Economy - overview
Afghanistan
Afghanistan's economy is recovering from decades of
conflict. The economy has improved significantly since the fall of
the Taliban regime in 2001 largely because of the infusion of
international assistance, the recovery of the agricultural sector,
and service sector growth. Real GDP growth fell from the 10% level
in 2006-07 to a little more than 3% in 2008. Despite the progress of
the past few years, Afghanistan is extremely poor, landlocked, and
highly dependent on foreign aid, agriculture, and trade with
neighboring countries. Much of the population continues to suffer
from shortages of housing, clean water, electricity, medical care,
and jobs. Criminality, insecurity, and the Afghan Government's
inability to extend rule of law to all parts of the country pose
challenges to future economic growth. It will probably take the
remainder of the decade and continuing donor aid and attention to
significantly raise Afghanistan's living standards from its current
level, among the lowest in the world. International pledges made by
more than 60 countries and international financial institutions at
the Berlin Donors Conference for Afghan reconstruction in March 2004
reached $8.9 billion for 2004-09. While the international community
remains committed to Afghanistan's development, pledging over $57
billion at three donors' conferences since 2002, Kabul will need to
overcome a number of challenges. Expanding poppy cultivation and a
growing opium trade generate roughly $3 billion in illicit economic
activity and looms as one of Kabul's most serious policy concerns.
Other long-term challenges include: budget sustainability, job
creation, corruption, government capacity, and rebuilding war torn
infrastructure.
Akrotiri
Economic activity is limited to providing services to the
military and their families located in Akrotiri. All food and
manufactured goods must be imported.
Albania
Lagging behind its Balkan neighbors, Albania is making the
difficult transition to a more modern open-market economy.
Macroeconomic growth has averaged around 5% over the last five years
and inflation is low and stable. The government has taken measures
to curb violent crime, and recently adopted a fiscal reform package
aimed at reducing the large gray economy and attracting foreign
investment. The economy is bolstered by annual remittances from
abroad representing about 15% of GDP, mostly from Albanians residing
in Greece and Italy; this helps offset the towering trade deficit.
The agricultural sector, which accounts for over half of employment
but only about one-fifth of GDP, is limited primarily to small
family operations and subsistence farming because of lack of modern
equipment, unclear property rights, and the prevalence of small,
inefficient plots of land. Energy shortages because of a reliance on
hydropower, and antiquated and inadequate infrastructure contribute
to Albania's poor business environment and lack of success in
attracting new foreign investment. The completion of a new thermal
power plant near Vlore has helped diversify generation capacity, and
plans to upgrade transmission lines between Albania and Montenegro
and Kosovo would help relieve the energy shortages. Also, with help
from EU funds, the government is taking steps to improve the poor
national road and rail network, a long-standing barrier to sustained
economic growth.
Algeria
The hydrocarbons sector is the backbone of the economy,
accounting for roughly 60% of budget revenues, 30% of GDP, and over
95% of export earnings. Algeria has the eighth-largest reserves of
natural gas in the world and is the fourth-largest gas exporter; it
ranks 15th in oil reserves. Sustained high oil prices in recent
years have helped improve Algeria's financial and macroeconomic
indicators. Algeria is running substantial trade surpluses and
building up record foreign exchange reserves. Algeria has decreased
its external debt to less than 5% of GDP after repaying its Paris
Club and London Club debt in 2006. Real GDP has risen due to higher
oil output and increased government spending. The government's
continued efforts to diversify the economy by attracting foreign and
domestic investment outside the energy sector, however, has had
little success in reducing high unemployment and improving living
standards. Structural reform within the economy, such as development
of the banking sector and the construction of infrastructure, moves
ahead slowly hampered by corruption and bureaucratic resistance.
American Samoa
American Samoa has a traditional Polynesian economy
in which more than 90% of the land is communally owned. Economic
activity is strongly linked to the US with which American Samoa
conducts most of its commerce. Tuna fishing and tuna processing
plants are the backbone of the private sector, with canned tuna the
primary export. Transfers from the US Government add substantially
to American Samoa's economic well being. Attempts by the government
to develop a larger and broader economy are restrained by Samoa's
remote location, its limited transportation, and its devastating
hurricanes. Tourism is a promising developing sector.
