Slovakia
Slovakia has mastered much of the difficult transition from
a centrally planned economy to a modern market economy. The DZURINDA
government made excellent progress during 2001-04 in macroeconomic
stabilization and structural reform. Major privatizations are nearly
complete, the banking sector is almost completely in foreign hands,
and the government has helped facilitate a foreign investment boom
with business-friendly policies, such as labor market liberalization
and a 19% flat tax. Slovakia's economic growth exceeded expectations
in 2001-04, despite the general European slowdown. Unemployment, at
an unacceptable 15% in 2003-04, remains the economy's Achilles heel.
Slovakia joined the EU on 1 May 2004.
Slovenia
Slovenia, with its historical ties to Western Europe,
enjoys a GDP per capita substantially higher than that of the other
transitioning economies of Central Europe. In March 2004, Slovenia
became the first transition country to graduate from borrower status
to donor partner at the World Bank. Privatization of the economy
proceeded at an accelerated pace in 2002-04. Despite lackluster
performance in Europe in 2001-04, Slovenia maintained moderate
growth. Structural reforms to improve the business environment have
allowed for greater foreign participation in Slovenia's economy and
have helped to lower unemployment. Further measures to curb
inflation are still needed. Corruption and the high degree of
coordination between government, business, and central bank policy
were issues of concern in the run-up to Slovenia's 1 May 2004
accession to the European Union. In mid-2004 Slovenia agreed to
adopt the euro by 2007 and, therefore, must keep its debt levels,
budget deficits, interest rates, and inflation levels within the
EU's Maastrict criteria.
Solomon Islands
The bulk of the population depends on agriculture,
fishing, and forestry for at least part of their livelihood. Most
manufactured goods and petroleum products must be imported. The
islands are rich in undeveloped mineral resources such as lead,
zinc, nickel, and gold. Prior to the arrival of the Regional
Assistance Mission to the Solomon Islands (RAMSI), severe ethnic
violence, the closing of key businesses, and an empty government
treasury culminated in economic collapse. RAMSI has enabled a return
to law and order, a new period of economic stability, and modest
growth as the economy rebuilds.
Somalia
Somalia's economic fortunes are driven by its deep political
divisions. The northwestern area has declared its independence as
the "Republic of Somaliland"; the northeastern region of Puntland is
a semi-autonomous state; and the remaining southern portion is
riddled with the struggles of rival factions. Economic life
continues, in part because much activity is local and relatively
easily protected. Agriculture is the most important sector, with
livestock normally accounting for about 40% of GDP and about 65% of
export earnings, but Saudi Arabia's recent ban on Somali livestock,
because of Rift Valley Fever concerns, has severely hampered the
sector. Nomads and semi-nomads, who are dependent upon livestock for
their livelihood, make up a large portion of the population.
Livestock, hides, fish, charcoal, and bananas are Somalia's
principal exports, while sugar, sorghum, corn, qat, and machined
goods are the principal imports. Somalia's small industrial sector,
based on the processing of agricultural products, has largely been
looted and sold as scrap metal. Despite the seeming anarchy,
Somalia's service sector has managed to survive and grow.
Telecommunication firms provide wireless services in most major
cities and offer the lowest international call rates on the
continent. In the absence of a formal banking sector, money exchange
services have sprouted throughout the country, handling between $500
million and $1 billion in remittances annually. Mogadishu's main
market offers a variety of goods from food to the newest electronic
gadgets. Hotels continue to operate, and militias provide security.
The ongoing civil disturbances and clan rivalries, however, have
interfered with any broad-based economic development and
international aid arrangements. In 2004 Somalia's overdue financial
obligations to the IMF continued to grow. Statistics on Somalia's
GDP, growth, per capita income, and inflation should be viewed
skeptically. In late December 2004, a major tsunami took an
estimated 150 lives and caused destruction of properity in coastal
areas.
