The 2009 CIA World Factbook

by United States. Central Intelligence Agency

Dominican Republic
The Dominican Republic has enjoyed strong GDP
growth since 2005 and continued to post sound gains through
mid-2008. The global recession, however, had a significant impact on
GDP growth in the latter half of the year as tourism and
remittances, two of the Dominican Republic's most important economic
contributors, showed signs of slowing. The economy is highly
dependent upon the US, the destination for about two-thirds of
exports. Remittances from the US amount to about a tenth of GDP,
equivalent to almost half of exports and three-quarters of tourism
receipts. The country has long been viewed primarily as an exporter
of sugar, coffee, and tobacco but in recent years the service sector
has overtaken agriculture as the economy's largest employer due to
growth in tourism and free trade zones. Although 2007 saw inflation
around 6%, the rate grew to over 12% in 2008. High food prices,
driven by the effects of consecutive tropical storms on agricultural
products, and education prices were significant contributors to the
jump. The effects of the global financial crisis and the US
recession are projected to negatively affect GDP growth in 2009 with
a rebound expected in 2010. Although the economy is growing at a
respectable rate, high unemployment and underemployment remains an
important challenge. The country suffers from marked income
inequality; the poorest half of the population receives less than
one-fifth of GNP, while the richest 10% enjoys nearly 40% of
national income. The Central America-Dominican Republic Free Trade
Agreement (CAFTA-DR) came into force in March 2007, which should
boost investment and exports and reduce losses to the Asian garment
industry.

Ecuador
Ecuador is substantially dependent on its petroleum
resources, which have accounted for more than half of the country's
export earnings and one-fourth of public sector revenues in recent
years. In 1999/2000, Ecuador suffered a severe economic crisis, with
GDP contracting by more than 6%. Poverty increased significantly,
the banking system collapsed, and Ecuador defaulted on its external
debt later that year. In March 2000, Congress approved a series of
structural reforms that also provided for the adoption of the US
dollar as legal tender. Dollarization stabilized the economy, and
positive growth returned in the years that followed, helped by high
oil prices, remittances, and increased non-traditional exports. From
2002-06 the economy grew 5.5%, the highest five-year average in 25
years. The poverty rate declined but remained high at 38% in 2006.
In 2006 the government imposed a windfall revenue tax on foreign oil
companies, leading to the suspension of free trade negotiations with
the US. These measures led to a drop in petroleum production in
2007. President Rafael CORREA raised the specter of debt default and
followed through on those threats in December 2008 by defaulting on
some commercial bond obligations. He also decreed a higher windfall
revenue tax on private oil companies, then renegotiated their
contracts to overcome the debilitating effect of the tax. This
generated economic uncertainty; private investment has dropped and
economic growth has slowed.

Egypt
Occupying the northeast corner of the African continent, Egypt
is bisected by the highly fertile Nile valley, where most economic
activity takes place. Egypt's economy was highly centralized during
the rule of former President Gamal Abdel NASSER but has opened up
considerably under former President Anwar EL-SADAT and current
President Mohamed Hosni MUBARAK. Cairo has aggressively pursued
economic reforms to encourage inflows of foreign investment and
facilitate GDP growth. In 2005, Prime Minister Ahmed NAZIF's
government reduced personal and corporate tax rates, reduced energy
subsidies, and privatized several enterprises. The stock market
boomed, and GDP grew about 7% each year since 2006. Despite these
achievements, the government has failed to raise living standards
for the average Egyptian, and has had to continue providing
subsidies for basic necessities. The subsidies have contributed to a
sizeable budget deficit - roughly 7% of GDP in 2007-08 - and
represent a significant drain on the economy. Foreign direct
investment has increased significantly in the past two years, but
the NAZIF government will need to continue its aggressive pursuit of
reforms in order to sustain the spike in investment and growth and
begin to improve economic conditions for the broader population.
Egypt's export sectors - particularly natural gas - have bright
prospects.

