Romania
Romania began the transition from Communism in 1989 with a
largely obsolete industrial base and a pattern of output unsuited to
the country's needs. The country emerged in 2000 from a punishing
three-year recession thanks to strong demand in EU export markets.
Despite the global slowdown in 2001-02, strong domestic activity in
construction, agriculture, and consumption have kept growth above
4%. An IMF standby agreement, signed in 2001, was accompanied by
slow but palpable gains in privatization, deficit reduction, and the
curbing of inflation. The IMF Board approved Romania's completion of
the standby agreement in October 2003, the first time Romania had
successfully concluded an IMF agreement since the 1989 revolution.
In July 2004, the Executive Board of the IMF approved a 24-month
standby arrangement for $367 million. The Romanian authorities do
not intend to draw on this arrangement, viewing it as a precaution.
Meanwhile, recent macroeconomic gains have done little to address
Romania's widespread poverty, and corruption and red tape handicap
the business environment.
Russia
Russia ended 2003 with its fifth straight year of growth,
averaging 6.5% annually since the financial crisis of 1998. Although
high oil prices and a relatively cheap ruble are important drivers
of this economic rebound, since 2000 investment and consumer-driven
demand have played a noticeably increasing role. Real fixed capital
investments have averaged gains greater than 10% over the last four
years and real personal incomes have averaged increases over 12%.
Russia has also improved its international financial position since
the 1998 financial crisis, with its foreign debt declining from 90%
of GDP to around 28%. Strong oil export earnings have allowed Russia
to increase its foreign reserves from only $12 billion to some $80
billion. These achievements, along with a renewed government effort
to advance structural reforms, have raised business and investor
confidence in Russia's economic prospects. Nevertheless, serious
problems persist. Oil, natural gas, metals, and timber account for
more than 80% of exports, leaving the country vulnerable to swings
in world prices. Russia's manufacturing base is dilapidated and must
be replaced or modernized if the country is to achieve broad-based
economic growth. Other problems include a weak banking system, a
poor business climate that discourages both domestic and foreign
investors, corruption, local and regional government intervention in
the courts, and widespread lack of trust in institutions. In
addition, a string of investigations launched against a major
Russian oil company, culminating with the arrest of its CEO in the
fall of 2003, have raised concerns by some observers that President
PUTIN is granting more influence to forces within his government
that desire to reassert state control over the economy.
Rwanda
Rwanda is a poor rural country with about 90% of the
population engaged in (mainly subsistence) agriculture. It is the
most densely populated country in Africa; landlocked with few
natural resources and minimal industry. Primary foreign exchange
earners are coffee and tea. The 1994 genocide decimated Rwanda's
fragile economic base, severely impoverished the population,
particularly women, and eroded the country's ability to attract
private and external investment. However, Rwanda has made
substantial progress in stabilizing and rehabilitating its economy
to pre-1994 levels, although poverty levels are higher now. GDP has
rebounded, and inflation has been curbed. Export earnings, however,
have been hindered by low beverage prices, depriving the country of
much needed hard currency. Attempts to diversify into
non-traditional agriculture exports such as flowers and vegetables
have been stymied by a lack of adequate transportation
infrastructure. Despite Rwanda's fertile ecosystem, food production
often does not keep pace with population growth, requiring food to
be imported. Rwanda continues to receive substantial aid money and
was approved for IMF-World Bank Heavily Indebted Poor Country (HIPC)
initiative debt relief in late 2000. But Kigali's high defense
expenditures cause tension between the government and international
donors and lending agencies.
Saint Helena
The economy depends largely on financial assistance
from the UK, which amounted to about $5 million in 1997 or almost
one-half of annual budgetary revenues. The local population earns
income from fishing, the raising of livestock, and sales of
handicrafts. Because there are few jobs, 25% of the work force has
left to seek employment on Ascension Island, on the Falklands, and
in the UK.
Saint Kitts and Nevis
Sugar was the traditional mainstay of the
Saint Kitts economy until the 1970s. Although the crop still
dominates the agricultural sector, activities such as tourism,
export-oriented manufacturing, and offshore banking have assumed
larger roles in the economy. As tourism revenues are now the chief
source of the islands' foreign exchange, a decline in stopover
tourist arrivals following the 11 September 2001 terrorist attacks
has eroded government finances. The opening of a 1,000+ bed Marriott
hotel in February 2003 was expected to bring in much-needed revenue.
Saint Lucia
Changes in the EU import preference regime and the
increased competition from Latin American bananas have made economic
diversification increasingly important in Saint Lucia. The island
nation has been able to attract foreign business and investment,
especially in its offshore banking and tourism industries. The
manufacturing sector is the most diverse in the Eastern Caribbean
area, and the government is trying to revitalize the banana
industry. Economic fundamentals remain solid.
Saint Pierre and Miquelon
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. The islands are heavily subsidized by France
to the great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Recent test
drilling for oil may pave the way for development of the energy
sector.
Saint Vincent and the Grenadines
Economic growth in this
lower-middle-income country hinges upon seasonal variations in the
agricultural and tourism sectors. Tropical storms wiped out
substantial portions of crops in 1994, 1995, and 2002, and tourism
in the Eastern Caribbean has suffered low arrivals following 11
September 2001. Saint Vincent is home to a small offshore banking
sector and has moved to adopt international regulatory standards.
Saint Vincent is also a large producer of marijuana and is being
used as a transshipment point for illegal narcotics from South
America.
Samoa
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, and agriculture
and fishing. The country is vulnerable to devastating storms.
Agriculture employs two-thirds of the labor force, and furnishes 90%
of exports, featuring coconut cream, coconut oil, and copra. The
manufacturing sector mainly processes agricultural products. The
decline of fish stocks in the area is a continuing problem. Tourism
is an expanding sector, accounting for 25% of GDP; about 88,000
tourists visited the islands in 2001. The Samoan Government has
called for deregulation of the financial sector, encouragement of
investment, and continued fiscal discipline, meantime protecting the
environment. Observers point to the flexibility of the labor market
as a basic strength for future economic advances. Foreign reserves
are in a relatively healthy state, the external debt is stable, and
inflation is low.
San Marino
The tourist sector contributes over 50% of GDP. In 2000
more than 3 million tourists visited San Marino. The key industries
are banking, wearing apparel, electronics, and ceramics. Main
agricultural products are wine and cheeses. The per capita level of
output and standard of living are comparable to those of the most
prosperous regions of Italy, which supplies much of its food.