Macau
Macau's economy has enjoyed strong growth in recent years on
the back of its expanding tourism and gaming sectors. After opening
up its locally-controlled casino industry to foreign competition in
2001, the territory attracted tens of billions of dollars in foreign
investment, transforming Macao into the world's largest gaming
center. By 2006, Macau's gaming revenue surpassed that of the Las
Vegas strip, and gaming-related taxes accounted for 75% of total
government revenue. In 2008, government revenue from gaming was set
to double 2006 collections. The expanding casino sector, and China's
decision beginning in 2002 to relax travel restrictions, reenergized
Macau's tourism industry. This city of just over 500,000 hosted more
than 30 million visitors in 2008. Almost 60% came from mainland
China despite increasing restrictions on travel to the SAR. Macau's
traditional manufacturing industry has been in a slow decline since
the termination of the Multi-Fiber Agreement in 2005. In 2008,
exports of textiles and garments generated only $1.1 billion,
compared to $13.7 billion in gross gaming receipts. The Closer
Economic Partnership Agreement (CEPA) between Macau and mainland
China that came into effect on 1 January 2004 offers many Macau-made
products tariff-free access to the mainland. Macau's currency, the
Pataca, is closely tied to the Hong Kong dollar, which is also
freely accepted in the territory.
Macedonia
Having a small, open economy makes Macedonia vulnerable to
economic developments in Europe and dependent on regional
integration and progress toward EU membership for continued economic
growth. At independence in September 1991, Macedonia was the least
developed of the Yugoslav republics, producing a mere 5% of the
total federal output of goods and services. The collapse of
Yugoslavia ended transfer payments from the central government and
eliminated advantages from inclusion in a de facto free trade area.
An absence of infrastructure, UN sanctions on the downsized
Yugoslavia, and a Greek economic embargo over a dispute about the
country's constitutional name and flag hindered economic growth
until 1996. GDP subsequently rose each year through 2000. In 2001,
during a civil conflict, the economy shrank 4.5% because of
decreased trade, intermittent border closures, increased deficit
spending on security needs, and investor uncertainty. Growth
averaged 4% per year during 2003-06 and more than 5% per year during
2007-08. Macedonia has maintained macroeconomic stability with low
inflation, but it has so far lagged the region in attracting foreign
investment and creating jobs, despite making extensive fiscal and
business sector reforms. Official unemployment remains high at
nearly 35%, but may be overstated based on the existence of an
extensive gray market, estimated to be more than 20% of GDP, that is
not captured by official statistics. In the wake of the global
economic downturn, Macedonia has experienced decreased foreign
direct investment, lowered credit, and a slowdown of export growth.
The Government of Macedonia now predicts growth in 2009 to be no
more than 3%.
Madagascar
Having discarded past socialist economic policies,
Madagascar has since the mid 1990s followed a World Bank- and
IMF-led policy of privatization and liberalization. This strategy
placed the country on a slow and steady growth path from an
extremely low level. Agriculture, including fishing and forestry, is
a mainstay of the economy, accounting for more than one-fourth of
GDP and employing 80% of the population. Exports of apparel have
boomed in recent years primarily due to duty-free access to the US.
Deforestation and erosion, aggravated by the use of firewood as the
primary source of fuel, are serious concerns. President RAVALOMANANA
has worked aggressively to revive the economy following the 2002
political crisis, which triggered a 12% drop in GDP that year.
Poverty reduction and combating corruption will be the centerpieces
of economic policy for the next few years.
