Argentina
Argentina benefits from rich natural resources, a highly
literate population, an export-oriented agricultural sector, and a
diversified industrial base. Although one of the world's wealthiest
countries 100 years ago, Argentina suffered during most of the 20th
century from recurring economic crises, persistent fiscal and
current account deficits, high inflation, mounting external debt,
and capital flight. A severe depression, growing public and external
indebtedness, and a bank run culminated in 2001 in the most serious
economic, social, and political crisis in the country's turbulent
history. Interim President Adolfo RODRIGUEZ SAA declared a default -
the largest in history - on the government's foreign debt in
December of that year, and abruptly resigned only a few days after
taking office. His successor, Eduardo DUHALDE, announced an end to
the peso's decade-long 1-to-1 peg to the US dollar in early 2002.
The economy bottomed out that year, with real GDP 18% smaller than
in 1998 and almost 60% of Argentines under the poverty line. Real
GDP rebounded to grow by an average 9% annually over the subsequent
five years, taking advantage of previously idled industrial capacity
and labor, an audacious debt restructuring and reduced debt burden,
excellent international financial conditions, and expansionary
monetary and fiscal policies. Inflation, however, reached
double-digit levels in 2006 and the government of President Nestor
KIRCHNER responded with "voluntary" price agreements with
businesses, as well as export taxes and restraints. Multi-year price
freezes on electricity and natural gas rates for residential users
stoked consumption and kept private investment away, leading to
restrictions on industrial use and blackouts in 2007.
Armenia
Since the breakup of the Soviet Union in 1991, Armenia has
made progress in implementing many economic reforms including
privatization, price reforms, and prudent fiscal policies. The
conflict with Azerbaijan over the ethnic Armenian-dominated region
of Nagorno-Karabakh contributed to a severe economic decline in the
early 1990s. By 1994, however, the Armenian Government launched an
ambitious IMF-sponsored economic liberalization program that
resulted in positive growth rates. Economic growth has averaged over
13% in recent years. Armenia has managed to reduce poverty, slash
inflation, stabilize its currency, and privatize most small- and
medium-sized enterprises. Under the old Soviet central planning
system, Armenia developed a modern industrial sector, supplying
machine tools, textiles, and other manufactured goods to sister
republics, in exchange for raw materials and energy. Armenia has
since switched to small-scale agriculture and away from the large
agroindustrial complexes of the Soviet era. Nuclear power plants
built at Metsamor in the 1970s were closed following the 1988 Spitak
Earthquake, though they sustained no damage. One of the two reactors
was re-opened in 1995, but the Armenian government is under
international pressure to close it due to concerns that the Soviet
era design lacks important safeguards. Metsamor provides 40 percent
of the country's electricity - hydropower accounts for about
one-fourth. Economic ties with Russia remain close, especially in
the energy sector. The electricity distribution system was
privatized in 2002 and bought by Russia's RAO-UES in 2005.
Construction of a pipeline to deliver natural gas from Iran to
Armenia is halfway completed and is scheduled to be commissioned by
January 2009. Armenia has some mineral deposits (copper, gold,
bauxite). Pig iron, unwrought copper, and other nonferrous metals
are Armenia's highest valued exports. Armenia's severe trade
imbalance has been offset somewhat by international aid, remittances
from Armenians working abroad, and foreign direct investment.
Armenia joined the WTO in January 2003. The government made some
improvements in tax and customs administration in recent years, but
anti-corruption measures will be more difficult to implement.
Despite strong economic growth, Armenia's unemployment rate remains
high. Armenia will need to pursue additional economic reforms in
order to improve its economic competitiveness and to build on recent
improvements in poverty and unemployment, especially given its
economic isolation from two of its nearest neighbors, Turkey and
Azerbaijan.
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. Over 1.5
million tourists per year visit Aruba, with 75% of those from the
US. Construction continues to boom, with hotel capacity five times
the 1985 level. In addition, the country's oil refinery reopened in
1993, providing a major source of employment, foreign exchange
earnings, and growth. Tourist arrivals have rebounded strongly
following a dip after the 11 September 2001 attacks. The island
experiences only a brief low season, and hotel occupancy in 2004
averaged 80%, compared to 68% throughout the rest of the Caribbean.