Andorra
Tourism, the mainstay of Andorra's tiny, well-to-do economy,
accounts for more than 80% of GDP. An estimated 11.6 million
tourists visit annually, attracted by Andorra's duty-free status and
by its summer and winter resorts. Andorra's comparative advantage
has recently eroded as the economies of neighboring France and Spain
have been opened up, providing broader availability of goods and
lower tariffs. The banking sector, with its partial "tax haven"
status, also contributes substantially to the economy. Agricultural
production is limited - only 2% of the land is arable - and most
food has to be imported. The principal livestock activity is sheep
raising. Manufacturing output consists mainly of cigarettes, cigars,
and furniture. Andorra is a member of the EU Customs Union and is
treated as an EU member for trade in manufactured goods (no tariffs)
and as a non-EU member for agricultural products.
Angola
Angola's high growth rate is driven by its oil sector, which
has taken advantage of high international oil prices. Oil production
and its supporting activities contribute about 85% of GDP. Increased
oil production supported growth averaging more than 15% per year
from 2004 to 2007. A postwar reconstruction boom and resettlement of
displaced persons has led to high rates of growth in construction
and agriculture as well. Much of the country's infrastructure is
still damaged or undeveloped from the 27-year-long civil war.
Remnants of the conflict such as widespread land mines still mar the
countryside even though an apparently durable peace was established
after the death of rebel leader Jonas SAVIMBI in February 2002.
Subsistence agriculture provides the main livelihood for most of the
people, but half of the country's food must still be imported. In
2005, the government started using a $2 billion line of credit,
since increased to $7 billion, from China to rebuild Angola's public
infrastructure, and several large-scale projects were completed in
2006. Angola also has large credit lines from Brazil, Portugal,
Germany, Spain, and the EU. The central bank in 2003 implemented an
exchange rate stabilization program using foreign exchange reserves
to buy kwanzas out of circulation. This policy became more
sustainable in 2005 because of strong oil export earnings; it has
significantly reduced inflation. Although consumer inflation
declined from 325% in 2000 to under 13% in 2008, the stabilization
policy has put pressure on international net liquidity. Angola
became a member of OPEC in late 2006 and in late 2007 was assigned a
production quota of 1.9 million barrels a day, somewhat less than
the 2-2.5 million bbl Angola's government had wanted. To fully take
advantage of its rich national resources - gold, diamonds, extensive
forests, Atlantic fisheries, and large oil deposits - Angola will
need to implement government reforms, increase transparency, and
reduce corruption. The government has rejected a formal IMF
monitored program, although it continues Article IV consultations
and ad hoc cooperation. Corruption, especially in the extractive
sectors, and the negative effects of large inflows of foreign
exchange, are major challenges facing Angola.
Anguilla
Anguilla has few natural resources, and the economy depends
heavily on luxury tourism, offshore banking, lobster fishing, and
remittances from emigrants. Increased activity in the tourism
industry has spurred the growth of the construction sector
contributing to economic growth. Anguillan officials have put
substantial effort into developing the offshore financial sector,
which is small but growing. In the medium term, prospects for the
economy will depend largely on the tourism sector and, therefore, on
revived income growth in the industrialized nations as well as on
favorable weather conditions.
Antarctica
Fishing off the coast and tourism, both based abroad,
account for Antarctica's limited economic activity. Antarctic
fisheries in 2006-07 (1 July-30 June) reported landing 126,976
metric tons (estimated fishing from the area covered by the
Convention on the Conservation of Antarctic Marine Living Resources
(CCAMLR), which extends slightly beyond the Antarctic Treaty area).
Unregulated fishing, particularly of Patagonian toothfish
(Dissostichus eleginoides - also known as Chilean sea bass), is a
serious problem. The CCAMLR determines the recommended catch limits
for marine species. A total of 45,652 tourists visited the Antarctic
Treaty area in the 2007-08 Antarctic summer, up from the 36,460
visitors in 2006-2007, and the 30,877 visitors in 2005-2006
(estimates provided to the Antarctic Treaty by the International
Association of Antarctica Tour Operators (IAATO); this does not
include passengers on overflights). Nearly all of them were
passengers on commercial (nongovernmental) ships and several yachts
that make trips during the summer. Most tourist trips last
approximately two weeks.