South Africa
South Africa is a middle-income, emerging market with
an abundant supply of natural resources; well-developed financial,
legal, communications, energy, and transport sectors; a stock
exchange that ranks among the 10 largest in the world; and a modern
infrastructure supporting an efficient distribution of goods to
major urban centers throughout the region. However, growth has not
been strong enough to lower South Africa's high unemployment rate;
and daunting economic problems remain from the apartheid era,
especially poverty and lack of economic empowerment among the
disadvantaged groups. South African economic policy is fiscally
conservative, but pragmatic, focusing on targeting inflation and
liberalizing trade as means to increase job growth and household
income.
South Georgia and the South Sandwich Islands
Some fishing takes
place in adjacent waters. There is a potential source of income from
harvesting finfish and krill. The islands receive income from
postage stamps produced in the UK, sale of fishing licenses, and
harbor and landing fees from tourist vessels. Tourism from
specialized cruise ships is increasing rapidly.
Southern Ocean
Fisheries in 2000-01 (1 July to 30 June) landed
112,934 metric tons, of which 87% was krill and 11% Patagonian
toothfish. International agreements were adopted in late 1999 to
reduce illegal, unreported, and unregulated fishing, which in the
2000-01 season landed, by one estimate, 8,376 metric tons of
Patagonian and antarctic toothfish. In the 2000-01 antarctic summer
12,248 tourists, most of them seaborne, visited the Southern Ocean
and Antarctica, compared to 14,762 the previous year.
Spain
The Spanish economy boomed from 1986 to 1990, averaging five
percent annual growth. After a European-wide recession in the early
1990s, the Spanish economy resumed moderate growth starting in 1994.
Spain's mixed capitalist economy supports a GDP that on a per capita
basis is 80% that of the four leading West European economies. The
center-right government of former President AZNAR successfully
worked to gain admission to the first group of countries launching
the European single currency (the euro) on 1 January 1999. The AZNAR
administration continued to advocate liberalization, privatization,
and deregulation of the economy and introduced some tax reforms to
that end. Unemployment fell steadily under the AZNAR administration
but remains high at 10.4%. Growth of 2.5% in 2003 and 2.6% in 2004
was satisfactory given the background of a faltering European
economy. The socialist president, RODRIGUEZ ZAPATERO, has initiated
economic and social reforms that are generally popular among the
masses of people but that are anathema to religious and other
conservative elements. Adjusting to the monetary and other economic
policies of an integrated Europe, reducing unemployment, and
absorbing widespread social changes will pose challenges to Spain
over the next few years.
Spratly Islands
Economic activity is limited to commercial fishing.
The proximity to nearby oil- and gas-producing sedimentary basins
suggests the potential for oil and gas deposits, but the region is
largely unexplored; there are no reliable estimates of potential
reserves; commercial exploitation has yet to be developed.
Sri Lanka
In 1977, Colombo abandoned statist economic policies and
its import substitution trade policy for market-oriented policies
and export-oriented trade. Sri Lanka's most dynamic sectors now are
food processing, textiles and apparel, food and beverages,
telecommunications, and insurance and banking. In 2003, plantation
crops made up only 15% of exports (compared with 93% in 1970), while
textiles and garments accounted for 63%. GDP grew at an average
annual rate of 5.5% in the early 1990s until a drought and a
deteriorating security situation lowered growth to 3.8% in 1996. The
economy rebounded in 1997-2000 with average growth of 5.3%, but 2001
saw the first contraction in the country's history, -1.4%, due to a
combination of power shortages, severe budgetary problems, the
global slowdown, and continuing civil strife. Growth recovered to
4.0% in 2002 and to 5.2% in both 2003 and 2004. About 800,000 Sri
Lankans work abroad, 90% in the Middle East. They send home about $1
billion a year. The struggle by the Tamil Tigers of the north and
east for a largely independent homeland continues to cast a shadow
over the economy. In late December 2004, a major tsunami took about
31,000 lives, left more than 6,300 missing and 443,000 displaced,
and destroyed an estimated $1.5 billion worth of property.