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 and will
likely drop even further in 2009. Tourism, in turn, depends on
growth in the US, the source of more than 80% of the visitors. To
help offset the effect of the global economic downturn, particularly
on employment, the INGRAHAM administration plans to engage in
infrastructure projects. 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.
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. The global
financial crisis is likely to result in slower economic growth for
Bahrain during 2009 as tight international credit and a slowing
global economy cause funding for many non-oil projects to dry up.
Lower oil prices may also cause Bahrain's budget to slip back into
deficit.
Bangladesh
The economy has grown 5-6% per year since 1996 despite
inefficient state-owned enterprises, delays in exploiting natural
gas resources, insufficient power supplies, and slow implementation
of economic reforms. Bangladesh remains a poor, overpopulated, and
inefficiently-governed nation. Although more than half of GDP is
generated through the service sector, nearly two-thirds of
Bangladeshis are employed in the agriculture sector, with rice as
the single-most-important product. Garment exports and remittances
from Bangladeshis working overseas, mainly in the Middle East and
East Asia, fuel economic growth. In 2008 Bangladesh pursued a
monetary policy aimed at maintaining high employment, but created
higher inflation in the process.
Barbados
Historically, the Barbadian economy was dependent on
sugarcane cultivation and related activities. However, in recent
years the economy has diversified into light industry and tourism
with about three-quarters of GDP and 80% of exports being attributed
to services. Growth has rebounded since 2003, bolstered by increases
in construction projects and tourism revenues, reflecting its
success in the higher-end segment, but the sector will likely face
declining revenues with the global economic downturn. The country
enjoys one of the highest per capita incomes in the region. Offshore
finance and information services are important foreign exchange
earners and thrive from having the same time zone as eastern US
financial centers and a relatively highly educated workforce. The
government continues its efforts to reduce unemployment, to
encourage direct foreign investment, and to privatize remaining
state-owned enterprises. The public debt-to-GDP ratio of about 80%
will likely widen as the THOMPSON administration engages in a more
expansionary fiscal policy.
Belarus Belarus has seen little structural reform since 1995, when President LUKASHENKO launched the country on the path of "market socialism." In keeping with this policy, LUKASHENKO reimposed administrative controls over prices and currency exchange rates and expanded the state's right to intervene in the management of private enterprises. Since 2005, the government has re-nationalized a number of private companies. In addition, businesses have been subject to pressure by central and local governments, e.g., arbitrary changes in regulations, numerous rigorous inspections, retroactive application of new business regulations, and arrests of "disruptive" businessmen and factory owners. A wide range of redistributive policies has helped those at the bottom of the ladder; the Gini coefficient is among the lowest in the world. Because of these restrictive economic policies, Belarus has had trouble attracting foreign investment. Nevertheless, government statistics indicate GDP growth has been strong in recent years, reaching 10% in 2008, despite the roadblocks of a tough, centrally directed economy with a high rate of inflation. Belarus receives discounted oil and natural gas from Russia and much of Belarus' growth can be attributed to the re-export of Russian oil at market prices. Trade with Russia - by far its largest single trade partner - decreased in 2007-08, largely as a result of a change in the way the Value Added Tax (VAT) on trade was collected. Russia has introduced an export duty on oil shipped to Belarus, which will increase gradually through 2009, and a requirement that Belarusian duties on re-exported Russian oil be shared with Russia - 80% was slated to go to Russia in 2008, and 85% in 2009. Russia also increased Belarusian natural gas prices from $47 per thousand cubic meters (tcm)in 2006 to $100 per tcm in 2007, and to $128 per tcm in 2008, and plans to increase prices gradually to world levels by 2011. Russia's recent policy of bringing energy prices for Belarus to world market levels may result in a slowdown in economic growth in Belarus over the next few years. Some policy measures, including improving energy efficiency and diversifying exports, have been introduced, but external borrowing has been the main mechanism used to manage the growing pressures on the economy. Belarus felt the effects of the global financial crisis in late 2008 and reached agreement with Russia in November for a $2 billion stabilization loan and with the IMF for a $2.5 billion stand-by agreement in January 2009. In line with IMF conditionality, Belarus devalued the ruble approximately 20% in January 2009 and has tightened some fiscal and monetary policies. Belarus's economic growth is likely to slow in 2009 as it faces decreasing demand for its exports, and will find it difficult to increase external borrowing if the credit markets continue to tighten.
