao Tome and Principe's territorial waters in the oil-rich Gulf of Guinea, which are being jointly developed in a 60-40 split with Nigeria, but any actual production is at least several years off. Volatile aid and investment inflows, even with a growing tourism sector, have kept growth moderate at around 4% annually, which is insufficient to alleviate poverty. The IMF in late 2016 expressed concern about the country’s banking sector vulnerabilities.
Saudi Arabia Saudi Arabia has an oil-based economy with strong government controls over major economic activities. It possesses about 16% 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 87% of budget revenues, 42% of GDP, and 90% of export earnings.

Saudi Arabia is encouraging the growth of the private sector in order to diversify its economy and to employ more Saudi nationals. Over 6 million foreign workers play an important role in the Saudi economy, particularly in the oil and service sectors; at the same time, however, Riyadh is struggling to reduce unemployment among its own nationals. Saudi officials are particularly focused on employing its large youth population, which generally lacks the education and technical skills the private sector needs.

In 2016, the Kingdom incurred a budget deficit estimated at 13.6% of GDP, which was financed by bond sales and drawing down reserves. Although the Kingdom can finance high deficits for several years by drawing down its considerable foreign assets or by borrowing, it has cut capital spending. Plans to cut deficits include introducing a value-added tax and reducing subsidies on electricity, water, and petroleum products. In January 2016, Crown Prince and Deputy Prime Minister MUHAMMAD BIN SALMAN announced that Saudi Arabia intends to list shares of its state-owned petroleum company, ARAMCO - another move to increase revenue and outside investment. The government has also looked at privatization and diversification of the economy more closely in the wake of a diminished oil market. Historically, Saudi Arabia has focused diversification efforts on power generation, telecommunications, natural gas exploration, and petrochemical sectors. More recently, the government has approached investors about expanding the role of the private sector in the health care, education and tourism industries. While Saudi Arabia has emphasized their goals of diversification for some time, current low oil prices may force the government to make more drastic changes ahead of their long-run timeline.
Senegal Senegal’s economy is driven by mining, construction, tourism, fisheries and agriculture, which are the primary sources of employment in rural areas. The country's key export industries include phosphate mining, fertilizer production, agricultural products and commercial fishing and it is also working on oil exploration projects. Senegal relies heavily on donor assistance, remittances and foreign direct investment. For the first time in the past 12 years, Senegal reached a growth rate of 6.5% in 2015 and surpassed 6.6% in 2016, due in part to a buoyant performance in agriculture because of higher rainfall and productivity in the sector.

President Macky SALL, who was elected in March 2012 under a reformist policy agenda, inherited an economy with high energy costs, a challenging business environment, and a culture of overspending. President SALL unveiled an ambitious economic plan, the Emerging Senegal Plan (ESP), which aims to implement priority economic reforms and investment projects to increase economic growth while preserving macroeconomic stability and debt sustainability. Bureaucratic bottlenecks and a challenging business climate are among the perennial challenges that may slow the implementation of this plan.

Senegal is receiving technical support from the IMF during 2015-17 under a Policy Support Instrument (PSI) to assist with implementation of the ESP. The PSI implementation continues to be satisfactory as concluded by the IMF’s second review mission in March 2016. Investors have signaled confidence in the country through Senegal’s successful Eurobond issuances in recent years, including in 2014.

The government will focus on 19 projects under the ESP for the 2016 budget to continue the structural transformation of the economy. These 19 projects include the Thies-Touba Highway, including the new airport- Mbour-Thies Highway. Senegal will increase the national family allowances program and the community development emergency program in 2016. Electricity supply is a chief constraint for Senegal’s development. Electricity prices in Senegal are among the highest in the world. Power Africa, a program led by USAID and OPIC, plans to increase the current 500 MW of generating capacity to over 1,000 mW in the next three to five years. Recent gas discoveries on the Senegal-Mauritanian border, as well as just south of Dakar, will help alleviate some of the energy shortages.
Serbia Serbia has a transitional economy largely dominated by market forces, but the state sector remains significant in certain areas. The economy relies on manufacturing and exports, driven largely by foreign investment. MILOSEVIC-era mismanagement of the economy, an extended period of international economic sanctions, civil war, and the damage to Yugoslavia's infrastructure and industry during the NATO airstrikes in 1999 left the economy worse off than it was in 1990. In 2015, Serbia’s GDP was 27.5% below where it was in 1989.

After former Federal Yugoslav President MILOSEVIC was ousted in September 2000, the Democratic Opposition of Serbia (DOS) coalition government implemented stabilization measures and embarked on a market reform program. Serbia renewed its membership in the IMF in December 2000 and rejoined the World Bank and the European Bank for Reconstruction and Development. Serbia has made progress in trade liberalization and enterprise restructuring and privatization, but many large enterprises - including the power utilities, telecommunications company, natural gas company, and others - remain state-owned. Serbia has made some progress towards EU membership, signing a Stabilization and Association Agreement with Brussels in May 2008, and with full implementation of the Interim Trade Agreement with the EU in February 2010, gained candidate status in March 2012. In January 2014, Serbia's EU accession talks officially opened, and as of March 2017, Serbia had opened eight negotiating chapters. Serbia's negotiations with the WTO are advanced, with the country's complete ban on the trade and cultivation of agricultural biotechnology products representing the primary remaining obstacle to accession. Serbia maintains a three-year Stand-by Arrangement with the IMF worth approximately $1.3 billion that is scheduled to end in February 2018. The government has shown progress implementing economic reforms, such as fiscal consolidation, privatization, and reducing public spending.

High unemployment and stagnant household incomes are ongoing political and economic problems. Serbia is slowly implementing structural economic reforms needed to ensure the country's long-term prosperity. In 2016, Serbia reduced its budget deficit to 1.4% and slowed the rate of growth of its public debt as a percent of GDP, more than doubled between 2008 and 2015. Serbia's concerns about inflation and exchange-rate stability preclude the use of expansionary monetary policy.

Major economic challenges ahead include: high unemployment rates and the need for private sector job creation; structural reforms of state-owned companies; strategic public sector reforms; and the need for new foreign direct investment. Other serious longer-term challenges include an inefficient judicial system, high levels of corruption, and an aging population. Factors favorable to Serbia's economic growth include the economic reforms it is undergoing as part of its EU accession process and IMF agreement, its strategic location, a relatively inexpensive and skilled labor force, and free trade agreements with the EU, Russia, Turkey, and countries that are members of the Central European Free Trade Agreement.
Seychelles Since independence in 1976, per capita output in this Indian Ocean archipelago has expanded to roughly seven times the pre-independence, near-subsistence level, moving the island into the upper-middle-income group of countries. Growth has been led by the tourist sector, which employs about 30% of the labor force and provides more than 70% of hard currency earnings, and by tuna fishing.

In recent years, the government has encouraged foreign investment to upgrade hotels and other services. At the same time, the government has moved to reduce the dependence on tourism by promoting the development of farming, fishing, and small-scale manufacturing.

In 2008, having depleted its foreign exchange reserves, Seychelles defaulted on interest payments due on a $230 million Eurobond, requested assistance from the IMF, and immediately enacted a number of significant structural reforms, including liberalization of the exchange rate, reform of the public sector to include layoffs, and the sale of some state assets. In December 2013, the IMF declared that Seychelles had successfully transitioned to a market-based economy with full employment and a fiscal surplus. Effective 1 January 2017, Seychelles will no longer be eligible for trade benefits under the US African Growth and Opportunities Act after having gained developed country status. Seychelles grew at 4.9% in 2016 because of a strong tourist sector and low commodity prices; its fiscal surplus reached 3% of GDP. The Seychellois Government met the IMF’s performance criteria for 2016 but recognizes a need to make additional progress to combat high poverty levels, estimated at 39% in 2013.
Sierra Leone Sierra Leone is extremely poor and nearly half of the working-age population engages in subsistence agriculture. The country possesses substantial mineral, agricultural, and fishery resources, but it is still recovering from a civil war that destroyed most institutions before ending in the early 2000s.

In recent years, economic growth has been driven by mining - particularly iron ore. The country’s principal exports are iron ore, diamonds, and rutile, and the economy is vulnerable to fluctuations in international prices. Until 2014, the government had relied on external assistance to support its budget, but it was gradually becoming more independent. The Ebola outbreak of 2014 and 2015, combined with falling global commodities prices, caused a significant contraction of economic activity in all areas. While the World Health Organization declared an end to the Ebola outbreak in Sierra Leone in November 2015, low commodity prices in 2015-2016 contributed to the country’s biggest fiscal shortfall since 2001. In 2017, increased iron ore exports are expected to support modest economic growth. Non-mining activities will remain constrained by inadequate infrastructure, such as power and roads, even though power sector projects may provide some additional electricity capacity in the near term.

Continued economic growth will depend on rising commodities prices and increased efforts to diversify the sources of growth. Pervasive corruption and undeveloped human capital will continue to deter foreign investors. Sustained international donor support in the near future will partially offset these fiscal constraints.
Singapore Singapore has a highly developed and successful free-market economy. It enjoys a remarkably open and corruption-free environment, stable prices, and a per capita GDP higher than that of most developed countries. Unemployment is very low. The economy depends heavily on exports, particularly of consumer electronics, information technology products, medical and optical devices, pharmaceuticals, and on its vibrant transportation, business, and financial services sectors.

The economy contracted 0.6% in 2009 as a result of the global financial crisis, but has continued to grow since 2010. Growth in 2014-16 was slower than during the previous decade, at under 3% annually, largely a result of soft demand for exports amid a sluggish global economy and weak growth in Singapore’s manufacturing sector.

The government is attempting to restructure Singapore’s economy by weaning its dependence on foreign labor, addressing weak productivity growth, and increasing Singaporean wages. Singapore has attracted major investments in advanced manufacturing, pharmaceuticals, and medical technology production and will continue efforts to strengthen its position as Southeast Asia's leading financial and technology hub. Singapore is a member of the Regional Comprehensive Economic Partnership negotiations with the nine other ASEAN members plus Australia, China, India, Japan, South Korea, and New Zealand. In 2015, Singapore formed, with the other ASEAN members, the ASEAN Economic Community.
Sint Maarten The economy of Sint Maarten centers around tourism with nearly four-fifths of the labor force engaged in this sector. Nearly 1.8 million visitors came to the island by cruise ship and roughly 500,000 visitors arrived through Princess Juliana International Airport in 2013. Cruise ships and yachts also call on Sint Maarten's numerous ports and harbors. Limited agriculture and local fishing means that almost all food must be imported. Energy resources and manufactured goods are also imported. Sint Maarten had the highest per capita income among the five islands that formerly comprised the Netherlands Antilles.
Slovakia Slovakia’s economy suffered from a slow start in the first years after its separation from the Czech Republic in 1993, due to the country’s authoritarian leadership and high levels of corruption, but economic reforms implemented after 1998 have placed Slovakia on a path of strong growth. With a population of 5.4 million, the Slovak Republic has a small, open economy driven mainly by automobile and electronics exports, which account for more than 80% of GDP. Slovakia joined the EU in 2004 and the euro zone in 2009. The country’s banking sector is sound and predominantly foreign owned.

