Faroe Islands
The Faroese economy has had a strong performance since
1994, mostly as a result of increasing fish landings and high and
stable export prices. Unemployment is falling and there are signs of
labor shortages in several sectors. The positive economic
development has helped the Faroese Home Rule Government produce
increasing budget surpluses, which in turn help to reduce the large
public debt, most of it owed to Denmark. However, the total
dependence on fishing makes the Faroese economy extremely
vulnerable, and the present fishing efforts appear in excess of what
is a sustainable level of fishing in the long term. Oil finds close
to the Faroese area give hope for deposits in the immediate Faroese
area, which may eventually lay the basis for a more diversified
economy and thus lessen dependence on Danish economic assistance.
Aided by a substantial annual subsidy (15% of GDP) from Denmark, the
Faroese have a standard of living not far below the Danes and other
Scandinavians.
Fiji
Fiji, endowed with forest, mineral, and fish resources, is one
of the most developed of the Pacific island economies, though still
with a large subsistence sector. Sugar exports and a growing tourist
industry - with 300,000 to 400,000 tourists annually - are the major
sources of foreign exchange. Sugar processing makes up one-third of
industrial activity. Long-term problems include low investment,
uncertain land ownership rights, and the government's ability to
manage its budget.
Finland
Finland has a highly industrialized, largely free-market
economy, with per capita output roughly that of the UK, France,
Germany, and Italy. Its key economic sector is manufacturing -
principally the wood, metals, engineering, telecommunications, and
electronics industries. Trade is important, with exports equaling
almost one-third of GDP. Except for timber and several minerals,
Finland depends on imports of raw materials, energy, and some
components for manufactured goods. Because of the climate,
agricultural development is limited to maintaining self-sufficiency
in basic products. Forestry, an important export earner, provides a
secondary occupation for the rural population. Rapidly increasing
integration with Western Europe - Finland was one of the 11
countries joining the European Economic and Monetary Union (EMU) on
1 January 1999 - will dominate the economic picture over the next
several years. Growth in 2003 was held back by the global slowdown
but will pick up in 2004 provided the world economy suffers no
further blows.
France
France is in the midst of transition, from a well-to-do
modern economy that has featured extensive government ownership and
intervention to one that relies more on market mechanisms. The
Socialist-led government has partially or fully privatized many
large companies, banks, and insurers, but still retains controlling
stakes in several leading firms, including Air France, France
Telecom, Renault, and Thales, and remains dominant in some sectors,
particularly power, public transport, and defense industries. The
telecommunications sector is gradually being opened to competition.
France's leaders remain committed to a capitalism in which they
maintain social equity by means of laws, tax policies, and social
spending that reduce income disparity and the impact of free markets
on public health and welfare. The current government has lowered
income taxes and introduced measures to boost employment. At the end
of 2002 the government was focusing on the problems of the high cost
of labor and labor market inflexibility resulting from the 35-hour
workweek and restrictions on lay-offs. The government was also
pushing for pension reforms and simplification of administrative
procedures. The tax burden remains one of the highest in Europe. The
current economic slowdown and inflexible budget items have pushed
the deficit above the EU's 3% debt limit. Business investment
remains listless because of low rates of capital utilization, high
debt, and the steep cost of capital.
French Guiana
The economy is tied closely to the larger French
economy through subsidies and imports. Besides the French space
center at Kourou (which accounts for 25% of GDP), fishing and
forestry are the most important economic activities. Forest and
woodland cover 90% of the country. The large reserves of tropical
hardwoods, not fully exploited, support an expanding sawmill
industry that provides sawn logs for export. Cultivation of crops is
limited to the coastal area, where the population is largely
concentrated; rice and manioc are the major crops. French Guiana is
heavily dependent on imports of food and energy. Unemployment is a
serious problem, particularly among younger workers.
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. Tourism
accounts for about one-fourth of GDP and is a primary source of hard
currency earnings. Other sources of income are pearl farming and
deep-sea commercial fishing. The small manufacturing sector
primarily processes agricultural products. The territory benefits
substantially from development agreements with France aimed
principally at creating new businesses and strengthening social
services.