Belgium
This modern, private-enterprise economy has capitalized on
its central geographic location, highly developed transport network,
and diversified industrial and commercial base. Industry is
concentrated mainly in the populous Flemish area in the north. With
few natural resources, Belgium must import substantial quantities of
raw materials and export a large volume of manufactures, making its
economy unusually dependent on the state of world markets. Roughly
three-quarters of its trade is with other EU countries. Public debt
is more than 80% of GDP. On the positive side, the government
succeeded in balancing its budget during the 2000-2008 period, and
income distribution is relatively equal. Belgium began circulating
the euro currency in January 2002. Economic growth and foreign
direct investment dropped in 2008. In 2009 Belgium is likely to have
negative growth, growing unemployment, and a 3% budget deficit,
stemming from the worldwide banking crisis.
Belize
In this small, essentially private-enterprise economy,
tourism is the number one foreign exchange earner followed by
exports of marine products, citrus, cane sugar, bananas, and
garments. The government's expansionary monetary and fiscal
policies, initiated in September 1998, led to sturdy GDP growth
averaging nearly 4% in 1999-2007, though growth slipped to 3.8% in
2008 as a result of the global slowdown, natural disasters, and the
drop in the price of oil. Oil discoveries in 2006 bolstered the
economic growth. Exploration efforts continue and a small increase
in production is expected in 2009. Major concerns continue to be the
sizable trade deficit and unsustainable foreign debt equivalent to
nearly 70% of GDP. In February 2007, the government restructured
nearly all of its public external commercial debt, which helped
reduce interest payments and relieve some of the country's liquidity
concerns. A key short-term objective remains the reduction of
poverty with the help of international donors.
Benin
The economy of Benin remains underdeveloped and dependent on
subsistence agriculture, cotton production, and regional trade.
Growth in real output has averaged around 5% in the past seven
years, but rapid population growth has offset much of this increase.
Inflation has subsided over the past several years. In order to
raise growth still further, Benin plans to attract more foreign
investment, place more emphasis on tourism, facilitate the
development of new food processing systems and agricultural
products, and encourage new information and communication
technology. Specific projects to improve the business climate by
reforms to the land tenure system, the commercial justice system,
and the financial sector were included in Benin's $307 million
Millennium Challenge Account grant signed in February 2006. The 2001
privatization policy continues in telecommunications, water,
electricity, and agriculture though the government annulled the
privatization of Benin's state cotton company in November 2007 after
the discovery of irregularities in the bidding process. The Paris
Club and bilateral creditors have eased the external debt situation,
with Benin benefiting from a G8 debt reduction announced in July
2005, while pressing for more rapid structural reforms. An
insufficient electrical supply continues to adversely affect Benin's
economic growth though the government recently has taken steps to
increase domestic power production.
Bermuda
Bermuda enjoys the third highest per capita income in the
world more than 50% higher than that of the US. Its economy is
primarily based on providing financial services for international
business and luxury facilities for tourists. A number of reinsurance
companies relocated to the island following the 11 September 2001
attacks and again after Hurricane Katrina in August 2005
contributing to the expansion of an already robust international
business sector. Bermuda's tourism industry - which derives over 80%
of its visitors from the US - continues to struggle but remains the
island's number two industry. Most capital equipment and food must
be imported. Bermuda's industrial sector is small, although
construction continues to be important; the average cost of a house
in June 2003 had risen to $976,000. Agriculture is limited with only
20% of the land being arable.
Bhutan
The economy, one of the world's smallest and least developed,
is based on agriculture and forestry, which provide the main
livelihood for more than 60% of the population. Agriculture consists
largely of subsistence farming and animal husbandry. Rugged
mountains dominate the terrain and make the building of roads and
other infrastructure difficult and expensive. The economy is closely
aligned with India's through strong trade and monetary links and
dependence on India's financial assistance. The industrial sector is
technologically backward, with most production of the cottage
industry type. Most development projects, such as road construction,
rely on Indian migrant labor. Model education, social, and
environment programs are underway with support from multilateral
development organizations. Each economic program takes into account
the government's desire to protect the country's environment and
cultural traditions. For example, the government, in its cautious
expansion of the tourist sector, encourages visits by upscale,
environmentally conscientious tourists. Detailed controls and
uncertain policies in areas such as industrial licensing, trade,
labor, and finance continue to hamper foreign investment. Hydropower
exports to India have boosted Bhutan's overall growth, even though
GDP fell in 2008 as a result of a slowdown in India, its predominant
export market. New hydropower projects will be the driving force
behind Bhutan's ability to create employment and sustain growth in
the coming years.