Slovakia has been a regional FDI champion for several years, attractive due to a relatively low-cost yet skilled labor force, and a favorable geographic location in the heart of Central Europe. Among the most pressing domestic issues potentially threatening the attractiveness of the Slovak market are shortages in qualified labor force, persistent corruption issues, and an inadequate judiciary, as well as a lack of innovation. The energy sector in particular is characterized by unpredictable regulatory oversight and high costs, in part driven by government interference in regulated tariffs.
Slovenia With excellent infrastructure, a well-educated work force, and a strategic location between the Balkans and Western Europe, Slovenia has one of the highest per capita GDPs in Central Europe, despite having suffered a protracted recession in the 2008-09 period in the wake of the global financial crisis. Slovenia became the first 2004 EU entrant to adopt the euro (on 1 January 2007) and has experienced one of the most stable political transitions in Central and Southeastern Europe.

In March 2004, Slovenia became the first transition country to graduate from borrower status to donor partner at the World Bank. In 2007, Slovenia was invited to begin the process for joining the OECD; it became a member in 2012. However, long-delayed privatizations, particularly within Slovenia’s largely state-owned and increasingly indebted banking sector, have fueled investor concerns since 2012 that the country would need EU-IMF financial assistance. In 2013, the European Commission granted Slovenia permission to begin recapitalizing ailing lenders and transferring their nonperforming assets into a “bad bank” established to restore bank balance sheets. From 2014 to 2016, export-led growth, fueled by demand in larger European markets pushed GDP growth to 2.3% per year, while stubbornly high unemployment fell slightly to below 12%.

Prime Minister CERAR’s government took office in September 2014, pledging to press ahead with commitments to privatize a select group of state-run companies, rationalize public spending, and further stabilize the banking sector.
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 closure of key businesses, and an empty government treasury culminated in economic collapse. RAMSI's efforts to restore law and order and economic stability have led to modest growth as the economy rebuilds.
Somalia Despite the lack of effective national governance, Somalia maintains an informal economy largely based on livestock, remittance/money transfer companies, and telecommunications. Somalia's government lacks the ability to collect domestic revenue and external debt – mostly in arrears – was estimated at 93% of GDP in 2014.

Agriculture is the most important sector, with livestock normally accounting for about 40% of GDP and more than 50% of export earnings. Nomads and semi-pastoralists, who are dependent upon livestock for their livelihood, make up a large portion of the population. Economic activity is estimated to have increased by 3.7% in 2016 because of growth in the agriculture, construction and telecommunications sector. Somalia's small industrial sector, based on the processing of agricultural products, has largely been looted and the machinery sold as scrap metal.

In recent years, Somalia's capital city, Mogadishu, has witnessed the development of the city's first gas stations, supermarkets, and airline flights to Turkey since the collapse of central authority in 1991. Mogadishu's main market offers a variety of goods from food to electronic gadgets. Hotels continue to operate and are supported with private-security militias. Formalized economic growth has yet to expand outside of Mogadishu and a few regional capitals, and within the city, security concerns dominate business. Telecommunication firms provide wireless services in most major cities and offer the lowest international call rates on the continent. In the absence of a formal banking sector, money transfer/remittance services have sprouted throughout the country, handling up to $1.6 billion in remittances annually, although international concerns over the money transfers into Somalia continues to threaten these services’ ability to operate in Western nations.
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; and a stock exchange that is Africa’s largest and among the top 20 in the world.

Economic growth has decelerated in recent years, slowing to an estimated 0.3% in 2016. Unemployment, poverty, and inequality - among the highest in the world - remain a challenge. Official unemployment is roughly 26% of the workforce, and runs significantly higher among black youth. Even though the country's modern infrastructure supports a relatively efficient distribution of goods to major urban centers throughout the region, unstable electricity supplies retard growth. Eskom, the state-run power company, is building three new power stations and is installing new power demand management programs to improve power grid reliability; in late 2016 they issued a request for bids to revamp South Africa’s nuclear power generating capabilities. Load shedding and resulting rolling blackouts gripped many parts of South Africa in late 2014 and early 2015 because of electricity supply constraints due to technical problems at some generation units, unavoidable planned maintenance, and an accident at a power station.

South Africa's economic policy has focused on controlling inflation; however, the country faces structural constraints that also limit economic growth, such as skills shortages, declining global competitiveness, and frequent work stoppages due to strike action. The government faces growing pressure from urban constituencies to improve the delivery of basic services to low-income areas, to increase job growth, and to provide university level-education at affordable prices. Political infighting among South Africa’s ruling party and the volatility of the rand risks economic growth. International investors are concerned about the country’s long-term economic stability; as of December 2016, most major international credit ratings agencies placed South Africa only one level above junk bond status.
Southern Ocean Fisheries in 2013-14 landed 302,960 metric tons, of which 96% (291,370 tons-the highest reported catch since 1991) was krill and 4% (11,590 tons) Patagonian toothfish (also known as Chilean sea bass), compared to 15,330 tons in 2012-13 (estimated fishing from the area covered by the Convention of the Conservation of Antarctic Marine Living Resources, 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 2014-15 Antarctic summer, 36,702 tourists visited the Southern Ocean, slightly lower than the 37,405 visitors in 2013-14 (estimates provided to the Antarctic Treaty by the International Association of Antarctica Tour Operators, and does not include passengers on overflights and those flying directly in and out of Antarctica).
South Georgia and South Sandwich Islands Some fishing takes place in adjacent waters. Harvesting finfish and krill are potential sources of income. The islands receive income from postage stamps produced in the UK, the sale of fishing licenses, and harbor and landing fees from tourist vessels. Tourism from specialized cruise ships is increasing rapidly.
South Sudan Following several decades of civil war with Sudan, industry and infrastructure in landlocked South Sudan are severely underdeveloped and poverty is widespread. Subsistence agriculture provides a living for the vast majority of the population. Property rights are insecure and price signals are weak, because markets are not well organized. After independence, South Sudan's central bank issued a new currency, the South Sudanese pound, allowing a short grace period for turning in the old currency.

South Sudan has little infrastructure - approximately 200 kilometers of paved roads. Electricity is produced mostly by costly diesel generators, and indoor plumbing and potable water are scarce. South Sudan depends largely on imports of goods, services, and capital - mainly from Uganda, Kenya and Sudan.

Nevertheless, South Sudan does have abundant natural resources. At independence in 2011, South Sudan produced nearly three-fourths of former Sudan's total oil output of nearly a half million barrels per day. The Government of South Sudan used to rely on oil for the vast majority of its budget revenues before oil production fell sharply. Oil is exported through a pipeline that runs to refineries and shipping facilities at Port Sudan on the Red Sea. The economy of South Sudan will remain linked to Sudan for some time, given the long lead time and great expense required to build another pipeline, should the government decide to do so. In January 2012, South Sudan suspended production of oil because of its dispute with Sudan over transshipment fees. This suspension lasted 15 months and had a devastating impact on GDP, which declined by 48% in 2012. With the resumption of oil flows the economy rebounded strongly during the second half of calendar year 2013. This occurred in spite of the fact that oil production, at an average level of 222,000 barrels per day, was 40% lower compared with 2011, prior to the shutdown. GDP grew by nearly 30% in 2013. However, the outbreak of conflict in December 2013 combined with a further reduction of oil production and exports, meant that GDP growth fell significantly in 2014 and 2015 as poverty and food insecurity rose. South Sudan holds one of the richest agricultural areas in Africa with fertile soils and abundant water supplies. Currently the region supports 10-20 million head of cattle.

South Sudan is currently burdened by considerable debt because of increased military spending and revenue shortfalls due to low oil prices and decreased production. South Sudan has received more than $4 billion in foreign aid since 2005, largely from the UK, the US, Norway, and the Netherlands. Annual inflation peaked at over 800% in October 2016. The government has relied on borrowing from the central bank to fund budget expenses. The decision in December 2015 by the central bank to abandon a fixed exchange rate and allow the South Sudanese Pound to float has not reduced inflation in the short term. Long-term challenges include diversifying the formal economy, alleviating poverty, maintaining macroeconomic stability, improving tax collection and financial management and improving the business environment.
Spain After experiencing a prolonged recession in the wake of the global financial crisis that began in 2008, in 2016 Spain marked the third full year of positive economic growth in nine years, largely due to increased private consumption. At the onset of the financial crisis, Spain's GDP contracted by 3.7% in 2009, ending a 16-year growth trend, and continued contracting through most of 2013. In that year, the government successfully shored up struggling banks - exposed to the collapse of Spain's depressed real estate and construction sectors - and in January 2014 completed an EU-funded restructuring and recapitalization program for its financial sector.

Until 2014, credit contraction in the private sector, fiscal austerity, and high unemployment weighed on domestic consumption and investment. The unemployment rate rose from a low of about 8% in 2007 to more than 26% in 2013, but labor reforms prompted a modest reduction to 19.7% in 2016. High unemployment has strained Spain's public finances, as spending on social benefits increased while tax revenues fell. Spain’s budget deficit peaked at 11.4% of GDP in 2010, but Spain gradually reduced the deficit to about 5% of GDP in 2015, and 4.1% of GDP in 2016. Public debt has increased substantially – from 60.1% of GDP in 2010 to nearly 99.5% in 2016.

Exports were resilient throughout the economic downturn and helped to bring Spain's current account into surplus in 2013 for the first time since 1986, where it remained through 2016. Rising labor productivity and an internal devaluation resulting from moderating labor costs and lower inflation have helped to improve foreign investor interest in the economy and positive FDI flows have been restored.

Political gridlock after the national elections in December 2015 and June 2016 and ensuing government formation process constrained the caretaker government’s ability to implement needed labor, pension, health care, tax, and education reforms— in 2016. The European Commission criticized Spain’s 2016 budget for easing austerity measures and for its alleged overly optimistic growth and deficit projections. Spain’s borrowing costs are dramatically lower since their peak in mid-2012, and despite the recent uptick in economic activity, inflation has dropped sharply, from 1.5% in 2013 to a negative 0.3% in 2016.
Spratly Islands Economic activity is limited to commercial fishing. The proximity to nearby oil- and gas-producing sedimentary basins indicate potential oil and gas deposits, but the region is largely unexplored. No reliable estimates of potential reserves are available. Commercial exploitation has yet to be developed.
Sri Lanka Sri Lanka is attempting to sustain economic growth while maintaining macroeconomic stability under an IMF program. The government's high debt payments and bloated civil service cadre, which have contributed to historically high budget deficits and low tax revenues, remain a concern. Government debt is about 77% of GDP and remains among the highest of the emerging markets.