French Southern and Antarctic Lands
Economic activity is limited to
servicing meteorological and geophysical research stations 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
nations of sub-Saharan Africa. This has supported a sharp decline in
extreme poverty; yet because of high income inequality a large
proportion of the population remains poor. Gabon depended on timber
and manganese until oil was discovered offshore in the early 1970s.
The oil sector now accounts for 50% of GDP. Gabon continues to face
fluctuating prices for its oil, timber, and manganese exports.
Despite the abundance of natural wealth, poor fiscal management
hobbles the economy. Devaluation of its Francophone currency by 50%
on 12 January 1994 sparked a one-time inflationary surge, to 35%;
the rate dropped to 6% in 1996. The IMF provided a one-year standby
arrangement in 1994-95, a three-year Enhanced Financing Facility
(EFF) at near commercial rates beginning in late 1995, and stand-by
credit of $119 million in October 2000. Those agreements mandate
progress in privatization and fiscal discipline. France provided
additional financial support in January 1997 after Gabon had met IMF
targets for mid-1996. In 1997, an IMF mission to Gabon criticized
the government for overspending on off-budget items, overborrowing
from the central bank, and slipping on its schedule for
privatization and administrative reform. The rebound of oil prices
in 1999-2000 helped growth, but drops in production hampered Gabon
from fully realizing potential gains. In December 2000, Gabon signed
a new agreement with the Paris Club to reschedule its official debt.
A follow-up bilateral repayment agreement with the US was signed in
December 2001. Short-term progress depends on an upbeat world
economy and fiscal and other adjustments in line with IMF policies.
Gambia, The
The Gambia has no important mineral or other natural
resources and has a limited agricultural base. About 75% of the
population depends on crops and livestock for its livelihood.
Small-scale manufacturing activity features the processing of
peanuts, fish, and hides. Reexport trade normally constitutes a
major segment of economic activity, but a 1999 government-imposed
preshipment inspection plan, and instability of the Gambian dalasi
(currency) have drawn some of the reexport trade away from The
Gambia. The government's 1998 seizure of the private peanut firm
Alimenta eliminated the largest purchaser of Gambian groundnuts; the
following two marketing seasons have seen substantially lower prices
and sales. A decline in tourism in 2000 has also held back growth.
Unemployment and underemployment rates are extremely high. Shortrun
economic progress remains highly dependent on sustained bilateral
and multilateral aid, on responsible government economic management
as forwarded by IMF technical help and advice, and on expected
growth in the construction sector.
Gaza Strip
Economic output in the Gaza Strip - under the
responsibility of the Palestinian Authority since the Cairo
Agreement of May 1994 - declined by about one-third between 1992 and
1996. The downturn was largely the result of Israeli closure
policies - the imposition of generalized border closures in response
to security incidents in Israel - which disrupted previously
established labor and commodity market relationships between Israel
and the WBGS (West Bank and Gaza Strip). The most serious negative
social effect of this downturn was the emergence of high
unemployment; unemployment in the WBGS during the 1980s was
generally under 5%; by 1995 it had risen to over 20%. Israel's use
of comprehensive closures decreased during the next few years and,
in 1998, Israel implemented new policies to reduce the impact of
closures and other security procedures on the movement of
Palestinian goods and labor. These changes fueled an almost
three-year-long economic recovery in the West Bank and Gaza Strip;
real GDP grew by 5% in 1998 and 6% in 1999. Recovery was upended in
the last quarter of 2000 with the outbreak of violence, triggering
tight Israeli closures of Palestinian self-rule areas and a severe
disruption of trade and labor movements. In 2001, and even more
severely in 2002, Israeli military measures in Palestinian Authority
areas resulted in the destruction of capital plant and
administrative structure, widespread business closures, and a sharp
drop in GDP. Another major loss has been the decline in income
earned by Palestinian workers in Israel. International aid of $2
billion in 2001-02 to the Gaza Strip and West Bank have prevented
the complete collapse of the economy.