The government has made cutting the budget and trade deficits a high
priority.
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, strong economy with a per
capita GDP on par with the four dominant West European economies.
Robust business and consumer confidence and high export prices for
raw materials and agricultural products are fueling the economy,
particularly in mining states. Australia's emphasis on reforms, low
inflation, a housing market boom, and growing ties with China have
been key factors behind the economy's 16 solid years of expansion.
Drought, robust import demand, and a strong currency have pushed the
trade deficit up in recent years, while infrastructure bottlenecks
and a tight labor market are constraining growth in export volumes
and stoking inflation. Australia's budget has been in surplus since
2002 due to strong revenue growth.
Austria
Austria, with its well-developed market economy and high
standard of living, is closely tied to other EU economies,
especially Germany's. The Austrian economy also benefits greatly
from strong commercial relations, especially in the banking and
insurance sectors, with central, eastern, and southeastern Europe.
The economy features a large service sector, a sound industrial
sector, and a small, but highly developed agricultural sector.
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. The outgoing government has
successfully pursued a comprehensive economic reform program, aimed
at streamlining government and creating a more competitive business
environment, further strengthening Austria's attractiveness as an
investment location. It has implemented effective pension reforms;
however, lower taxes in 2005-06 led to a small budget deficit in
2006 and 2007. Boosted by strong exports, growth nevertheless
reached 3.3% in both 2006 and 2007, although the economy may slow in
2008 because of the strong euro, high oil prices, and problems in
international financial markets. To meet increased competition -
especially from new EU members and Central European countries -
Austria will need to continue restructuring, emphasizing
knowledge-based sectors of the economy, and encouraging greater
labor flexibility and greater labor participation by its aging
population.
Azerbaijan
Azerbaijan's high economic growth in 2006 and 2007 is
attributable to large and growing oil exports. 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 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. A consortium of Western oil companies began
pumping 1 million barrels a day from a large offshore field in early
2006, through a $4 billion pipeline it built from Baku to Turkey's
Mediterranean port of Ceyhan. By 2010 revenues from this project
will double the country's current GDP. 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. Several other
obstacles impede Azerbaijan's economic progress: the need for
stepped up foreign investment in the non-energy sector, the
continuing conflict with Armenia over the Nagorno-Karabakh region,
pervasive corruption, and elevated inflation. 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 oil
and gas pipelines in the region, and Azerbaijan's ability to manage
its energy wealth.
Bahamas, The
The Bahamas is one of the wealthiest Caribbean
countries with an economy heavily dependent on tourism and offshore
banking. Tourism together with tourism-driven construction and
manufacturing accounts for approximately 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 tourist arrivals have been on the decline since 2006. Financial
services constitute the second-most important sector of the Bahamian
economy and, when combined with business services, account for about
36% 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
combined 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. Tourism, in turn, depends on growth
in the US, the source of more than 80% of the visitors.
Bahrain
With its highly developed communication and transport
facilities, Bahrain is home to numerous multinational firms with
business in the Gulf. Petroleum production and refining account for
over 60% of Bahrain's export receipts, over 70% of government
revenues, and 11% of GDP (exclusive of allied industries),
underpinning Bahrain's strong economic growth in recent years.
Aluminum is Bahrain's second major export after oil. Other major
segments of Bahrain's economy are the financial and construction
sectors. Bahrain is focused on Islamic banking and is competing on
an international scale with Malaysia as a worldwide banking center.
Bahrain is actively pursuing the diversification and privatization
of its economy to reduce the country's dependence on oil. As part of
this effort, in August 2006 Bahrain and the US implemented a Free
Trade Agreement (FTA), the first FTA between the US and a Gulf
state. Continued strong growth hinges on Bahrain's ability to
acquire new natural gas supplies as feedstock to support its
expanding petrochemical and aluminum industries. Unemployment,
especially among the young, and the depletion of oil and underground
water resources are long-term economic problems.