The new government in 2015 drastically increased wages for public sector employees, which boosted demand for consumer goods but hurt the overall balance of payments and reduced foreign exchange reserves.

Tourism has experienced strong growth during recent years following the resolution of the government's 26-year conflict with the Liberation Tigers of Tamil Eelam. The government has been pursuing large-scale reconstruction and development projects in its efforts to spur growth.
Sudan Sudan has experienced protracted social conflict, civil war, and, in July 2011, the loss of three-quarters of its oil production due to the secession of South Sudan. The oil sector had driven much of Sudan's GDP growth since 1999. For nearly a decade, the economy boomed on the back of rising oil production, high oil prices, and significant inflows of foreign direct investment. Since the economic shock of South Sudan's secession, Sudan has struggled to stabilize its economy and make up for the loss of foreign exchange earnings. The interruption of oil production in South Sudan in 2012 for over a year and the consequent loss of oil transit fees further exacerbated the fragile state of Sudan’s economy. Ongoing conflicts in Southern Kordofan, Darfur, and the Blue Nile states, lack of basic infrastructure in large areas, and reliance by much of the population on subsistence agriculture, keep close to half of the population at or below the poverty line.

Sudan is also subject to comprehensive US sanctions. Sudan is attempting to develop non-oil sources of revenues, such as gold mining, while carrying out an austerity program to reduce expenditures. The world’s largest exporter of gum Arabic, Sudan produces 75-80% of the world’s total output. Agriculture continues to employ 80% of the work force.

Sudan introduced a new currency, still called the Sudanese pound, following South Sudan's secession, but the value of the currency has fallen since its introduction. Khartoum formally devalued the currency in June 2012, when it passed austerity measures that included gradually repealing fuel subsidies. Sudan also faces high inflation, which reached 47% on an annual basis in November 2012 but subsided to about 20% in 2016-17.
Suriname Suriname’s economy is dominated by the mining industry, with exports of oil and gold accounting for approximately 85% of exports and 27% of government revenues. This makes the economy highly vulnerable to mineral price volatility. The worldwide drop in international commodity prices and the cessation of alumina mining in Suriname significantly reduced government revenue and national income during the past few years. After 99 years of operations, a major US aluminum company recently discontinued its activities in Suriname. Public sector revenues fell, together with exports, international reserves, employment, and private sector investment.

Economic growth declined annually from just under 5% in 2012 to -10.4% in 2016. In January 2011, the government devalued the currency by 20% and raised taxes to reduce the budget deficit. Suriname began instituting macro adjustments between September 2015 and 2016; these included another 20% currency devaluation in November 2015 and foreign currency interventions by the Central Bank until March 2016, after which time the Bank allowed the Surinamese dollar (SRD) to float. By December 2016, the SRD had lost 46% of its value against the dollar. High import price pass-through from depreciation and electricity tariff increases caused inflation to increase 55.5% year-over-year in December 2016.

Suriname's economic prospects for the medium-term will depend on continued commitment to responsible monetary and fiscal policies and on the introduction of structural reforms to liberalize markets and promote competition. The government's over-reliance on revenue from the extractive sector colors Suriname's economic outlook. One credit bureau forecasted that the economy would contract 2% in 2017. Rising international oil prices and higher production by Suriname’s oil company, Staatsolie’s, will lift oil exports. Two new offshore oil exploration wells will draw 100 million dollars in foreign direct investment inflows. Higher gold prices and increased production from the Merian gold mine also will lift exports. However, investment overall is slowing and unemployment is rising, reflecting government spending cuts, weak business confidence, and the completion of large mining infrastructure projects. Fiscal problems, such as a failure to secure sufficient external financing, could result in additional pressure on the exchange rate and inflation.
Svalbard Coal mining, tourism, and international research are Svalbard's major industries. Coal mining has historically been the dominant economic activity, and the Treaty of 9 February 1920 gives the 45 countries that so far have ratified the treaty 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 engaging in this are Norwegian and Russian. Low coal prices have forced the Norwegian coal company, Store Norske Spitsbergen Kulkompani, to close one of its two mines and to considerably reduce the activity of the other. Since the 1990s, the tourism and hospitality industry has grown rapidly, and Svalbard now receives 60,000 visitors annually.

The settlements on Svalbard were established as company towns, and at their height in the 1950s, the Norwegian state-owned coal company supported nearly 1,000 jobs. Today, only about 300 people work in the mining industry.

Goods such as alcohol, tobacco, and vehicles, normally highly taxed on mainland Norway, are considerably cheaper in Svalbard in an effort by the Norwegian government to entice more people to live on the Arctic archipelago. By law, Norway collects only enough taxes to pay for the needs of the local government; none of tax proceeds go to the central government.
Swaziland A small, landlocked kingdom, Swaziland is bordered in the north, west and south by the Republic of South Africa and by Mozambique in the east. Swaziland depends on South Africa for 60% of its exports and for more than 90% of its imports. Swaziland's currency is pegged to the South African rand, effectively relinquishing Swaziland's monetary policy to South Africa. The government is dependent on customs duties from the Southern African Customs Union (SACU) for 49% of revenue; income tax accounts for 27% and a valued added tax for 19% of revenues. Swaziland is a lower middle income country, but its income distribution is highly skewed, with an estimated 20% of the population controlling 80% of the nation’s wealth. As of 2017, more than one-quarter of the adult population was infected by HIV/AIDS; Swaziland has the world’s highest HIV prevalence rate.

Subsistence agriculture employs approximately 70% of the population. The manufacturing sector diversified in the 1980s and 1990s, but manufacturing has grown little in the last decade. Sugar and soft drink concentrate are the largest foreign exchange earners. Mining has declined in importance in recent years. Coal, gold, diamond, and quarry stone mines are small scale, and the only iron ore mine closed in 2014.

With an estimated 28% unemployment rate, Swaziland's need to increase the number and size of small and medium enterprises and to attract foreign direct investment is acute. On 1 January 2015, Swaziland lost its eligibility for benefits under the US African Growth and Opportunity Act after failing to meet benchmarks relating to workers’ rights.

The IMF forecasted that Swaziland’s economy will grow at a slower pace in 2017 because of a region-wide drought, which is likely to hurt Swaziland’s revenue from sugar exports and other agricultural products; tourism and transport sectors will also decline. Overgrazing, soil depletion, drought, and floods are persistent problems. Swaziland’s revenue from SACU receipts also are projected to decline in 2017, making it harder for the government to maintain fiscal balance.
Sweden Sweden has achieved an enviable standard of living with its combination of free-market capitalism and extensive welfare benefits. Sweden remains outside the euro zone largely out of concern that joining the European Economic and Monetary Union would diminish the country’s sovereignty over its welfare system. Timber, hydropower, and iron ore constitute the resource base of an economy heavily oriented toward foreign trade.

Sweden’s economy experienced modest growth in 2014-16, with real GDP growth above 2%, but continues to struggle with deflationary pressure.
Switzerland Switzerland, a country that espouses neutrality, is a prosperous and modern market economy with low unemployment, a highly skilled labor force, and a per capita GDP among the highest in the world. Switzerland's economy benefits from a highly developed service sector, led by financial services, and a manufacturing industry that specializes in high-technology, knowledge-based production. Its economic and political stability, transparent legal system, exceptional infrastructure, efficient capital markets, and low corporate tax rates also make Switzerland one of the world's most competitive economies.

The Swiss have brought their economic practices largely into conformity with the EU's to enhance their international competitiveness, but some trade protectionism remains, particularly for its small agricultural sector. The fate of the Swiss economy is tightly linked to that of its neighbors in the euro zone, which purchases half of Swiss exports. The global financial crisis of 2008 and resulting economic downturn in 2009 stalled demand for Swiss exports and put Switzerland into a recession. During this period, the Swiss National Bank (SNB) implemented a zero-interest rate policy to boost the economy, as well as to prevent appreciation of the franc, and Switzerland's economy began to recover in 2010.

The sovereign debt crises unfolding in neighboring euro-zone countries, however, coupled with ongoing economic instability in Russia and other eastern European economies continue to pose a significant risk to the Swiss economy, driving up demand for the Swiss franc by investors seeking a safe-haven currency. In January 2015, the SNB abandoned the Swiss franc’s peg to the euro, roiling global currency markets and making active SNB intervention a necessary hallmark of present-day Swiss monetary policy. The independent SNB has upheld its zero interest rate policy and conducted major market interventions to prevent further appreciation of the Swiss franc, but parliamentarians have urged it to do more to weaken the currency. The franc's strength has made Swiss exports less competitive and weakened the country's growth outlook; GDP growth fell below 2% per year from 2011-16.

In recent years, Switzerland has responded to increasing pressure from neighboring countries and trading partners to reform its banking secrecy laws, by agreeing to conform to OECD regulations on administrative assistance in tax matters, including tax evasion. The Swiss government has also renegotiated its double taxation agreements with numerous countries, including the US, to incorporate OECD standards, and is openly considering the possibility of imposing taxes on bank deposits held by foreigners.
Syria Syria's economy continues to deteriorate amid the ongoing conflict that began in 2011, declining by more than 70% from 2010 to 2016. The government has struggled to address the effects of international sanctions, widespread infrastructure damage, diminished domestic consumption and production, reduced subsidies, and high inflation, which have caused dwindling foreign exchange reserves, rising budget and trade deficits, a decreasing value of the Syrian pound, and falling household purchasing power.

During 2014, the ongoing conflict and continued unrest and economic decline worsened the humanitarian crisis and elicited a greater need for international assistance, as the number of people in need inside Syria increased from 9.3 million to 12.2 million, and the number of Syrian refugees increased from 2.2 million to more than 3.3 million.

Prior to the turmoil, Damascus had begun liberalizing economic policies, including cutting lending interest rates, opening private banks, consolidating multiple exchange rates, raising prices on some subsidized items, and establishing the Damascus Stock Exchange, but the economy remains highly regulated. Long-run economic constraints include foreign trade barriers, declining oil production, high unemployment, rising budget deficits, increasing pressure on water supplies caused by heavy use in agriculture, rapid population growth, industrial expansion, water pollution, and widespread infrastructure damage.
Taiwan Taiwan has a dynamic capitalist economy that is driven largely by industrial manufacturing, and especially exports of electronics, machinery, and petrochemicals. This heavy dependence on exports exposes the economy to fluctuations in global demand. Taiwan's diplomatic isolation, low birth rate, rapidly aging population, and increasing competition from China and other Asia Pacific markets are other major long-term challenges.

