| Country | Economy - overview |
| Djibouti | The economy is based on service activities connected with the country's strategic location and status as a free trade zone in the Horn of Africa. Two-thirds of Djibouti's inhabitants live in the capital city; the remainder are mostly nomadic herders. Scanty rainfall limits crop production to 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 and exports from landlocked neighbor Ethiopia represent 85% of port activity at Djibouti's container terminal. Djibouti has few natural resources and little industry. The nation is, therefore, heavily dependent on foreign assistance to help support its balance of payments and to finance development projects. An unemployment rate of nearly 60% continues to be a major problem. While inflation is not a concern, due to the fixed tie of the Djiboutian franc to the US dollar, the artificially high value of the Djiboutian franc adversely affects Djibouti's balance of payments. Per capita consumption dropped an estimated 35% between 1999 and 2006 because of recession, civil war, and a high population growth rate (including immigrants and refugees). Faced with a multitude of economic difficulties, the government has fallen in arrears on long-term external debt and has been struggling to meet the stipulations of foreign aid donors. |
| Dominica | The Dominican economy depends on agriculture, primarily bananas, and remains highly vulnerable to climatic conditions and international economic developments. Tourism has increased as the government seeks to promote Dominica as an "ecotourism" destination. In 2003, the government began a comprehensive restructuring of the economy - including elimination of price controls, privatization of the state banana company, and tax increases - to address Dominica's economic and financial crisis of 2001-02 and to meet IMF targets. This restructuring paved the way for the current economic recovery - real growth for 2006 reached a two-decade high - and will help to reduce the debt burden, which remains at about 100% of GDP. In order to diversify the island's production base, the government is attempting to develop an offshore financial sector and is researching Dominica's capability to export geothermal energy. |
| Dominican Republic | The Dominican Republic has enjoyed strong GDP growth since 2005, with double digit growth in 2006. In 2007, exports were bolstered by the nearly 50% increase in nickel prices; however, prices are expected to fall in 2008, contributing to a slowdown in GDP growth for the year. Although the country has long been viewed primarily as an exporter of sugar, coffee, and tobacco, in recent years the service sector has overtaken agriculture as the economy's largest employer due to growth in tourism and free trade zones. 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. With the help of strict fiscal targets agreed to in the 2004 renegotiation of an IMF standby loan, President FERNANDEZ has stabilized the country's financial situation, lowering inflation to less than 6%. A fiscal expansion is expected for 2008 prior to the elections in May and for Tropical Storm Noel reconstruction. 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 diminishs 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 contracted by more than 6%, with a significant increase in poverty. The banking system also 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 of Alfredo PALACIO (2005-07) seized the assets of Occidental Petroleum for alleged contract violations and imposed a windfall revenue tax on foreign oil companies, leading to the suspension of free trade negotiations with the US. These measures, combined with chronic underinvestment in the state oil company, Petroecuador, led to a drop in petroleum production in 2007. PALACIO's successor, Rafael CORREA, raised the specter of debt default - but Ecuador has paid its debt on time. He also decreed a higher windfall revenue tax on private oil companies, then sought to renegotiate their contracts to overcome the debilitating effect of the tax. This generated economic uncertainty; private investment has dropped and economic growth has slowed significantly. |
| Egypt | Occupying the northeast corner of the African continent, Egypt is bisected by the highly fertile Nile valley, where most economic activity takes place. In the last 30 years, the government has reformed the highly centralized economy it inherited from President Gamel Abdel NASSER. 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 5% per year in 2005-06, and topped 7% in 2007. 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 7.5% of GDP in 2007 - 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. Robust growth in non-traditional exports have offset declines in the maquila exports, while remittances and external aid offset the trade deficit from high oil prices and strong import demand for consumer and intermediate goods. El Salvador leads the region in remittances per capita with inflows equivalent to nearly all export income. Implementation in 2006 of the Central America-Dominican Republic Free Trade Agreement (CAFTA), which El Salvador was the first to ratify, has strengthened an already positive export trend. 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. The current government has pursued economic diversification, with some success in promoting textile production, international port services, and tourism through tax incentives. It is committed to opening the economy to trade and investment, 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. |
| 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 2007, led by oil. Equatorial Guinea now has the fourth highest per capita income in the world, after Luxembourg, Bermuda, and Jersey. |
| Eritrea | Since independence from Ethiopia in 1993, Eritrea has faced the economic problems of a small, desperately poor country, accentuated by the recent implementation of restrictive economic policies. Eritrea has a command economy under the control of the sole political party, the People's Front for Democracy and Justice (PFDJ). Like the economies of many African nations, the economy is largely based on subsistence agriculture, with 80% of the population involved in farming and herding. The Ethiopian-Eritrea war in 1998-2000 severely hurt Eritrea's economy. GDP growth fell to zero in 1999 and to -12.1% in 2000. The May 2000 Ethiopian offensive into northern Eritrea caused some $600 million in property damage and loss, including losses of $225 million in livestock and 55,000 homes. The attack prevented planting of crops in Eritrea's most productive region, causing food production to drop by 62%. Even during the war, Eritrea developed its transportation infrastructure, asphalting new roads, improving its ports, and repairing war-damaged roads and bridges. Since the war ended, the government has maintained a firm grip on the economy, expanding the use of the military and party-owned businesses to complete Eritrea's development agenda. The government strictly controls the use of foreign currency, limiting access and availability. Few private enterprises remain in Eritrea. Eritrea's economy is heavily dependent on taxes paid by members of the diaspora. Erratic rainfall and the delayed demobilization of agriculturalists from the military continue to interfere with agricultural production, and Eritrea's recent harvests have not been able to meet the food needs of the country. The government continues to place its hope for additional revenue on the development of several international mining projects. Despite difficulties for international companies in working with the Eritrean government, a Canadian mining company signed a contract with the GSE in 2007 and plans to begin mineral extraction in 2010. Eritrea also anticipates opening a free trade zone at the port of Massawa in 2008. Eritrea's economic future depends upon its ability to master social problems such as illiteracy, unemployment, and low skills, and more importantly, on the government's willingness to support a true market economy. |
| Estonia | Estonia, a 2004 European Union entrant, has a modern market-based economy and one of the highest per capita income levels in Central Europe. The economy benefits from strong electronics and telecommunications sectors and strong trade ties with Finland, Sweden, and Germany. The current government has pursued relatively sound fiscal policies, resulting in balanced budgets and low public debt. In 2007, however, a large current account deficit and rising inflation put pressure on Estonia's currency, which is pegged to the euro, highlighting the need for growth in export-generating industries. |
|
|
|
|
This page was last updated on 14 July, 2008 |
|
|
Home 
Fields
World Records
World Dictionary
Geographic Names
Fields History
Chiefs of State
Intl. Organizations
Intl. Environmental Agree.
Other References
Notes and Definitions