El Salvador
The smallest country in Central America, El Salvador has
the third largest economy, but growth has been modest in recent
years. Economic growth will decelerate in 2009 due to the global
slowdown and to El Salvador's dependence on exports to the US and
remittances from the US. El Salvador leads the region in remittances
per capita with inflows equivalent to nearly all export income. In
2006 El Salvador was the first country to ratify the Central
America-Dominican Republic Free Trade Agreement (CAFTA). CAFTA has
bolstered the export of processed foods, sugar, and ethanol, and
supported investment in the maquila sector. The SACA administration
has sought to diversify the economy, focusing on regional
transportation and tourism. El Salvador has promoted an open trade
and investment environment, and has embarked on a wave of
privatizations extending to telecom, electricity distribution,
banking, and pension funds. In late 2006, the government and the
Millennium Challenge Corporation signed a five-year, $461 million
compact to stimulate economic growth and reduce poverty in the
country's northern region through investments in education, public
services, enterprise development, and transportation infrastructure.
With the adoption of the US dollar as its currency in 2001, El
Salvador lost control over monetary policy and must concentrate on
maintaining a disciplined fiscal policy.

Equatorial Guinea
The discovery and exploitation of large oil
reserves have contributed to dramatic economic growth in recent
years. Forestry, farming, and fishing are also major components of
GDP. Subsistence farming predominates. Although pre-independence
Equatorial Guinea counted on cocoa production for hard currency
earnings, the neglect of the rural economy under successive regimes
has diminished potential for agriculture-led growth (the government
has stated its intention to reinvest some oil revenue into
agriculture). A number of aid programs sponsored by the World Bank
and the IMF have been cut off since 1993, because of corruption and
mismanagement. No longer eligible for concessional financing because
of large oil revenues, the government has been trying to agree on a
"shadow" fiscal management program with the World Bank and IMF.
Government officials and their family members own most businesses.
Undeveloped natural resources include titanium, iron ore, manganese,
uranium, and alluvial gold. Growth remained strong in 2008, led by
oil.

Eritrea
Since independence from Ethiopia in 1993, Eritrea has faced
the economic problems of a small, desperately poor country,
accentuated by the recent implementation of restrictive economic
policies. Eritrea has a command economy under the control of the
sole political party, the People's Front for Democracy and Justice
(PFDJ). Like the economies of many African nations, the economy is
largely based on subsistence agriculture, with 80% of the population
involved in farming and herding. The Ethiopian-Eritrea war in
1998-2000 severely hurt Eritrea's economy. GDP growth fell to zero
in 1999 and to -12.1% in 2000. The May 2000 Ethiopian offensive into
northern Eritrea caused some $600 million in property damage and
loss, including losses of $225 million in livestock and 55,000
homes. The attack prevented planting of crops in Eritrea's most
productive region, causing food production to drop by 62%. Despite
the fighting, Eritrea developed its transportation infrastructure,
asphalting new roads, improving its ports, and repairing war-damaged
roads and bridges. Since the war's conclusion, the government has
maintained a firm grip on the economy, expanding the use of the
military and party-owned businesses to complete Eritrea's
development agenda. The government strictly controls the use of
foreign currency by limiting access and availability. Few private
enterprises remain in Eritrea. Eritrea's economy depends heavily on
taxes paid by members of the diaspora. Erratic rainfall and the
delayed demobilization of agriculturalists from the military
continue to interfere with agricultural production, and Eritrea's
recent harvests have been unable to meet the food needs of the
country. The Government continues to place its hope for additional
revenue on the development of several international mining projects.
Despite difficulties for international companies in working with the
Eritrean Government, a Canadian mining company signed a contract
with the Government in 2007 and plans to begin mineral extraction in
2010. Eritrea also opened a free trade zone at the port of Massawa
in 2008. Eritrea's economic future depends upon its ability to
master social problems such as illiteracy, unemployment, and low
skills, and more importantly, on the government's willingness to
support a true market economy.