Following the landmark Economic Cooperation Framework Agreement (ECFA) signed with China in June 2010, Taiwan in July 2013 signed a free trade deal with New Zealand - Taipei’s first-ever with a country with which it does not maintain diplomatic relations - and, in November of that year, inked a trade pact with Singapore. However, follow-on components of the ECFA, including a signed agreement on trade in services and negotiations on trade in goods and dispute resolution, have stalled. In early 2014, the government bowed to public demand and proposed a new law governing the oversight of cross-Strait agreements, before any additional deals with China are implemented; the legislature has yet to vote on such legislation, leaving the future of ECFA uncertain. President TSAI since taking office in May 2016 has promoted greater economic integration with South and Southeast Asia through the New Southbound Policy initiative and has also expressed interest in Taiwan joining the Trans-Pacific Partnership as well as bilateral trade deals with partners such as the US.

Taiwan's total fertility rate of just over one child per woman is among the lowest in the world, raising the prospect of future labor shortages, falling domestic demand, and declining tax revenues. Taiwan's population is aging quickly, with the number of people over 65 expected to account for nearly 20% of the island's total population by 2025.

The island runs a trade surplus with many economies, including China and the US, and its foreign reserves are the world's fifth largest, behind those of China, Japan, Saudi Arabia, and Switzerland. In 2006, China overtook the US to become Taiwan's second-largest source of imports after Japan. China is also the island's number one destination for foreign direct investment. Taiwan since 2009 has gradually loosened rules governing Chinese investment and has also secured greater market access for its investors on the mainland. In August 2012, the Taiwan Central Bank signed a memorandum of understanding (MOU) on cross-Strait currency settlement with its Chinese counterpart. The MOU allows for the direct settlement of Chinese renminbi (RMB) and the New Taiwan dollar across the Strait, which has helped Taiwan develop into a local RMB hub.

Closer economic links with the mainland bring opportunities for Taiwan’s economy but also pose challenges as political differences remain unresolved and China’s economic growth is slowing. Domestic economic issues loomed large in public debate ahead of the January 2016 presidential and legislative elections, including concerns about stagnant wages, high housing prices, youth unemployment, job security, and financial security in retirement.
Tajikistan Tajikistan is a poor, mountainous country with an economy dominated by minerals extraction, metals processing, agriculture, and reliance on remittances from citizens working abroad. The 1992-97 civil war severely damaged an already weak economic infrastructure and caused a sharp decline in industrial and agricultural production. Today, Tajikistan has one of the lowest per capita GDPs among the 15 former Soviet republics. Less than 7% of the land area is arable and cotton is the most important crop. Tajikistan imports approximately 70% of its food. Mineral resources include silver, gold, uranium, antimony, and tungsten. Industry consists mainly of small obsolete factories in food processing and light industry, substantial hydropower facilities, and a large aluminum plant - currently operating well below its capacity.

Because of a lack of employment opportunities in Tajikistan, more than one million Tajik citizens work abroad - roughly 90% in Russia - supporting families back home through remittances that in 2014 were equivalent to nearly 50% of GDP. Some experts estimate the value of narcotics transiting Tajikistan is equivalent to 30%-50% of GDP.

Since the end of the civil war, the country has pursued half-hearted reforms and privatizations in the economic sphere, but the poor business climate remains a hurdle to attracting foreign investment. Tajikistan has sought to develop its substantial hydroelectricity potential through partnership with Russian and Iranian investors, and is pursuing completion of the Roghun dam - which, if built according to plan, would be the tallest dam in the world. However, the project is a sensitive issue for downstream neighbors and faces large financing shortfalls. In 2016, Tajikistan officially contracted with Italian firm Salini Impregilo to construct the dam over a 13-year period for $3.9 billion.

Recent slowdowns in the Russian and Chinese economies, low commodity prices, and currency fluctuations are hampering economic growth in Tajikistan. By some estimates, the dollar value of remittances from Russia to Tajikistan dropped by more than 65% in 2015. The government faces challenges financing the public debt, which is equivalent to 35% of GDP, and the National Bank of Tajikistan has aggressively spent its reserves to bolster the weakening somoni, leaving little space for fiscal or monetary measures to counter any additional economic shocks.
Tanzania Tanzania is one of the world's poorest economies in terms of per capita income, but has achieved high growth rates based on its vast natural resource wealth and tourism. GDP growth in 2009-16 averaged 6%-7% per year. Dar es Salaam used fiscal stimulus measures and easier monetary policies to lessen the impact of the global recession. Tanzania has largely completed its transition to a market economy, though the government retains a presence in sectors such as telecommunications, banking, energy, and mining.

The economy depends on agriculture, which accounts for more than one-quarter of GDP, provides 85% of exports, and employs about 65% of the work force. All land in Tanzania is owned by the government, which can lease land for up to 99 years. Proposed reforms to allow for land ownership, particularly foreign land ownership, remain unpopular.

The financial sector in Tanzania has expanded in recent years and foreign-owned banks account for about 48% of the banking industry's total assets. Competition among foreign commercial banks has resulted in significant improvements in the efficiency and quality of financial services, though interest rates are still relatively high, reflecting high fraud risk. Recent banking reforms have helped increase private-sector growth and investment.

The World Bank, the IMF, and bilateral donors have provided funds to rehabilitate Tanzania's aging infrastructure, including rail and port, which provide important trade links for inland countries. In 2013, Tanzania completed the world's largest Millennium Challenge Compact (MCC) grant, worth $698 million, but in late 2015, the MCC Board of Directors deferred a decision to renew Tanzania’s eligibility because of irregularities in voting in Zanzibar and concerns over the governments use of a controversial cybercrime bill.

Under the new government elected in 2015, Tanzania has developed an ambitious development agenda focused on creating a better business environment through improved infrastructure, access to financing, and education progress, but implementing budgets remains challenging for the government.
Thailand With a relatively well-developed infrastructure, a free-enterprise economy, and generally pro-investment policies, Thailand is highly dependent on international trade, with exports accounting for about two-thirds of GDP. Thailand’s exports include electronics, agricultural commodities, automobiles and parts, and processed foods. The industry and service sectors produce about 90% of GDP. The agricultural sector, comprised mostly of small-scale farms, contributes only 10% of GDP but employs about one-third of the labor force. Thailand has attracted an estimated 3.0-4.5 million migrant workers, mostly from neighboring countries.

Over the last few decades, Thailand has sustained strong growth and has reduced poverty substantially. In 2013, the Thai Government implemented a nationwide 300 baht (roughly $10) per day minimum wage policy and deployed new tax reforms designed to lower rates on middle-income earners.

Growth has slowed in the last few years, however, due to domestic political turmoil and sluggish global demand. Nevertheless, Thailand’s economic fundamentals are sound, with low inflation, low unemployment, and reasonable public and external debt levels. Tourism and government spending - mostly on infrastructure and short-term stimulus measures – have helped to boost the economy, and The Bank of Thailand has been supportive, with several interest rate reductions.

Over the longer-term, Thailand faces labor shortages, and domestic debt levels, political uncertainty, and an aging population pose risks to growth.
Timor-Leste Since independence in 1999, Timor-Leste has faced great challenges in rebuilding its infrastructure, strengthening the civil administration, and generating jobs for young people entering the work force. The development of offshore oil and gas resources has greatly supplemented government revenues. This technology-intensive industry, however, has done little to create jobs in part because there are no production facilities in Timor-Leste. Gas is currently piped to Australia for processing, but Timor-Leste has expressed interest in developing a domestic processing capacity.

In June 2005, the National Parliament unanimously approved the creation of the Timor-Leste Petroleum Fund to serve as a repository for all petroleum revenues and to preserve the value of Timor-Leste's petroleum wealth for future generations. The Fund held assets of $16 billion, as of mid-2016. Oil accounts for over 90% of government revenues, and the drop in the price of oil in 2014-16 has led to concerns about the long-term sustainability of government spending. Timor-Leste compensated for the decline in price by exporting more oil. The Ministry of Finance maintains that the Petroleum Fund is sufficient to sustain government operations for the foreseeable future.

Annual government budget expenditures increased markedly between 2009 and 2012 but dropped significantly through 2016. Historically, the government failed to spend as much as its budget allowed. The government has focused significant resources on basic infrastructure, including electricity and roads, but limited experience in procurement and infrastructure building has hampered these projects. The underlying economic policy challenge the country faces remains how best to use oil-and-gas wealth to lift the non-oil economy onto a higher growth path and to reduce poverty.
Togo Togo is enjoying a period of steady economic growth fueled by political stability and a concerted effort by the government to modernize the country’s commercial infrastructure. The country has recently completed an ambitious large-scale infrastructure improvement program, including new principal roads, a new airport terminal, and a new sea-port. The economy depends heavily on both commercial and subsistence agriculture, which provides employment for around 60% of the labor force. Some basic foodstuffs must still be imported. Cocoa, coffee, and cotton and other agricultural products generate about 20% of export earnings with cotton being the most important cash crop. Togo is among the world's largest producers of phosphate and seeks to develop its carbonate phosphate reserves, which provide more than 20% of export earnings.

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. Togo completed its IMF Extended Credit Facility in 2011 and reached a Heavily Indebted Poor Country debt relief completion point in 2010 at which 95% of the country's debt was forgiven. Togo continues to work with the IMF on structural reforms, and is currently finalizing IMF approval for an agreement on an Extended Credit Facility arrangement consisting of a three-year $238 million loan package. Progress depends on follow through on privatization, increased openness in government financial operations, progress toward legislative elections, and continued support from foreign donors.

Togo’s 2016 economic growth remained steady at 5.3%, largely driven by infusions of foreign aid, infrastructure investment in the port and mineral sectors, and improvements in the business climate. Foreign direct investment inflows have slowed in recent years.
Tokelau Tokelau's small size (three villages), isolation, and lack of resources greatly restrain economic development and confine agriculture to the subsistence level. 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.

The people rely heavily on aid from New Zealand - about $15 million annually in FY12/13 and FY13/14 - to maintain public services. New Zealand's support amounts to 80% of Tokelau's recurrent government budget. An international trust fund, currently worth nearly $32 million, was established in 2004 by New Zealand to provide Tokelau an independent source of revenue.
Tonga Tonga has a small, open island economy and is the last constitutional monarchy among the Pacific Island countries. It has a narrow export base in agricultural goods. Squash, vanilla beans, and yams are the main crops. Agricultural exports, including fish, make up two-thirds of total exports. Tourism is the second-largest source of hard currency earnings following remittances. Tonga had 53,800 visitors in 2015. The country must import a high proportion of its food, mainly from New Zealand.

