Paracel Islands
China announced plans in 1997 to open the islands
for tourism.
Paraguay
Paraguay has a market economy marked by a large informal
sector. The informal sector features both reexport of imported
consumer goods to neighboring countries as well as the activities of
thousands of microenterprises and urban street vendors. Because of
the importance of the informal sector, accurate economic measures
are difficult to obtain. A large percentage of the population
derives their living from agricultural activity, often on a
subsistence basis. The formal economy grew by an average of about 3%
annually in 1995-97; but GDP declined slightly in 1998, 1999, and
2000, rose slightly in 2001, only to fall again in 2002. On a per
capita basis, real income has stagnated at 1980 levels. Most
observers attribute Paraguay's poor economic performance to
political uncertainty, corruption, lack of progress on structural
reform, substantial internal and external debt, and deficient
infrastructure.
Peru
Peru's economy reflects its varied geography - an arid coastal
region, the Andes further inland, and tropical lands bordering
Colombia and Brazil. Abundant mineral resources are found in the
mountainous areas, and Peru's coastal waters provide excellent
fishing grounds. However, overdependence on minerals and metals
subjects the economy to fluctuations in world prices, and a lack of
infrastructure deters trade and investment. After several years of
inconsistent economic performance, the Peruvian economy was one of
the fastest growing in Latin America in 2002 and 2003, growing by 5%
and 4%, respectively, with the exchange rate stable and an annual
inflation lower than 2%. Foreign direct investment also was strong,
thanks to the ongoing Camisea natural gas pipeline project
(scheduled to begin operations in 2004) and investments in gold
mining. Risk premiums on Peruvian bonds on secondary markets reached
historically low levels in late 2003, reflecting investor optimism
and the government's fiscal restraint. Despite the strong
macroeconomic performance, political intrigue and allegations of
corruption continued to swirl in 2003, with the TOLEDO
administration growing increasingly unpopular, and local and foreign
concern rising that the political turmoil could place the country's
hard-won fiscal and financial stability at risk. Moreover, as of
late 2003, unemployment had yet to respond to the strong growth in
economic activity, owing in part to rigid labor market regulations
that act as an impediment to hiring.
Philippines
The Philippines was less severely affected by the Asian
financial crisis of 1998 than its neighbors, aided in part by annual
remittances of $6-7 billion from overseas workers. From a 0.6%
decline in 1998, GDP expanded by 2.4% in 1999, and 4.4% in 2000, but
slowed to 3.2% in 2001 in the context of a global economic slowdown,
an export slump, and political and security concerns. GDP growth
accelerated to 4.4% in 2002 and 4.2% in 2003, reflecting the
continued resilience of the service sector, gains in industrial
output, and improved exports. Nonetheless, it will take a higher,
sustained growth path to make appreciable progress in poverty
alleviation given the Philippines' high annual population growth
rate and unequal distribution of income. The MACAPAGAL-ARROYO
Administration has promised to continue economic reforms to help the
Philippines match the pace of development in the newly
industrialized countries of East Asia. The strategy includes
improving the infrastructure, strengthening tax collection to
bolster government revenues, furthering deregulation and
privatization of the economy, enhancing the viability of the
financial system, and increasing trade integration with the region.
Prospects for 2004 will depend on the economic performance of two
major trading partners, the US and Japan, and on increased
confidence on the part of the international investment community.
Pitcairn Islands
The inhabitants of this tiny isolated economy exist
on fishing, subsistence farming, handicrafts, and postage stamps.
The fertile soil of the valleys produces a wide variety of fruits
and vegetables, including citrus, sugarcane, watermelons, bananas,
yams, and beans. Bartering is an important part of the economy. The
major sources of revenue are the sale of postage stamps to
collectors and the sale of handicrafts to passing ships.