Malawi
Landlocked Malawi ranks among the world's most densely
populated and least developed countries. The economy is
predominately agricultural with about 85% of the population living
in rural areas. Agriculture accounts for more than one-third of GDP
and 90% of export revenues. The performance of the tobacco sector is
key to short-term growth as tobacco accounts for more than half of
exports. The economy depends on substantial inflows of economic
assistance from the IMF, the World Bank, and individual donor
nations. In December 2007, the US granted Malawi eligibility status
to receive financial support within the Millennium Challenge
Corporation (MCC) initiative. Malawi will now begin a consultative
process to develop a five-year program before funding can begin. In
2006, Malawi was approved for relief under the Heavily Indebted Poor
Countries (HIPC) program. The government faces many challenges
including developing a market economy, improving educational
facilities, facing up to environmental problems, dealing with the
rapidly growing problem of HIV/AIDS, and satisfying foreign donors
that fiscal discipline is being tightened. In 2005, President
MUTHARIKA championed an anticorruption campaign. Since 2005
President MUTHARIKA'S government has exhibited improved financial
discipline under the guidance of Finance Minister Goodall GONDWE and
signed a three year Poverty Reduction and Growth Facility worth $56
million with the IMF. Improved relations with the IMF lead other
international donors to resume aid as well.
Malaysia
Malaysia, a middle-income country, has transformed itself
since the 1970s from a producer of raw materials into an emerging
multi-sector economy. After coming to office in 2003, former Prime
Minister ABDULLAH tried to move the economy farther up the
value-added production chain by attracting investments in high
technology industries, medical technology, and pharmaceuticals. The
Government of Malaysia is continuing efforts to boost domestic
demand to wean the economy off of its dependence on exports.
Nevertheless, exports - particularly of electronics - remain a
significant driver of the economy. As an oil and gas exporter,
Malaysia has profited from higher world energy prices, although the
rising cost of domestic gasoline and diesel fuel forced Kuala Lumpur
to reduce government subsidies. Malaysia "unpegged" the ringgit from
the US dollar in 2005 and the currency appreciated 6% per year
against the dollar in 2006-08. Although this has helped to hold down
the price of imports, inflationary pressures began to build in 2007
- in 2008 inflation stood at nearly 6%, year-over-year. The
government presented its five-year national development agenda in
April 2006 through the Ninth Malaysia Plan, a comprehensive
blueprint for the allocation of the national budget from 2006-10.
ABDULLAH unveiled a series of ambitious development schemes for
several regions that have had trouble attracting business
investment. Real GDP growth averaged about 6% per year under
ABDULLAH, but regions outside of Kuala Lumpur and the manufacturing
hub Penang did not fare as well. The central bank maintains healthy
foreign exchange reserves and the regulatory regime has limited
Malaysia's exposure to riskier financial instruments and the global
financial crisis. Decreasing worldwide demand for consumer goods is
expected to hurt economic growth in 2009 and beyond, however.
Maldives
Tourism, Maldives' largest industry, accounts for 28% of
GDP and more than 60% of foreign exchange receipts. Over 90% of
government tax revenue comes from import duties and tourism-related
taxes. Fishing is the second leading sector. Agriculture and
manufacturing continue to play a lesser role in the economy,
constrained by the limited availability of cultivable land and the
shortage of domestic labor. Most staple foods must be imported.
Industry, which consists mainly of garment production, boat
building, and handicrafts, accounts for about 7% of GDP. The
Maldivian Government began an economic reform program in 1989
initially by lifting import quotas and opening some exports to the
private sector. Subsequently, it has liberalized regulations to
allow more foreign investment. Real GDP growth averaged over 7.5%
per year for more than a decade. In late December 2004, a major
tsunami left more than 100 dead, 12,000 displaced, and property
damage exceeding $300 million. As a result of the tsunami, the GDP
contracted by about 4.6% in 2005. A rebound in tourism, post-tsunami
reconstruction, and development of new resorts helped the economy
recover quickly, with GDP growth registering 18% in 2006. Growth
slowed in 2007-08, but remained above 5% per year. The trade deficit
expanded sharply as a result of high oil prices and imports of
construction material. Government spending on social needs,
subsidies, and civil servant salaries have created a large budget
deficit and inflation has picked up sharply, reaching nearly 13% in
October 2008 due to high oil and food prices. Diversifying beyond
tourism and fishing, reforming public finance, and increasing
employment are the major challenges facing the government. Over the
longer term Maldivian authorities worry about the impact of erosion
and possible global warming on their low-lying country; 80% of the
area is 1 meter or less above sea level.