The country remains dependent on external aid and remittances from overseas Tongans to offset its trade deficit. The government is emphasizing the development of the private sector, encouraging investment, and is committing increased funds for health care and education. Tonga's English-speaking and educated workforce offer a viable labor market, and the tropical climate provides fertile soil. Renewable energy and deep-sea mining also offer opportunities for investment.

Tonga has a reasonably sound basic infrastructure and well developed social services. The government faces high unemployment among the young, moderate inflation, pressures for democratic reform, and rising civil service expenditures.
Trinidad and Tobago Trinidad and Tobago relies on its energy sector for much of its economic activity, and has one of the highest per capita incomes in Latin America. Economic growth between 2000 and 2007 averaged slightly over 8% per year, significantly above the regional average of about 3.7% for that same period; however, GDP has slowed down since then, contracting during 2009-12, making small gains in 2013 and contracting again in 2014-16. Trinidad and Tobago is buffered by considerable foreign reserves and a sovereign wealth fund that equals about one-and-a-half times the national budget, but the country is in a recession and the government faces the dual challenge of gas shortages and a low price environment.

Energy production and downstream industrial use dominate the economy. Oil and gas typically account for about 40% of GDP and 80% of exports but less than 5% of employment. Trinidad and Tobago is home to one of the largest natural gas liquefaction facilities in the Western Hemisphere. Trinidad and Tobago produces about nine times more natural gas than crude oil on an energy equivalent basis with gas contributing about two-thirds of energy sector government revenue. The US is the country’s largest trading partner, accounting for 28% of its total imports and taking 48% of its exports.

Economic diversification is a longstanding government talking point, and Trinidad and Tobago has much potential due to its stable, democratic government and its educated, English speaking workforce. The country is also a regional financial center with a well-regulated and stable financial system. Other sectors the Government of Trinidad and Tobago has targeted for increased investment and projected growth include tourism, agriculture, information and communications technology, and shipping. Unfortunately, a host of other factors, including low labor productivity, inefficient government bureaucracy, and corruption, have hampered economic development.
Tunisia Tunisia's diverse, market-oriented economy has long been cited as a success story in Africa and the Middle East, but it faces an array of challenges following the 2011 Arab Spring revolution, including slow economic growth and high unemployment. Following an ill-fated experiment with socialist economic policies in the 1960s, Tunisia embarked on a successful strategy focused on bolstering exports, foreign investment, and tourism, all of which have become central to the country's economy. Key exports now include textiles and apparel, food products, petroleum products, chemicals, and phosphates, with about 80% of exports bound for Tunisia's main economic partner, the EU.

Tunisia's liberal strategy, coupled with investments in education and infrastructure, fueled decades of 4-5% annual GDP growth and improved living standards. Former President Zine el Abidine BEN ALI (1987-2011) continued these policies, but as his reign wore on cronyism and corruption stymied economic performance, and unemployment rose among the country's growing ranks of university graduates. These grievances contributed to the January 2011 overthrow of BEN ALI, sending Tunisia's economy into a tailspin as tourism and investment declined sharply.

Tunisia’s government remains under pressure to boost economic growth quickly to mitigate chronic socio-economic challenges, especially high levels of youth unemployment, which has persisted since the revolution in 2011. Successive terrorist attacks against the tourism sector and worker strikes in the phosphate sector, which combined account for nearly 15% of GDP, slowed growth to less than 1% of GDP in 2015 and 1.5% in 2016. Tunis is seeking increased foreign investment and working with labor unions to limit labor disruption.
Turkey Turkey's largely free-market economy is driven by its industry and, increasingly, service sectors, although its traditional agriculture sector still accounts for about 25% of employment. The automotive, petrochemical, and electronics industries have risen in importance and surpassed the traditional textiles and clothing sectors within Turkey's export mix. However, the recent period of political stability and economic dynamism has given way to domestic uncertainty and security concerns, which are generating financial market volatility and weighing on Turkey’s economic outlook.

Current government policies emphasize populist spending measures and credit breaks, while implementation of structural economic reforms has slowed. The government is playing a more active role in some strategic sectors and has used economic institutions and regulators to target political opponents, undermining private sector confidence in the judicial system. Between July 2016 and March 2017, three credit ratings agencies downgraded Turkey’s sovereign credit ratings, citing concerns about the rule of law and the pace of economic reforms.
Current government policies emphasize populist spending measures and credit breaks, while implementation of structural economic reforms has slowed. The government is playing a more active role in some strategic sectors and has used economic institutions and regulators to target political opponents, undermining private sector confidence in the judicial system. Between July 2016 and March 2017, three credit ratings agencies downgraded Turkey’s sovereign credit ratings, citing concerns about the rule of law and the pace of economic reforms.
Turkey remains highly dependent on imported oil and gas but is pursuing energy relationships with a broader set of international partners and taking steps to increase use of domestic energy sources including renewables, nuclear, and coal. The joint Turkish-Azerbaijani Trans-Anatolian Natural Gas Pipeline is moving forward to increase transport of Caspian gas to Turkey and Europe, and when completed will help diversify Turkey's sources of imported gas.

After Turkey experienced a severe financial crisis in 2001, Ankara adopted financial and fiscal reforms as part of an IMF program. The reforms strengthened the country's economic fundamentals and ushered in an era of strong growth averaging more than 6% annually until 2008. An aggressive privatization program also reduced state involvement in basic industry, banking, transport, power generation, and communication. Global economic conditions and tighter fiscal policy caused GDP to contract in 2009, but Turkey's well-regulated financial markets and banking system helped the country weather the global financial crisis, and GDP growth rebounded to around 9% in 2010 and 2011, as exports and investment recovered following the crisis.

Since 2014, productivity and growth has slowed to reveal persistent underlying imbalances in the Turkish economy. In particular, Turkey’s low domestic savings and large current account deficit means it must rely on external investment inflows to finance growth, leaving the economy vulnerable to destabilizing shifts in investor confidence. The economy contracted in the third quarter of 2016 for the first time since 2009, in part due to a sharp decline in the tourism sector, and growth is likely to remain below potential in 2017. Other troublesome trends include rising unemployment and elevated inflation, which is likely to increase in 2017 given the Turkish lira’s recent depreciation against the dollar. Although government debt remains low at about 32% of GDP, bank and corporate borrowing has almost tripled as a percent of GDP during the past decade, outpacing its emerging-market peers and prompting investor concerns about its long-term sustainability.
Turkmenistan Turkmenistan is largely a desert country with intensive agriculture in irrigated oases and significant natural gas and oil resources. The two largest crops are cotton, most of which is produced for export, and wheat, which is domestically consumed. Although agriculture accounts for roughly 9% of GDP, it continues to employ nearly half of the country's workforce. Hydrocarbon exports (mainly natural gas) make up 25% of Turkmenistan’s GDP, the bulk of which is natural gas going to China. Ashgabat has explored two initiatives to bring gas to new markets: a trans-Caspian pipeline that would carry gas to Europe and the Turkmenistan-Afghanistan-Pakistan-India gas pipeline. Both face major financing and security hurdles and are unlikely to be completed soon.

Turkmenistan’s autocratic governments under presidents NIYAZOW (1991-2006) and BERDIMUHAMEDOW (since 2007) have made little progress improving the business climate, privatizing state-owned industries, and combatting corruption, limiting economic development outside the energy sector. High energy prices in the mid-2000s allowed the government to undertake extensive development and social spending, including providing heavy utility subsidies.

Low energy prices since mid-2014 are hampering Turkmenistan’s economic growth and reducing government revenues. The government has cut subsidies in several areas, and wage arrears have increased. In January 2014, the Central Bank of Turkmenistan devalued the manat by 19%, and downward pressure on the currency continues. There is a widening spread between the official exchange rate (3.49 TMM per US dollar) and the black market exchange rate (approximately 7 TMM per US dollar). Currency depreciation, corruption, isolationist policies, and limited spending on public services has resulted in a stagnate economy that is nearing crisis. Turkmenistan claims substantial foreign currency reserves, but non-transparent data limit international institutions’ ability to verify this information.
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 more than 1 million visitors that arrived in 2013. Three-quarters of the visitors came by ship. 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. Only eight of the atolls are inhabited. It is one of the smallest countries in the world, with its highest point at 4.6 meters above sea level. The country is isolated, almost entirely dependent on imports, particularly of food and fuel, and vulnerable to climate change and rising sea levels, which pose significant challenges to development.

The public sector dominates economic activity. Tuvalu has few natural resources, except for its fisheries. Earnings from fish exports and fishing licenses for Tuvalu’s territorial waters are a significant source of government revenue. In 2013, revenue from fishing licenses doubled and totaled more than 45% of GDP.

Official aid from foreign development partners has also increased. Tuvalu has substantial assets abroad. The Tuvalu Trust Fund, an international trust fund established in 1987 by development partners, has grown to $104 million (A$141 million) in 2014 and is an important cushion for meeting shortfalls in the government's budget. While remittances are another substantial source of income, the value of remittances has declined since the 2008-09 global financial crisis, but has stabilized at nearly $4 million per year. The financial impact of climate change and the cost of climate related adaptation projects is one of many concerns for the nation.
Uganda Uganda has substantial natural resources, including fertile soils, regular rainfall, small deposits of copper, gold, and other minerals, and recently discovered oil. Agriculture is the most important sector of the economy, employing more than one-third of the work force. Coffee accounts for the bulk of export revenues. Uganda has a small industrial sector that is dependent on imported inputs like oil and equipment. Overall productivity is hampered by a number of supply-side constraints, including underinvestment in an agricultural sector that continues to rely on rudimentary technology. Industrial growth is impeded by high-costs due to poor infrastructure, low levels of private investment, and the depreciation of the Ugandan shilling.

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 were especially aimed at dampening inflation while encouraging foreign investment to boost production and export earnings. Since 1990, economic reforms ushered in an era of solid economic growth based on continued investment in infrastructure, improved incentives for production and exports, lower inflation, and better domestic security.

The global economic downturn in 2008 hurt Uganda's exports; however, Uganda's GDP growth has largely recovered due to past reforms and a rapidly growing urban consumer population. Oil revenues and taxes are expected to become a larger source of government funding as production starts in the next five to 10 years. However, lower oil prices since 2014 and protracted negotiations and legal disputes between the Ugandan government and oil companies may prove a stumbling block to further exploration and development.

