Costa Rica
Costa Rica's basically stable economy depends on tourism,
agriculture, and electronics exports. Exports have become more
diversified in the past 10 years due to the growth of the high-tech
manufacturing sector, which is dominated by the microprocessor
industry and the production of medical devices. Tourism continues to
bring in foreign exchange, as Costa Rica's impressive biodiversity
makes it a key destination for ecotourism. Foreign investors remain
attracted by the country's political stability and relatively high
education levels, as well as the fiscal incentives offered in the
free-trade zones. Costa Rica has attracted one of the highest levels
of foreign direct investment per capita in Latin America. Poverty
has remained around 20% for nearly 20 years, and the strong social
safety net that had been put into place by the government has eroded
due to increased financial constraints on government expenditures.
Immigration from Nicaragua has increasingly become a concern for the
government. The estimated 300,000-500,000 Nicaraguans in Costa Rica
legally and illegally are an important source of - mostly unskilled
- labor, but also place heavy demands on the social welfare system.
Under the ARIAS administration, the government has made strides in
reducing internal and external debt - in 2007, Costa Rica had its
first budget surplus in 50 years. Reducing inflation remains a
difficult problem because of rising commodity import prices and
labor market rigidities, though lower oil prices will decrease
upward pressures. The Central Bank is moving towards a more flexible
exchange rate system to focus on inflation targeting by 2010. The
US-Central American Free Trade Agreement (CAFTA) entered into force
on 1 January 2009, after significant delays within the Costa Rican
legislature. Nevertheless, economic growth has slowed in 2009 as the
global downturn reduced export demand and invesment inflows.
Cote d'Ivoire
Cote d'Ivoire is the world's largest producer and
exporter of cocoa beans and a significant producer and exporter of
coffee and palm oil. Consequently, the economy is highly sensitive
to fluctuations in international prices for these products, and, to
a lesser extent, in climatic conditions. Despite government attempts
to diversify the economy, it is still heavily dependent on
agriculture and related activities, engaging roughly 68% of the
population. Since 2006, oil and gas production have become more
important engines of economic activity than cocoa. According to IMF
statistics, earnings from oil and refined products were $1.3 billion
in 2006, while cocoa-related revenues were $1 billion during the
same period. Cote d'Ivoire's offshore oil and gas production has
resulted in substantial crude oil exports and provides sufficient
natural gas to fuel electricity exports to Ghana, Togo, Benin, Mali
and Burkina Faso. Oil exploration by a number of consortiums of
private companies continues offshore, and President GBAGBO has
expressed hope that daily crude output could reach 200,000 barrels
per day (b/d) by the end of the decade. Since the end of the civil
war in 2003, political turmoil has continued to damage the economy,
resulting in the loss of foreign investment and slow economic
growth. GDP grew by nearly 2% in 2007 and 3% in 2008. Per capita
income has declined by 15% since 1999.
Croatia
Once one of the wealthiest of the Yugoslav republics,
Croatia's economy suffered badly during the 1991-95 war as output
collapsed and the country missed the early waves of investment in
Central and Eastern Europe that followed the fall of the Berlin
Wall. Between 2000 and 2007, however, Croatia's economic fortunes
began to improve slowly, with moderate but steady GDP growth between
4% and 6% led by a rebound in tourism and credit-driven consumer
spending. Inflation over the same period has remained tame and the
currency, the kuna, stable. Nevertheless, difficult problems still
remain, including a stubbornly high unemployment rate, a growing
trade deficit and uneven regional development. The state retains a
large role in the economy, as privatization efforts often meet stiff
public and political resistance. While macroeconomic stabilization
has largely been achieved, structural reforms lag because of deep
resistance on the part of the public and lack of strong support from
politicians. The EU accession process should accelerate fiscal and
structural reform. While long term growth prospects for the economy
remain strong, Croatia will face significant pressure as a result of
the global financial crisis. Croatia's high foreign debt, anemic
export sector, strained state budget, and over-reliance on tourism
revenue will result in higher risk to economic stability over the
medium term.
Cuba
The government continues to balance the need for economic
loosening against a desire for firm political control. It has rolled
back limited reforms undertaken in the 1990s to increase enterprise
efficiency and alleviate serious shortages of food, consumer goods,
and services. The average Cuban's standard of living remains at a
lower level than before the downturn of the 1990s, which was caused
by the loss of Soviet aid and domestic inefficiencies. Since late
2000, Venezuela has been providing oil on preferential terms, and it
currently supplies about 100,000 barrels per day of petroleum
products. Cuba has been paying for the oil, in part, with the
services of Cuban personnel in Venezuela including some 30,000
medical professionals.
Cyprus
The area of the Republic of Cyprus under government control
has a market economy dominated by the service sector, which accounts
for 78% of GDP. Tourism, financial services, and real estate are the
most important sectors. Erratic growth rates over the past decade
reflect the economy's reliance on tourism, which often fluctuates
with political instability in the region and economic conditions in
Western Europe. Nevertheless, the economy in the area under
government control has grown at a rate well above the EU average
since 2000. Cyprus joined the European Exchange Rate Mechanism
(ERM2) in May 2005 and adopted the euro as its national currency on
1 January 2008. An aggressive austerity program in the preceding
years, aimed at paving the way for the euro, helped turn a soaring
fiscal deficit (6.3% in 2003) into a surplus of 1.2% in 2008, and
reduced inflation to 5.1%. This prosperity will come under pressure
in 2009, as construction and tourism slow in the face of reduced
foreign demand triggered by the ongoing global financial crisis.
