| Country | Economy - overview |
| Dominican Republic | The Dominican Republic has enjoyed strong GDP growth since 2005, and continued to post sound gains through mid-2008. The global recession, however, had a significant impact on GDP growth in the latter half of the year as tourism and remittances, two of the Dominican Republic's most important economic contributors, showed signs of slowing. The economy is highly dependent upon the US, the source of nearly three-fourths of exports, and remittances represent about a tenth of GDP, equivalent to almost half of exports and three-quarters of tourism receipts. The country has long been viewed primarily as an exporter of sugar, coffee, and tobacco, but in recent years the service sector has overtaken agriculture as the economy's largest employer due to growth in tourism and free trade zones. Although 2007 saw inflation rates averaging around 6%, inflation rates in 2008 grew to over 11% on average for the first 3 quarters. High food prices, driven by the effects of consecutive tropical storms on agricultural products, and education prices were significant contributors to the jump. The effects of the global financial crisis and the US recession are projected to negatively affect GDP growth in 2009, with a rebound expected in 2010. Although the economy is growing at a respectable rate, high unemployment and underemployment remains an important challenge. The country suffers from marked income inequality; the poorest half of the population receives less than one-fifth of GNP, while the richest 10% enjoys nearly 40% of national income. The Central America-Dominican Republic Free Trade Agreement (CAFTA-DR) came into force in March 2007, which should boost investment and exports and reduce losses to the Asian garment industry. |
| Ecuador | Ecuador is substantially dependent on its petroleum resources, which have accounted for more than half of the country's export earnings and one-fourth of public sector revenues in recent years. In 1999/2000, Ecuador suffered a severe economic crisis, with GDP contracting by more than 6%. Poverty increased significantly, the banking system collapsed, and Ecuador defaulted on its external debt later that year. In March 2000, Congress approved a series of structural reforms that also provided for the adoption of the US dollar as legal tender. Dollarization stabilized the economy, and positive growth returned in the years that followed, helped by high oil prices, remittances, and increased non-traditional exports. From 2002-06 the economy grew 5.5%, the highest five-year average in 25 years. The poverty rate declined but remained high at 38% in 2006. In 2006 the government imposed a windfall revenue tax on foreign oil companies, leading to the suspension of free trade negotiations with the US. These measures led to a drop in petroleum production in 2007. President Rafael CORREA raised the specter of debt default and followed through on those threats in December 2008 by defaulting on some commercial bond obligations. He also decreed a higher windfall revenue tax on private oil companies, then renegotiated their contracts to overcome the debilitating effect of the tax. This generated economic uncertainty; private investment has dropped and economic growth has slowed. |
| Egypt | Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. Egypt's economy was highly centralized during the rule of former President Gamal Abdel NASSER but has opened up considerably under former President Anwar EL-SADAT and current President Mohamed Hosni MUBARAK. Cairo has aggressively pursued economic reforms to encourage inflows of foreign investment and facilitate GDP growth. In 2005, Prime Minister Ahmed NAZIF's government reduced personal and corporate tax rates, reduced energy subsidies, and privatized several enterprises. The stock market boomed, and GDP grew about 7% each year since 2006. Despite these achievements, the government has failed to raise living standards for the average Egyptian, and has had to continue providing subsidies for basic necessities. The subsidies have contributed to a sizeable budget deficit - roughly 7% of GDP in 2007-08 - and represent a significant drain on the economy. Foreign direct investment has increased significantly in the past two years, but the NAZIF government will need to continue its aggressive pursuit of reforms in order to sustain the spike in investment and growth and begin to improve economic conditions for the broader population. Egypt's export sectors - particularly natural gas - have bright prospects. |
| El Salvador | The smallest country in Central America, El Salvador has the third largest economy, but growth has been modest in recent years. Economic growth will decelerate in 2009 due to the global slowdown and to El Salvador's dependence on exports to the US and remittances from the US. El Salvador leads the region in remittances per capita with inflows equivalent to nearly all export income. In 2006 El Salvador was the first country to ratify the Central America-Dominican Republic Free Trade Agreement (CAFTA). CAFTA has bolstered the export of processed foods, sugar, and ethanol, and supported investment in the maquila sector. The SACA administration has sought to diversify the economy, focusing on regional transportation and tourism. El Salvador has promoted an open trade and investment environment, and has embarked on a wave of privatizations extending to telecom, electricity distribution, banking, and pension funds. In late 2006, the government and the Millennium Challenge Corporation signed a five-year, $461 million compact to stimulate economic growth and reduce poverty in the country's northern region through investments in education, public services, enterprise development, and transportation infrastructure. With the adoption of the US dollar as its currency in 2001, El Salvador lost control over monetary policy and must concentrate on maintaining a disciplined fiscal policy. |
| Equatorial Guinea | The discovery and exploitation of large oil reserves have contributed to dramatic economic growth in recent years. Forestry, farming, and fishing are also major components of GDP. Subsistence farming predominates. Although pre-independence Equatorial Guinea counted on cocoa production for hard currency earnings, the neglect of the rural economy under successive regimes has diminished potential for agriculture-led growth (the government has stated its intention to reinvest some oil revenue into agriculture). A number of aid programs sponsored by the World Bank and the IMF have been cut off since 1993, because of corruption and mismanagement. No longer eligible for concessional financing because of large oil revenues, the government has been trying to agree on a "shadow" fiscal management program with the World Bank and IMF. Government officials and their family members own most businesses. Undeveloped natural resources include titanium, iron ore, manganese, uranium, and alluvial gold. Growth remained strong in 2008, led by oil. |
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This page was last updated on 28 June, 2009 |
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