Uganda faces many economic challenges. Instability in South Sudan has led to a sharp increase in Sudanese refugees and is disrupting Uganda's main export market. High energy costs, inadequate transportation and energy infrastructure, insufficient budgetary discipline, and corruption inhibit economic development and investor confidence. During 2015 and 2016, the Uganda shilling depreciated 50% against the dollar.

The budget is dominated by energy and road infrastructure spending, while relying on donor support for long-term drivers of growth, including agriculture, health, and education. The largest infrastructure projects are externally financed through low-interest concessional loans. As a result, debt servicing for these loans is expected to rise.
Ukraine After Russia, the Ukrainian Republic was 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 unique equipment, such as, large diameter pipes and vertical drilling apparatus, and raw materials to industrial and mining sites in other regions of the former USSR.

Shortly after independence in August 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. Outside institutions - particularly the IMF encouraged Ukraine to quicken the pace and scope of reforms to foster economic growth. 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. From 2000 until mid-2008, Ukraine's economy was buoyant despite political turmoil between the prime minister and president. The economy contracted nearly 15% in 2009, among the worst economic performances in the world. In April 2010, Ukraine negotiated a price discount on Russian gas imports in exchange for extending Russia's lease on its naval base in Crimea.

Ukraine’s oligarch-dominated economy grew slowly from 2010 to 2013. After former President YANUKOVYCH fled the country during the Revolution of Dignity, the international community began efforts to stabilize the Ukrainian economy, including a March 2014 IMF assistance package of $17.5 billion, of which Ukraine has received four disbursements, most recently in April 2017, bringing the total disbursed as of that date to approximately $8.4 billion. Ukraine has made significant progress on reforms designed to make the country prosperous, democratic, and transparent. But more improvements are needed, including fighting corruption, developing capital markets, and improving the legislative framework.

Russia’s occupation of Crimea in March 2014 and ongoing aggression in eastern Ukraine have hurt economic growth. With the loss of a major portion of Ukraine’s heavy industry in Donbas and ongoing violence, Ukraine’s economy contracted by 6.6% in 2014 and by 14.3% in 2015, but grew by 2.3% in 2016 as key reforms took hold. After the EU and Ukraine enacted the Deep and Comprehensive Free Trade Area and Russia imposed a series of trade restrictions, the EU replaced Russia as Ukraine’s largest trading partner. Analysts predict approximately 2% growth in 2017, but a new prohibition on commercial trade with separatist-controlled territories will have an uncertain effect on Ukraine’s key industrial sectors.
United Arab Emirates The UAE has an open economy with a high per capita income and a sizable annual trade surplus. Successful efforts at economic diversification have reduced the portion of GDP from the oil and gas sector to 30%.

Since the discovery of oil in the UAE nearly 60 years ago, the country 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 utilities to greater private sector involvement. The country's free trade zones - offering 100% foreign ownership and zero taxes - are helping to attract foreign investors.

The global financial crisis of 2008-09, tight international credit, and deflated asset prices constricted the economy in 2009. UAE authorities tried to blunt the crisis by increasing spending and boosting liquidity in the banking sector. The crisis hit Dubai hardest, as it was heavily exposed to depressed real estate prices. Dubai lacked sufficient cash to meet its debt obligations, prompting global concern about its solvency and ultimately a $20 billion bailout from the UAE Central Bank and Abu Dhabi Government that was refinanced in March 2014.

The UAE’s dependence on oil is a significant long-term challenge. Low oil prices have prompted the UAE to cut expenditures, including on some social programs, but the UAE has sufficient assets in its sovereign investment funds to cover its deficits. The government reduced fuel subsidies in August 2015, and has announced plans to introduce excise and value-added taxes by January 1, 2018. The UAE's strategic plan for the next few years focuses on economic diversification, promoting the UAE as a global trade and tourism hub, developing industry, and creating more job opportunities for nationals through improved education and increased private sector employment.
United Kingdom The UK, a leading trading power and financial center, is the third largest economy in Europe after Germany and France. 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 resources, but its oil and natural gas reserves are declining; the UK has been a net importer of energy since 2005. Services, particularly banking, insurance, and business services, are key drivers of British GDP growth. Manufacturing, meanwhile, has declined in importance but still accounts for about 10% of economic output.

In 2008, the global financial crisis hit the economy particularly hard, due to the importance of its financial sector. Falling home prices, high consumer debt, and the global economic slowdown compounded Britain's economic problems, pushing the economy into recession in the latter half of 2008 and prompting the then BROWN (Labour) government to implement a number of measures to stimulate the economy and stabilize the financial markets. Facing burgeoning public deficits and debt levels, in 2010 the then CAMERON-led coalition government (between Conservatives and Liberal Democrats) initiated an austerity program, which has continued under the new Conservative majority government. However, the deficit still remains one of the highest in the G7, standing at 4.1% of GDP as of mid-2016, and Britain has pledged to lower its corporation tax from 20% to 17% by 2020. Britain had a debt burden of 92.2% GDP at the end of 2016.

While the UK is one of the fastest growing economies in the G7, economists are concerned about the potential negative impact of the UK’s vote to leave the EU. The UK has an extensive trade relationship with other EU members through its single market membership and economic observers have warned the exit will jeopardize its position as the central location for European financial services.


United States Pacific Island Wildlife Refuges no economic activity
United States The US has the most technologically powerful economy in the world, with a per capita GDP of $57,300. US firms are at or near the forefront in technological advances, especially in computers, pharmaceuticals, and medical, aerospace, and military equipment; however, their advantage has narrowed since the end of World War II. Based on a comparison of GDP measured at purchasing power parity conversion rates, the US economy in 2014, having stood as the largest in the world for more than a century, slipped into second place behind China, which has more than tripled the US growth rate for each year of the past four decades.

In the US, 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, businesses face higher barriers to enter their rivals' home markets than foreign firms face entering US markets.

Long-term problems for the US include stagnation of wages for lower-income families, inadequate investment in deteriorating infrastructure, rapidly rising medical and pension costs of an aging population, energy shortages, and sizable current account and budget deficits.

The onrush of technology has been a driving factor in 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. But the globalization of trade, and especially the rise of low-wage producers such as China, has put additional downward pressure on wages and upward pressure on the return to capital. Since 1975, practically all the gains in household income have gone to the top 20% of households. Since 1996, dividends and capital gains have grown faster than wages or any other category of after-tax income.

Imported oil accounts for nearly 55% of US consumption and oil has a major impact on the overall health of the economy. Crude oil prices doubled between 2001 and 2006, the year home prices peaked; higher gasoline prices ate into consumers' budgets and many individuals fell behind in their mortgage payments. Oil prices climbed another 50% between 2006 and 2008, and bank foreclosures more than doubled in the same period. Besides dampening the housing market, soaring oil prices caused a drop in the value of the dollar and a deterioration in the US merchandise trade deficit, which peaked at $840 billion in 2008. Because the US economy is energy-intensive, falling oil prices since 2013 have alleviated many of the problems the earlier increases had created.

The sub-prime mortgage crisis, falling home prices, investment bank failures, tight credit, and the global economic downturn pushed the US into a recession by mid-2008. GDP contracted until the third quarter of 2009, making this the deepest and longest downturn since the Great Depression. To help stabilize financial markets, the US Congress established a $700 billion Troubled Asset Relief Program (TARP) in October 2008. The government used some of these funds to purchase equity in US banks and industrial corporations, much of which had been returned to the government by early 2011. In January 2009, Congress passed and President Barack OBAMA signed a bill providing an additional $787 billion fiscal stimulus to be used over 10 years - two-thirds on additional spending and one-third on tax cuts - to create jobs and to help the economy recover. In 2010 and 2011, the federal budget deficit reached nearly 9% of GDP. In 2012, the Federal Government reduced the growth of spending and the deficit shrank to 7.6% of GDP. US revenues from taxes and other sources are lower, as a percentage of GDP, than those of most other countries.

Wars in Iraq and Afghanistan required major shifts in national resources from civilian to military purposes and contributed to the growth of the budget deficit and public debt. Through 2014, the direct costs of the wars totaled more than $1.5 trillion, according to US Government figures.

In March 2010, President OBAMA signed into law the Patient Protection and Affordable Care Act, a health insurance reform that was designed to extend coverage to an additional 32 million Americans by 2016, through private health insurance for the general population and Medicaid for the impoverished. Total spending on healthcare - public plus private - rose from 9.0% of GDP in 1980 to 17.9% in 2010.

In July 2010, the president signed the DODD-FRANK Wall Street Reform and Consumer Protection Act, a law designed to promote financial stability by protecting consumers from financial abuses, ending taxpayer bailouts of financial firms, dealing with troubled banks that are "too big to fail," and improving accountability and transparency in the financial system - in particular, by requiring certain financial derivatives to be traded in markets that are subject to government regulation and oversight.

In December 2012, the Federal Reserve Board (Fed) announced plans to purchase $85 billion per month of mortgage-backed and Treasury securities in an effort to hold down long-term interest rates, and to keep short-term rates near zero until unemployment dropped below 6.5% or inflation rose above 2.5%. In late 2013, the Fed announced that it would begin scaling back long-term bond purchases to $75 billion per month in January 2014 and further reduce them as conditions warranted; the Fed ended the purchases during the summer of 2014. In 2014, the unemployment rate dropped to 6.2%, and continued to fall to 5.5% by mid-2015, the lowest rate of joblessness since before the global recession began; inflation stood at 1.7%, and public debt as a share of GDP continued to decline, following several years of increases. In December 2015, the Fed raised its target for the benchmark federal funds rate by 0.25%, the first increase since the recession began. With US GDP growth below 2%, the Fed has opted to raise rates three times since then, and in mid-June 2017, the range for the target rate stood at 1% to 1.25%.
Uruguay Uruguay has a free market economy characterized by an export-oriented agricultural sector, a well-educated workforce, and high levels of social spending. Uruguay has sought to expand trade within the Common Market of the South (Mercosur) and with non-Mercosur members, and President VAZQUEZ has maintained his predecessor’s mix of pro-market policies and a strong social safety net.

Following financial difficulties in the late 1990s and early 2000s, Uruguay's economic growth averaged 8% annually during the period 2004-08. The 2008-09 global financial crisis put a brake on Uruguay's vigorous growth, which decelerated to 2.6% in 2009. Nevertheless, the country managed to avoid a recession and keep positive growth rates, mainly through higher public expenditure and investment; GDP growth reached 8.9% in 2010 but slowed markedly in the period 2012-16 as a result of a renewed slowdown in the global economy and in Uruguay's main trade partners and Mercosur counterparts, Argentina and Brazil. Reforms in those countries should give Uruguay an economic boost.
Uzbekistan Uzbekistan is a doubly landlocked country in which 51% of the population lives in urban settlements; the agriculture-rich Fergana Valley, in which Uzbekistan’s eastern borders are situated, has been counted among the most densely populated parts of Central Asia. Since its independence in September 1991, the government has largely maintained its Soviet-style command economy with subsidies and tight controls on production, prices, and access to foreign currency. Despite ongoing efforts to diversify crops, Uzbek agriculture remains largely centered on cotton; Uzbekistan is the world's fifth-largest cotton exporter and seventh-largest producer. Uzbekistan's growth has been driven primarily by state-led investments, and export of natural gas, gold, and cotton provides a significant share of foreign exchange earnings. In early 2016, Russia’s Gazprom announced it planned to increase purchases of Uzbek gas.

