| Country | Economy - overview |
| 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 major banking center and has successfully sought to diversify into services and small, high-value-added, nonpolluting industries. 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's reliance on tourism and banking for its economic growth has left it vunerable 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 with GDEP growth of 2.5%, but Monaco's economic prospects remain clouded in uncertainty tied to future euro-zone growth. Weak economic growth also has deteriorated public finances as the principality recorded a budget deficit of 1.8% of GDP in 2010. 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. 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. |
| Mongolia |
Economic activity in Mongolia was traditionally based on herding and agriculture - Mongolia's extensive mineral deposits, however, have attracted foreign investors, and the country is undergoing an economic transformation through its mining boom. Mongolia holds copper, gold, coal, molybdenum, fluorspar, uranium, tin, and tungsten deposits, among others, which account for a large part of foreign direct investment and government revenues. 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 economic growth, because of reform-embracing, free-market economics and extensive privatization of the formerly state-run economy. Severe winters and summer droughts in 2000-02 resulted in massive livestock die-off and zero or negative GDP growth. This was compounded by falling prices for Mongolia's primary sector exports and widespread opposition to privatization. Growth averaged nearly 9% per year in 2004-08 largely because of high copper prices and new gold production. In 2008 Mongolia experienced a soaring inflation rate with year-to-year inflation reaching nearly 30% - the highest inflation rate in over a decade. By late 2008, the country was faced with external shocks from the global financial crisis, and a sharp drop in commodity prices slashed government revenues. In early 2009, the International Monetary Fund reached a $236 million Stand-by Arrangement with Mongolia and the country has largely emerged from the crisis. The banking sector is recovering from instability during the 2008 crisis and the government has started to enact greater supervision regulations. In October 2009, Mongolia passed long-awaited legislation on an investment agreement to develop the Oyu Tolgoi mine, considered to be among the world's largest untapped copper deposits. Another similarly lengthy process is underway for an investment agreement for the massive coal mine at Tavan Tolgoi; it is under review by the National Security Council and a final decision is expected in 2012. The economy grew 6.1% in 2010 and 9.8% in 2011, largely on the strength of commodity exports to nearby countries. Mongolia's economy continues to be heavily influenced by its neighbors. Mongolia purchases 95% of its petroleum products and a substantial amount of electric power from Russia, leaving it vulnerable to price increases. Trade with China represents more than half of Mongolia's total external trade - China receives more than three-fourths of Mongolia's exports. In the face of anticipated growth in mining revenues, the country is grappling with the challenge of avoiding an overheated economy. Renewed concerns are surfacing over controlling inflation, which was more than 10% for much of 2010-11, due in part to soaring food prices. Government spending -- on line to increase as much as 75% over 2011 -- has added to concers over inflation. Remittances from Mongolians working abroad, particularly in South Korea, are significant. Money laundering is a growing concern. The country opened a fledgling stock exchange in 1991. Mongolia joined the World Trade Organization in 1997 and seeks to expand its participation in regional economic and trade regimes. |
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This page was last updated on 3 February, 2012 |
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