Estonia
Estonia, a 2004 European Union entrant, has a modern
market-based economy and one of the highest per capita income levels
in Central Europe. Estonia's successive governments have pursued a
free market, pro-business economic agenda and have wavered little in
their commitment to pro-market reforms. Tallinn's priority has been
to sustain high growth rates - on average 8% per year from 2003 to
2007. The economy benefits from strong electronics and
telecommunications sectors and strong trade ties with Finland,
Sweden, and Germany. The current government has pursued relatively
sound fiscal policies, resulting in balanced budgets and low public
debt. Rapid growth, however, has made it difficult to keep inflation
and large current-account deficits from soaring, putting downward
pressure on the country's currency. The government has not given up
on adopting the euro, but has repeatedly postponed its target date.
Estonia's economy slowed down markedly and fell sharply into
recession in mid-2008, primarily as a result of an investment and
consumption slump following the bursting of the real estate market
bubble.

Ethiopia
Ethiopia's poverty-stricken economy is based on
agriculture, accounting for almost half of GDP, 60% of exports, and
80% of total employment. The agricultural sector suffers from
frequent drought and poor cultivation practices. Coffee is critical
to the Ethiopian economy with exports of some $350 million in 2006,
but historically low prices have seen many farmers switching to qat
to supplement income. The war with Eritrea in 1998-2000 and
recurrent drought have buffeted the economy, in particular coffee
production. In November 2001, Ethiopia qualified for debt relief
from the Highly Indebted Poor Countries (HIPC) initiative, and in
December 2005 the IMF forgave Ethiopia's debt. Under Ethiopia's
constitution, the state owns all land and provides long-term leases
to the tenants; the system continues to hamper growth in the
industrial sector as entrepreneurs are unable to use land as
collateral for loans. Drought struck again late in 2002, leading to
a 3.3% decline in GDP in 2003. Normal weather patterns helped
agricultural and GDP growth recover during 2004-08.

European Union
Internally, the EU is attempting to lower trade
barriers, adopt a common currency, and move toward convergence of
living standards. Internationally, the EU aims to bolster Europe's
trade position and its political and economic power. Because of the
great differences in per capita income among member states (from
$7,000 to $69,000) and historic national animosities, the EU faces
difficulties in devising and enforcing common policies. For example,
since 2003 Germany and France have flouted the member states' treaty
obligation to prevent their national budgets from running more than
a 3% deficit. Between 2004 and 2007, the EU admitted 12 countries
that are, in general, less advanced technologically and economically
than the other 15. Eleven established EU member states introduced
the euro as their common currency on 1 January 1999 (Greece did so
two years later), but the UK, Sweden, and Denmark chose not to
participate. Of the 12 most recent member states, only Slovenia (1
January 2007) and Cyprus and Malta (1 January 2008) have adopted the
euro; the remaining nine are legally required to adopt the currency
upon meeting EU's fiscal and monetary convergence criteria.

Falkland Islands (Islas Malvinas) The economy was formerly based on agriculture, mainly sheep farming, but today fishing contributes the bulk of economic activity. In 1987, the government began selling fishing licenses to foreign trawlers operating within the Falkland Islands' exclusive fishing zone. These license fees total more than $40 million per year, which help support the island's health, education, and welfare system. Squid accounts for 75% of the fish taken. Dairy farming supports domestic consumption; crops furnish winter fodder. Exports feature shipments of high-grade wool to the UK and the sale of postage stamps and coins. The islands are now self-financing except for defense. The British Geological Survey announced a 200-mile oil exploration zone around the islands in 1993, and early seismic surveys suggest substantial reserves capable of producing 500,000 barrels per day; to date, no exploitable site has been identified. An agreement between Argentina and the UK in 1995 seeks to defuse licensing and sovereignty conflicts that would dampen foreign interest in exploiting potential oil reserves. Tourism, especially eco-tourism, is increasing rapidly, with about 30,000 visitors in 2001. Another large source of income is interest paid on money the government has in the bank. The British military presence also provides a sizeable economic boost.