Aware of the need to improve the investment climate, the government is taking incremental steps to reform the business sector and address impediments to foreign investment in the country. Since the death of first President Islam KARIMOV, rhetorical emphasis on such initiatives and ostensible government efforts to seek input from the private sector have increased. In the past, Uzbek authorities have accused US and other foreign companies operating in Uzbekistan of violating Uzbek laws and have frozen and seized their assets. At the same time, the Uzbek Government has actively courted several major US and international corporations, offering financing and tax advantages.

In 2003, the government accepted Article VIII obligations under the 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, and the government has lately raised the issue of currency reform in a number of official decrees and proclamations. Recently, lower global commodity prices and economic slowdown in neighboring Russia and China have been hurting Uzbekistan's trade and investment and worsening its problem of foreign currency shortage.
Vanuatu This South Pacific island economy is based primarily on small-scale agriculture, which provides a living for about two-thirds of the population. Fishing, offshore financial services, and tourism, with nearly 350,000 visitors in 2016, are other mainstays of the economy. Tourism has struggled after Efate, the most populous and popular island for tourists, was damaged by Tropical Cyclone Pam in 2015. Ongoing infrastructure difficulties at Port Vila’s Bauerfield Airport have caused air travel disruptions, further hampering tourism numbers. Australia and New Zealand are the main source of tourists and foreign aid. A small light industry sector caters to the local market. Tax revenues come mainly from import duties. Mineral deposits are negligible; the country has no known petroleum deposits.

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. In response to foreign concerns, the government has promised to tighten regulation of its offshore financial center.

Since 2002, the government has 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.
Venezuela Venezuela remains highly dependent on oil revenues, which account for almost all export earnings and nearly half of the government’s revenue. In 2016, GDP contracted 10%, inflation hit 720%, people faced widespread shortages of consumer goods, and central bank international reserves dwindled. On the other hand, Venezuela managed to pay down its external debt and narrow its current account deficit. Domestic production and industry continues to severely underperform and the Venezuelan government continues to rely on imports to meet its basic food and consumer goods needs.

Falling oil prices since 2014 have aggravated Venezuela’s economic crisis. Insufficient access to dollars, price controls, and rigid labor regulations have led some US and multinational firms to reduce or shut down their Venezuelan operations. Market uncertainty and state oil company PDVSA’s poor cash flow have slowed investment in the petroleum sector, resulting in a decline in oil production.

Under President Nicolas MADURO, the Venezuelan Government’s response to the economic crisis has been to increase state control over the economy and blame the private sector for the shortages. MADURO has ceded increasing authority for the production and distribution of scarce goods to the military and to local socialist party member committees. The Venezuelan Government has maintained strict currency controls since 2003. On 17 February 2016, the Venezuelan Government announced a change from three official currency exchange mechanisms to only two official rates for the sale of dollars to private-sector firms and individuals, with rates based on the government's import priorities. The official exchange rate used for food and medicine imports was devalued to 10 bolivars per dollar from 6.3 bolivars per dollar. The second rate moved to a managed float. These currency controls present significant obstacles to trade with Venezuela because importers cannot obtain sufficient dollars to purchase goods needed to maintain their operations. Meting out access to the multiple exchange rates has created opportunities for arbitrage and corruption. MADURO has used decree powers to enact legislation to deepen the state’s role as the primary buyer and distributor of imports, further tighten currency controls, cap business profits, and extend price controls.
Vietnam Vietnam is a densely populated developing country that has been transitioning from the rigidities of a centrally planned, highly agrarian economy since 1986 to a more industrial and market based economy, raising incomes substantially. In 2016, Vietnam missed its yearly growth target of 6.7% due to environmental issues – drought and salinization - impacting the agricultural sector and low oil prices affecting the extractive sector. However, annual GDP growth was 6.2%, reflecting strengthening domestic demand and strong manufacturing exports.

Vietnam has a young population, stable political system, commitment to sustainable growth, relatively low inflation, stable currency, strong FDI inflows, and strong manufacturing sector. In addition, the country is committed to continuing its global economic integration. Vietnam joined the WTO in January 2007 and concluded several free trade agreements in 2015-16, including the EU-Vietnam Free Trade Agreement, the Korean Free Trade Agreement, and the Eurasian Economic Union Free Trade Agreement.

However, to continue its trajectory of strong economic growth, the government acknowledges the need to spark a ‘second wave’ of reforms, including reforming state-owned-enterprises, reducing red tape, increasing business sector transparency, reducing the level of non-performing loans in the banking sector, and increasing financial sector transparency. Vietnam has demonstrated a commitment to sustainable growth over the last several years, but a recent slowdown in economic growth could test the government’s resolve.

In 2016, Vietnam cancelled its civilian nuclear energy development program, citing public concerns about safety and the high cost of the program, and is facing growing pressure on energy infrastructure. Overall, the country’s infrastructure fails to meet the needs of an expanding middle class. As the 2017 Asia-Pacific Economic Cooperation (APEC) chair, Vietnam will lead the dialogue on key APEC priorities such as inclusive growth, innovation, food security and climate change.
Virgin Islands Tourism, trade, and other services are the primary economic activities, accounting for nearly 60% of the Virgin Island's GDP and about half of total civilian employment. The islands host nearly 3 million tourists per year, mostly from visiting cruise ships. The islands are vulnerable to damage from storms. The agriculture sector is small, with most food being imported. Industry and government each account for about one-fifth of GDP. The manufacturing sector consists of rum distilling, electronics, pharmaceuticals, and watch assembly. A refinery on St. Croix, one of the world’s largest, processed 350,000 barrels of crude oil a day until it was shut down in February 2012, after operating for 45 years.

Federal programs and grants, totaling $241.4 million in 2013, contributed 19.7% of the territory’s total revenues. The economy declined in 2013, due to decreases in exports resulting from the loss of refined oil products. Nevertheless, the economy remains relatively diversified. Along with a vibrant tourism industry, rum exports, trade, and services will be major income sources in future years.
Wake Island Economic activity is limited to providing services to military personnel and contractors located on the island. All food and manufactured goods must be imported.
Wallis and Futuna The economy is limited to traditional subsistence agriculture, with 80% of labor force earnings coming from agriculture (coconuts and vegetables), livestock (mostly pigs), and fishing. However, roughly 70% of the labor force is employed in the public sector, although only about 20% of the population is in salaried employment.

Revenues come from French Government subsidies, licensing of fishing rights to Japan and South Korea, import taxes, and remittances from expatriate workers in New Caledonia. France directly finances the public sector and healthcare and education services. It also provides funding for key development projects in a range of areas, including infrastructure, economic development, environmental management, and healthcare facilities.

A key concern for Wallis and Futuna is an aging population with consequent economic development issues. Very few people aged 18-30 live on the islands due to the limited formal employment opportunities. Improving job creation is a current priority for the territorial government.
West Bank Israeli-Palestinian violence in 2015 exacerbated challenges to economic growth in the West Bank - the larger of the two areas comprising the Palestinian Territories. Increased security restrictions and political instability slowed economic activity, and Israel’s four-month withholding of taxes and other fees it collects on the Palestinian Authority’s (PA) behalf caused the PA to delay salary payments to its employees, which in turn had broader effects on business activity and consumer demand.

Longstanding Israeli closure policies continue to disrupt labor and trade flows and the territory’s industrial capacity, limit imports and exports, and constrain private sector development. The PA for the foreseeable future will continue to rely heavily on donor aid for its budgetary needs and economic activity.
Western Sahara Western Sahara has a small market-based economy whose main industries are fishing, phosphate mining, and pastoral nomadism. The territory's arid desert climate makes sedentary agriculture difficult, and Western Sahara imports much of its food. The Moroccan Government administers Western Sahara's economy and is a key source of employment, infrastructure development, and social spending in the territory.

Western Sahara's unresolved legal status makes the exploitation of its natural resources a contentious issue between Morocco and the Polisario. Morocco and the EU in December 2013 finalized a four-year agreement allowing European vessels to fish off the coast of Morocco, including disputed waters off the coast of Western Sahara.

Oil has never been found in Western Sahara in commercially significant quantities, but Morocco and the Polisario have quarreled over who has the right to authorize and benefit from oil exploration in the territory. Western Sahara's main long-term economic challenge is the development of a more diverse set of industries capable of providing greater employment and income to the territory. However, following King MOHAMMED VI’s November 2015 visit to Western Sahara, the Government of Morocco announced a series of investments aimed at spurring economic activity in the region, while the General Confederation of Moroccan Enterprises announced a $609 million investment initiative in the region in March 2015.
World The international financial crisis of 2008-09 led to the first downturn in global output since 1946 and presented the world with a major new challenge: determining what mix of fiscal and monetary policies to follow to restore growth and jobs, while keeping inflation and debt under control. Financial stabilization and stimulus programs that started in 2009-11, combined with lower tax revenues in 2009-10, required most countries to run large budget deficits. Treasuries issued new public debt - totaling $9.1 trillion since 2008 - to pay for the additional expenditures. To keep interest rates low, most central banks monetized that debt, injecting large sums of money into their economies - between December 2008 and December 2013 the global money supply increased by more than 35%. Governments are now faced with the difficult task of spurring current growth and employment without saddling their economies with so much debt that they sacrifice long-term growth and financial stability. When economic activity picks up, central banks will confront the difficult task of containing inflation without raising interest rates so high they snuff out further growth.

Fiscal and monetary data for 2013 are currently available for 180 countries, which together account for 98.5% of world GDP. Of the 180 countries, 82 pursued unequivocally expansionary policies, boosting government spending while also expanding their money supply relatively rapidly - faster than the world average of 3.1%; 28 followed restrictive fiscal and monetary policies, reducing government spending and holding money growth to less than the 3.1% average; and the remaining 70 followed a mix of counterbalancing fiscal and monetary policies, either reducing government spending while accelerating money growth, or boosting spending while curtailing money growth.

(For more information, see attached spreadsheet, Fiscal and Monetary Data, 2008-2012.)