Growth is expected to slow to less than 2%, which would be its
lowest level since 2003. As in the area administered by Turkish
Cypriots, water shortages are a perennial problem; a few
desalination plants have been added to existing plants over the last
year and are now on line. After 10 years of drought, the country
received substantial rainfall from 2001-04. Since then, rainfall has
been well below average, making water rationing a necessity.
Czech Republic
The Czech Republic is one of the most stable and
prosperous of the post-Communist states of Central and Eastern
Europe. Maintaining an open investment climate has been a key
element of the Czech Republic's transition from a communist,
centrally planned economy to a functioning market economy. As a
member of the European Union, with an advantageous location in the
center of Europe, a relatively low cost structure, and a
well-qualified labor force, the Czech Republic is an attractive
destination for foreign investment. Prior to its EU accession in
2004, the Czech government harmonized its laws and regulations with
those of the European Union. The government plans to meet the
criteria for joining the euro area around 2012. The small, open,
export-driven Czech economy grew by over 6% annually from 2005-2007
and strong growth continued throughout the first three quarters of
2008. Despite the global financial crisis, the conservative Czech
financial system has remained relatively healthy. The rate of Czech
economic growth, however, fell in the fourth quarter of 2008, mainly
due to a significant drop in demand for Czech exports in Western
Europe. This trend is expected to continue, with many analysts
predicting the Czech economy to contract slightly in 2009.
Denmark
This thoroughly modern market economy features high-tech
agriculture, up-to-date small-scale and corporate industry,
extensive government welfare measures, an equitable distribution of
income, comfortable living standards, a stable currency, a stable
political system, and high dependence on foreign trade. Unemployment
is low and capacity constraints limit growth potential. Denmark is a
net exporter of food and energy and enjoys a comfortable balance of
payments surplus. The government has been successful in meeting, and
even exceeding, the economic convergence criteria for participating
in the third phase (a common European currency) of the European
Economic and Monetary Union (EMU), but so far Denmark has decided
not to join 16 other EU members in the euro. Nonetheless, the Danish
krone remains pegged to the euro. Denmark's fiscal position is among
the strongest in the EU. Economic growth gained momentum in 2004 and
the upturn continued through 2006. After a long consumption-driven
upswing, Denmark's economy began slowing in early 2007 with the end
of a housing boom. This cyclical slowdown has been exacerbated by
the global financial crisis through increased borrowing costs and
lower export demand, consumer confidence, and investment. The
slowing global economy cut GDP by 1.2% in 2008. A major long-term
issue will be the sharp decline in the ratio of workers to retirees.
Dhekelia
Economic activity is limited to providing services to the
military and their families located in Dhekelia. All food and
manufactured goods must be imported.
Djibouti
The economy is based on service activities connected with
the country's strategic location and status as a free trade zone in
the Horn of Africa. Two-thirds of Djibouti's inhabitants live in the
capital city; the remainder are mostly nomadic herders. Scanty
rainfall limits crop production to fruits and vegetables, and most
food must be imported. Djibouti provides services as both a transit
port for the region and an international transshipment and refueling
center. Imports and exports from landlocked neighbor Ethiopia
represent 85% of port activity at Djibouti's container terminal.
Djibouti has few natural resources and little industry. The nation
is, therefore, heavily dependent on foreign assistance to help
support its balance of payments and to finance development projects.
An unemployment rate of nearly 60% in urban areas continues to be a
major problem. While inflation is not a concern, due to the fixed
tie of the Djiboutian franc to the US dollar, the artificially high
value of the Djiboutian franc adversely affects Djibouti's balance
of payments. Per capita consumption dropped an estimated 35% between
1999 and 2006 because of recession, civil war, and a high population
growth rate (including immigrants and refugees). Faced with a
multitude of economic difficulties, the government has fallen in
arrears on long-term external debt and has been struggling to meet
the stipulations of foreign aid donors.
Dominica
The Dominican economy depends on agriculture, primarily
bananas, and remains highly vulnerable to climatic conditions and
international economic developments. Tourism has increased as the
government seeks to promote Dominica as an "ecotourism" destination
and has developed a new tourism development plan with assistance
from the EU. Hurricane Dean struck the island in August 2007 causing
damages equivalent to 20% of GDP. In 2003, the government began a
comprehensive restructuring of the economy - including elimination
of price controls, privatization of the state banana company, and
tax increases - to address Dominica's economic and financial crisis
of 2001-02 and to meet IMF targets. This restructuring paved the way
for the current economic recovery - real growth for 2006 reached a
two-decade high - and will help to reduce the debt burden, which
remains at about 100% of GDP. In order to diversify the island's
production base, the government is attempting to develop an offshore
financial sector and has signed an agreement with the EU to develop
geothermal energy resources.