Poland
Poland has steadfastly pursued a policy of economic
liberalization throughout the 1990s and today stands out as a
success story among transition economies. Even so, much remains to
be done. The privatization of small and medium state-owned companies
and a liberal law on establishing new firms has encouraged the
development of the private business sector, but legal and
bureaucratic obstacles alongside persistent corruption are hampering
its further development. Poland's agricultural sector remains
handicapped by structural problems, surplus labor, inefficient small
farms, and lack of investment. Restructuring and privatization of
"sensitive sectors" (e.g., coal, steel, railroads, and energy),
while recently initiated, have stalled. Reforms in health care,
education, the pension system, and state administration have
resulted in larger than expected fiscal pressures. Further progress
in public finance depends mainly on privatization of Poland's
remaining state sector, the reduction of state employment, and an
overhaul of the tax code to incorporate the growing gray economy and
farmers, most of whom pay no tax. The government's determination to
enter the EU has shaped most aspects of its economic policy and new
legislation; in a nationwide referendum in November 2003, 77% of the
voters voted in favor of Poland's EU accession, now scheduled for
May 2004. Improving Poland's export competitiveness and containing
the internal budget deficit are top priorities. Due to political
uncertainty, the zloty has recently depreciated in relation to the
euro, while currencies of the other euro-zone aspirants have been
appreciating. GDP per capita equals that of the three Baltic states.
Portugal
Portugal has become a diversified and increasingly
service-based economy since joining the European Community in 1986.
Over the past decade, successive governments have privatized many
state-controlled firms and liberalized key areas of the economy,
including the financial and telecommunications sectors. The country
qualified for the Economic and Monetary Union (EMU) in 1998 and
began circulating the euro on 1 January 2002 along with 11 other EU
member economies. Economic growth has been above the EU average for
much of the past decade, but fell back in 2001-03. GDP per capita
stands at 70% of that of the leading EU economies. A poor
educational system, in particular, has been an obstacle to greater
productivity and growth. Portugal has been increasingly overshadowed
by lower-cost producers in Central Europe and Asia as a target for
foreign direct investment. The coalition government faces tough
choices in its attempts to boost Portugal's economic competitiveness
and to keep the budget deficit within the 3% EU ceiling.
Puerto Rico
Puerto Rico has one of the most dynamic economies in the
Caribbean region. A diverse industrial sector has far surpassed
agriculture as the primary locus of economic activity and income.
Encouraged by duty-free access to the US and by tax incentives, US
firms have invested heavily in Puerto Rico since the 1950s. US
minimum wage laws apply. Sugar production has lost out to dairy
production and other livestock products as the main source of income
in the agricultural sector. Tourism has traditionally been an
important source of income, with estimated arrivals of nearly 5
million tourists in 1999. Growth fell off in 2001-03, largely due to
the slowdown in the US economy.
Qatar
Oil and gas account for more than 55% of GDP, roughly 85% of
export earnings, and 70% of government revenues. Oil and gas have
given Qatar a per capita GDP about 80% of that of the leading West
European industrial countries. Proved oil reserves of 14.5 billion
barrels should ensure continued output at current levels for 23
years. Qatar's proved reserves of natural gas exceed 17.9 trillion
cubic meters, more than 5% of the world total and third largest in
the world. Long-term goals feature the development of offshore
natural gas reserves to offset the ultimate decline in oil
production. Since 2000, Qatar has consistently posted trade
surpluses largely because of high oil prices and increased natural
gas exports.
Reunion
The economy has traditionally been based on agriculture, but
services now dominate. Sugarcane has been the primary crop for more
than a century, and in some years it accounts for 85% of exports.
The government has been pushing the development of a tourist
industry to relieve high unemployment, which amounts to one-third of
the labor force. The gap in Reunion between the well-off and the
poor is extraordinary and accounts for the persistent social
tensions. The white and Indian communities are substantially better
off than other segments of the population, often approaching
European standards, whereas minority groups suffer the poverty and
unemployment typical of the poorer nations of the African continent.
The outbreak of severe rioting in February 1991 illustrates the
seriousness of socioeconomic tensions. The economic well-being of
Reunion depends heavily on continued financial assistance from
France.