In 2013, for many countries the drive for fiscal austerity that began in 2011 abated. While 5 out of 6 countries slowed spending in 2012, only 1 in 2 countries slowed spending in 2013. About 1 in 3 countries actually lowered the level of their expenditures. The global growth rate for government expenditures increased from 1.6% in 2012 to 5.1% in 2013, after falling from a 10.1% growth rate in 2011. On the other hand, nearly 2 out of 3 central banks tightened monetary policy in 2013, decelerating the rate of growth of their money supply, compared with only 1 out of 3 in 2012. Roughly 1 of 4 central banks actually withdrew money from circulation, an increase from 1 out of 7 in 2012. Growth of the global money supply, as measured by the narrowly defined M1, slowed from 8.7% in 2009 and 10.4% in 2010 to 5.2% in 2011, 4.6% in 2012, and 3.1% in 2013. Several notable shifts occurred in 2013. By cutting government expenditures and expanding money supplies, the US and Canada moved against the trend in the rest of the world. France reversed course completely. Rather than reducing expenditures and money as it had in 2012, it expanded both. Germany reversed its fiscal policy, sharply expanding federal spending, while continuing to grow the money supply. South Korea shifted monetary policy into high gear, while maintaining a strongly expansionary fiscal policy. Japan, however, continued to pursue austere fiscal and monetary policies.

Austere economic policies have significantly affected economic performance. The global budget deficit narrowed to roughly $2.7 trillion in 2012 and $2.1 trillion in 2013, or 3.8% and 2.5% of World GDP, respectively. But growth of the world economy slipped from 5.1% in 2010 and 3.7% in 2011, to just 3.1% in 2012, and 2.9% in 2013.

Countries with expansionary fiscal and monetary policies achieved significantly higher rates of growth, higher growth of tax revenues, and greater success reducing the public debt burden than those countries that chose contractionary policies. In 2013, the 82 countries that followed a pro-growth approach achieved a median GDP growth rate of 4.7%, compared to 1.7% for the 28 countries with restrictive fiscal and monetary policies, a difference of 3 percentage points. Among the 82, China grew 7.7%, Philippines 6.8%, Malaysia 4.7%, Pakistan and Saudi Arabia 3.6%, Argentina 3.5%, South Korea 2.8%, and Russia 1.3%, while among the 28, Brazil grew 2.3%, Japan 2.0%, South Africa 2.0%, Netherlands -0.8%, Croatia -1.0%, Iran -1.5%, Portugal -1.8%, Greece -3.8%, and Cyprus -8.7%.

Faster GDP growth and lower unemployment rates translated into increased tax revenues and a less cumbersome debt burden. Revenues for the 82 expansionary countries grew at a median rate of 10.7%, whereas tax revenues fell at a median rate of 6.8% for the 28 countries that chose austere economic policies. Budget balances improved for about three-quarters of the 28, but, for most, debt grew faster than GDP, and the median level of their public debt as a share of GDP increased 9.1 percentage points, to 59.2%. On the other hand, budget balances deteriorated for most of the 82 pro-growth countries, but GDP growth outpaced increases in debt, and the median level of public debt as a share of GDP increased just 1.9%, to 39.8%.

The world recession has suppressed inflation rates - world inflation declined 1.0 percentage point in 2012 to about 4.1% and 0.2 percentage point to 3.9% in 2013. In 2013 the median inflation rate for the 82 pro-growth countries was 1.3 percentage points higher than that for the countries that followed more austere fiscal and monetary policies. Overall, the latter countries also improved their current account balances by shedding imports; as a result, current account balances deteriorated for most of the countries that pursued pro-growth policies. Slow growth of world income continued to hold import demand in check and crude oil prices fell. Consequently, the dollar value of world trade grew just 1.3% in 2013.

Beyond the current global slowdown, the world faces several long standing economic challenges. The addition of 80 million people each year to an already overcrowded globe is exacerbating the problems of pollution, waste-disposal, epidemics, water-shortages, famine, over-fishing of oceans, deforestation, desertification, and depletion of non-renewable resources. The nation-state, as a bedrock economic-political institution, is steadily losing control over international flows of people, goods, services, funds, and technology. The introduction of the euro as the common currency of much of Western Europe in January 1999, while paving the way for an integrated economic powerhouse, has created economic risks because the participating nations have varying income levels and growth rates, and hence, require a different mix of monetary and fiscal policies. Governments, especially in Western Europe, face the difficult political problem of channeling resources away from welfare programs in order to increase investment and strengthen incentives to seek employment. Because of their own internal problems and priorities, the industrialized countries are unable to devote sufficient resources to deal effectively with the poorer areas of the world, which, at least from an economic point of view, are becoming further marginalized. The terrorist attacks on the US on 11 September 2001 accentuated a growing risk to global prosperity - the diversion of resources away from capital investments to counter-terrorism programs.

Despite these vexing problems, the world economy also shows great promise. Technology has made possible further advances in a wide range of fields, from agriculture, to medicine, alternative energy, metallurgy, and transportation. Improved global communications have greatly reduced the costs of international trade, helping the world gain from the international division of labor, raise living standards, and reduce income disparities among nations. Much of the resilience of the world economy in the aftermath of the financial crisis resulted from government and central bank leaders around the globe working in concert to stem the financial onslaught, knowing well the lessons of past economic failures.
Yemen Yemen is a low-income country that faces difficult long-term challenges to stabilizing and growing its economy, and the current conflict has only exacerbated those issues. The ongoing war has halted Yemen’s exports, pressured the currency’s exchange rate, accelerated inflation, severely limited food and fuel imports, and caused widespread damage to infrastructure. More than 80% of the population is in need of humanitarian assistance and over half are food insecure.

Prior to the start of the conflict in 2014, Yemen was highly dependent on declining oil and gas resources for revenue. Oil and gas earnings accounted for roughly 25% of GDP and 65% of government revenue. The Yemeni Government regularly faced annual budget shortfalls and tried to diversify the Yemeni economy through a reform program designed to bolster non-oil sectors of the economy and foreign investment. In July 2014, the government continued reform efforts by eliminating some fuel subsidies and in August 2014, the IMF approved a three-year, $570 million Extended Credit Facility for Yemen.

However, the conflict that began in 2014 stalled these reform efforts and ongoing fighting continues to accelerate the country’s economic decline. In September 2016, President HADI announced the move of the main branch of Central Bank of Yemen from Sanaa to Aden where his government could exert greater control over the central bank’s dwindling resources. Regardless of which group controls the main branch, the central bank system is struggling to function. Yemen’s Central Bank’s foreign reserves, which stood at roughly $5.2 billion prior to the conflict, have declined to negligible amounts. The Central Bank can no longer fully support imports of critical goods or the country’s exchange rate. The country also is facing a growing liquidity crisis and rising inflation. The private sector is hemorrhaging, with almost all businesses making substantial layoffs. Access to food and other critical commodities such as medical equipment is limited across the country due to security issues on the ground. The Social Welfare Fund, a cash transfer program for Yemen’s neediest, is no longer operational and has not made any disbursements since late 2014.

Yemen will require significant international assistance during and after the protracted conflict to stabilize its economy. Long-term challenges include a high population growth rate, high unemployment, declining water resources, and severe food scarcity.
Zambia Zambia had one of the world’s fastest growing economies for the ten years up to 2014, with real GDP growth averaging roughly 6.7% per annum, though growth slowed in 2015 and 2016 to just under 3%, due to falling copper prices, reduced power generation, and depreciation of the kwacha. Zambia’s lack of economic diversification and dependency on copper as its sole major export makes it vulnerable to fluctuations in the world commodities market and prices turned downward in 2015 due to declining demand from China; Zambia was overtaken by the Democratic Republic of Congo as Africa’s largest copper producer.

Despite recent strong economic growth and its status as a lower middle-income country, widespread and extreme rural poverty and high unemployment levels remain significant problems, made worse by a high birth rate, a relatively high HIV/AIDS burden, and by market-distorting agricultural and energy policies. Zambia has raised $7 billion from international investors by issuing separate sovereign bonds in 2012, 2014, and 2015, significantly increasing the country’s public debt burden to 56% of GDP; the government plans to refinance $2.8 billion worth of Eurobonds in 2017 to cut debt servicing costs.

Poor management of water resources has also contributed to a power generation shortage, which has hampered industrial productivity and contributed to an increase in year-on-year inflation to more than 20% in 2016. Zambia’s currency, the kwacha, also depreciated sharply against the dollar through 2015 and 2016, leading the central bank to restrict lending. Rampant spending in recent years has increased the fiscal deficit—over 8% in 2015—and may encourage the government to seek external financing from the IMF to fund the shortfall.
Zimbabwe Zimbabwe's economy depends heavily on its mining and agriculture sectors. Following a decade of contraction from 1998 to 2008, the economy recorded real growth of more than 10% per year in the period 2010-13, before slowing to roughly 4% in 2014 due to poor harvests, low diamond revenues, and decreased investment. Growth turned negative in 2016. Lower mineral prices, infrastructure and regulatory deficiencies, a poor investment climate, a large public and external debt burden, and extremely high government wage expenses impede the country’s economic performance.

Until early 2009, the Reserve Bank of Zimbabwe (RBZ) routinely printed money to fund the budget deficit, causing hyperinflation. Adoption of a multi-currency basket in early 2009 - which allowed currencies such as the Botswana pula, the South Africa rand, and the US dollar to be used locally - reduced inflation below 10% per year. In January 2015, as part of the government’s effort to boost trade and attract foreign investment, the RBZ announced that the Chinese renmimbi, Indian rupee, Australian dollar, and Japanese yen would be accepted as legal tender in Zimbabwe, though transactions were predominantly carried out in US dollars and South African rand until 2016, when the rand’s devaluation and instability led to near-exclusive use of the US dollar. The government in November 2016 began releasing bond notes, a parallel currency legal only in Zimbabwe which the government claims will have a one-to-one exchange ratio with the US dollar, to ease cash shortages. Bond notes began trading at a discount of up to 10% in the black market by the end of 2016.

Zimbabwe’s government entered a second Staff Monitored Program with the IMF in 2014 and undertook other measures to reengage with international financial institutions. Zimbabwe repaid roughly $108 million in arrears to the IMF in October 2016, but financial observers note that Zimbabwe is unlikely to gain new financing because the government has not disclosed how it plans to repay more than $1.7 billion in arrears to the World Bank and African Development Bank. International financial institutions want Zimbabwe to implement significant fiscal and structural reforms before granting new loans. Foreign and domestic investment continues to be hindered by the lack of land tenure and titling, the inability to repatriate dividends to investors overseas, and the lack of clarity regarding the government’s Indigenization and Economic Empowerment Act.