Argentina
Argentina benefits from rich natural resources, a highly
literate population, an export-oriented agricultural sector, and a
diversified industrial base. Over the past decade, however, the
country has suffered recurring economic problems of inflation,
external debt, capital flight, and budget deficits. Growth in 2000
was a negative 0.8%, as both domestic and foreign investors remained
skeptical of the government's ability to pay debts and maintain the
peso's fixed exchange rate with the US dollar. The economic
situation worsened in 2001 with the widening of spreads on Argentine
bonds, massive withdrawals from the banks, and a further decline in
consumer and investor confidence. Government efforts to achieve a
"zero deficit," to stabilize the banking system, and to restore
economic growth proved inadequate in the face of the mounting
economic problems. The peso's peg to the dollar was abandoned in
January 2002, and the peso was floated in February; the exchange
rate plunged and inflation picked up rapidly, but by mid-2002 the
economy had stabilized, albeit at a lower level. Strong demand for
the peso compelled the Central Bank to intervene in foreign exchange
markets to curb its appreciation in early 2003. Led by record
exports, the economy began to recover with output up 5.5% in 2003,
unemployment falling, and inflation sliced to 4.2% at year-end.
Armenia
Under the old Soviet central planning system, Armenia had
developed a modern industrial sector, supplying machine tools,
textiles, and other manufactured goods to sister republics in
exchange for raw materials and energy. Since the implosion of the
USSR in December 1991, Armenia has switched to small-scale
agriculture away from the large agroindustrial complexes of the
Soviet era. The agricultural sector has long-term needs for more
investment and updated technology. The privatization of industry has
been at a slower pace, but has been given renewed emphasis by the
current administration. Armenia is a food importer, and its mineral
deposits (copper, gold, bauxite) are small. The ongoing conflict
with Azerbaijan over the ethnic Armenian-dominated region of
Nagorno-Karabakh and the breakup of the centrally directed economic
system of the former Soviet Union contributed to a severe economic
decline in the early 1990s. By 1994, however, the Armenian
Government had launched an ambitious IMF-sponsored economic program
that has resulted in positive growth rates in 1995-2003. Armenia
also has managed to slash inflation, stabilize the local currency
(the dram), and privatize most small- and medium-sized enterprises.
The chronic energy shortages Armenia suffered in the early and
mid-1990s have been offset by the energy supplied by one of its
nuclear power plants at Metsamor. Armenia is now a net energy
exporter, although it does not have sufficient generating capacity
to replace Metsamor, which is under international pressure to close.
The electricity distribution system was privatized in 2002.
Armenia's severe trade imbalance has been offset somewhat by
international aid, domestic restructuring of the economy, and
foreign direct investment. Economic ties with Russia remain close,
especially in the energy sector.
Aruba
Tourism is the mainstay of the small, open Aruban economy,
with offshore banking and oil refining and storage also important.
The rapid growth of the tourism sector over the last decade has
resulted in a substantial expansion of other activities.
Construction has boomed, with hotel capacity five times the 1985
level. In addition, the reopening of the country's oil refinery in
1993, a major source of employment and foreign exchange earnings,
has further spurred growth. Aruba's small labor force and low
unemployment rate have led to a large number of unfilled job
vacancies, despite sharp rises in wage rates in recent years.
Tourist arrivals have declined in the aftermath of the 11 September
2001 terrorist attacks on the US. The government now must deal with
a budget deficit and a negative trade balance.
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, the dredging of
aragonite sands (The Bahamas), and production of crude oil and
natural gas (Caribbean Sea, Gulf of Mexico, and North Sea).
Australia
Australia has a prosperous Western-style capitalist
economy, with a per capita GDP on par with the four dominant West
European economies. Rising output in the domestic economy has been
offsetting the global slump, and business and consumer confidence
remains robust. Australia's emphasis on reforms is another key
factor behind the economy's strength. The stagnant economic
conditions in major export partners and the impact of the worst
drought in 100 years cast a shadow over prospects for 2003.
Austria
Austria, with its well-developed market economy and high
standard of living, is closely tied to other EU economies,
especially Germany's. Membership in the EU has drawn an influx of
foreign investors attracted by Austria's access to the single
European market and proximity to EU aspirant economies. Slowing
growth in Germany and elsewhere in the world held the economy to
only 1.2% growth in 2001, 0.6% in 2002, and 0.8% in 2003.. To meet
increased competition from both EU and Central European countries,
Austria will need to emphasize knowledge-based sectors of the
economy, continue to deregulate the service sector, and lower its
tax burden. A key issue is the encouragement of much greater
participation in the labor market by its ageing population.
Azerbaijan
Azerbaijan's number one export is oil. Azerbaijan's oil
production declined through 1997 but has registered an increase
every year since. Negotiation of production-sharing arrangements
(PSAs) with foreign firms, which have thus far committed $60 billion
to long-term oilfield development, should generate the funds needed
to spur future industrial development. Oil production under the
first of these PSAs, with the Azerbaijan International Operating
Company, began in November 1997. Azerbaijan shares all the
formidable problems of the former Soviet republics in making the
transition from a command to a market economy, but its considerable
energy resources brighten its long-term prospects. Baku has only
recently begun making progress on economic reform, and old economic
ties and structures are slowly being replaced. One obstacle to
economic progress is the need for stepped up foreign investment in
the non-energy sector. A second obstacle is the continuing conflict
with Armenia over the Nagorno-Karabakh region. Trade with Russia and
the other former Soviet republics is declining in importance while
trade is building with Turkey and the nations of Europe. Long-term
prospects will depend on world oil prices, the location of new
pipelines in the region, and Azerbaijan's ability to manage its oil
wealth.
Bahamas, The
The Bahamas is a stable, developing nation with an
economy heavily dependent on tourism and offshore banking. Tourism
alone accounts for more than 60% of GDP and directly or indirectly
employs half of the archipelago's labor force. Steady growth in
tourism receipts and a boom in construction of new hotels, resorts,
and residences had led to solid GDP growth in recent years, but the
slowdown in the US economy and the attacks of 11 September 2001 held
back growth in these sectors in 2002. Manufacturing and agriculture
together contribute approximately a tenth of GDP and show little
growth, despite government incentives aimed at those sectors.
Overall growth prospects in the short run rest heavily on the
fortunes of the tourism sector, which depends on growth in the US,
the source of most of the visitors.
Bahrain
In Bahrain, petroleum production and refining account for
about 60% of export receipts, 60% of government revenues, and 30% of
GDP. With its highly developed communication and transport
facilities, Bahrain is home to numerous multinational firms with
business in the Gulf. Bahrain is dependent on Saudi Arabia for oil
granted as aid. A large share of exports consists of petroleum
products made from refining imported crude. Construction proceeds on
several major industrial projects. Unemployment, especially among
the young, and the depletion of oil and underground water resources
are major long-term economic problems.