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 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 real GDP fell
by 10.9% in 2002, but by mid-year the economy had stabilized, albeit
at a lower level. GDP expanded by more than 8% in 2003 and again in
2004, with unemployment falling and inflation remaining in single
digits.
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
liberalization program that resulted in positive growth rates in
1995-2003. Armenia joined the WTO in January 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 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
exceptionally 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, 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 an enviable Western-style capitalist
economy, with a per capita GDP on par with the four dominant West
European economies. Rising output in the domestic economy, robust
business and consumer confidence, and rising exports of raw
materials and agricultural products are fueling the economy.
Australia's emphasis on reforms, low inflation, and growing ties
with China are other key factors behind the economy's strength. The
impact of drought, weak foreign demand, and strong import demand
pushed the trade deficit up from $8 billion in 2002, to $18 billion
in 2003, and to $13 billion in 2004. One other concern is the rapid
increase in domestic housing prices, which have raised the prospect
that interest rates will need to be raised to prevent a speculative
bubble.
Austria
Austria, with its well-developed market economy and high
standard of living, is closely tied to other EU economies,
especially Germany's. The economy features up-to-date industrial and
agricultural sectors. Timber is a key industry, 47% of the land area
being forested. Membership in the EU has drawn an influx of foreign
investors attracted by Austria's access to the single European
market and proximity to the new EU economies. Slow growth in Europe
has held the economy to 0.7% growth in 2001, 1.4% in 2002, 0.8% in
2003, and 1.9% in 2004. To meet increased competition from both EU
and Central European countries, particularly the new EU members,
Austria will need to emphasize knowledge-based sectors of the
economy, continue to deregulate the service sector, and encourage
much greater participation in the labor market by its aging
population. The aging phenomenon, together with already high health
and pension costs, poses fundamental problems in tax and welfare
policies.
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 2001-03. Financial services
constitute the second-most important sector of the Bahamian economy,
accounting for about 15% of GDP. However, since December 2000, when
the government enacted new regulations on the financial sector, many
international businesses have left The Bahamas. 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 more than 80% of the visitors. In addition to
tourism and banking, the government supports the development of a
"third pillar," e-commerce.
Bahrain
In well-to-do 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. A large share of exports consist 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. In September
2004 Bahrain signed a Free Trade Agreement (FTA) with the United
States - the first such agreement undertaken by a Gulf state. Both
countries must ratify the FTA before it is enforced.