Mali
Mali is among the 25 poorest countries in the world, with 65%
of its land area desert or semidesert and with a highly unequal
distribution of income. Economic activity is largely confined to the
riverine area irrigated by the Niger. About 10% of the population is
nomadic and some 80% of the labor force is engaged in farming and
fishing. Industrial activity is concentrated on processing farm
commodities. Mali is heavily dependent on foreign aid and vulnerable
to fluctuations in world prices for gold and cotton, its main
exports. The government has continued its successful implementation
of an IMF-recommended structural adjustment program that is helping
the economy grow, diversify, and attract foreign investment. Mali
has invested in tourism and a tractor assembly factory. Mali's
adherence to economic reform and the 50% devaluation of the CFA
franc in January 1994 have pushed up economic growth to a 5% average
in 1996-2008. Worker remittances and external trade routes for the
landlocked country have been jeopardized by continued unrest in
neighboring Cote d'Ivoire, however, Mali is building a road network
that will connect it to all adjacent countries and it has a railway
line to Senegal.
Malta
Malta produces only about 20% of its food needs, has limited
fresh water supplies, and has few domestic energy sources. Malta's
geographic position between the EU and Africa makes it a recipient
of illegal immigration, which has strained Malta's political and
economic resources. The financial services industry has grown in
recent years, but is not fully modernized. Malta's economy is
dependent on foreign trade, manufacturing - especially electronics
and pharmaceuticals - and tourism all of which have been negatively
affected by the global economic downturn. Malta adopted the euro on
1 January 2008. The Maltese government in 2009 will be challenged to
contain the budget deficit, which ballooned in 2008 to about 4.1% of
GDP, placing it above the euro zone's 3% maximum.
Marshall Islands
US Government assistance is the mainstay of this
tiny island economy. The Marshall Islands received more than $1
billion in aid from the US from 1986-2002. Agricultural production,
primarily subsistence, is concentrated on small farms; the most
important commercial crops are coconuts and breadfruit. Small-scale
industry is limited to handicrafts, tuna processing, and copra. The
tourist industry, now a small source of foreign exchange employing
less than 10% of the labor force, remains the best hope for future
added income. The islands have few natural resources, and imports
far exceed exports. Under the terms of the Amended Compact of Free
Association, the US will provide millions of dollars per year to the
Marshall Islands (RMI) through 2023, at which time a Trust Fund made
up of US and RMI contributions will begin perpetual annual payouts.
Government downsizing, drought, a drop in construction, the decline
in tourism, and less income from the renewal of fishing vessel
licenses have held GDP growth to an average of 1% over the past
decade.
Mauritania
Half the population still depends on agriculture and
livestock for a livelihood, even though many of the nomads and
subsistence farmers were forced into the cities by recurrent
droughts in the 1970s and 1980s. Mauritania has extensive deposits
of iron ore, which account for nearly 40% of total exports. The
nation's coastal waters are among the richest fishing areas in the
world, but overexploitation by foreigners threatens this key source
of revenue. The country's first deepwater port opened near
Nouakchott in 1986. Before 2000, drought and economic mismanagement
resulted in a buildup of foreign debt. In February 2000, Mauritania
qualified for debt relief under the Heavily Indebted Poor Countries
(HIPC) initiative and nearly all of its foreign debt has since been
forgiven. In December 2007 donors pledged $2.1 billion at a
triennial Consultative Group review. A new investment code approved
in December 2001 improved the opportunities for direct foreign
investment. Mauritania and the IMF agreed to a three-year Poverty
Reduction and Growth Facility (PRGF) arrangement in 2006 and
Mauritania made satisfactory progress, but IMF and World Bank
suspended their programs in Mauritania following the August 2008
coup; following the July 2009 Presidential elections, the IMF and
World Bank agreed to meet with the Goverment to discuss a
resumption. Oil prospects, while initially promising, have largely
failed to materialize. The Government continues to emphasize
reduction of poverty, improvement of health and education, and
privatization of the economy.