Saint Vincent and the Grenadines Economic growth slowed in 2008 after reaching a 10-year high of nearly 7% in 2006, and will likely slow in 2009 with the global economic downturn, though it will be above average for Latin America. Success of the economy hinges upon seasonal variations in agriculture, tourism, and construction activity as well as remittance inflows. Much of the workforce is employed in banana production and tourism, but persistent high unemployment has prompted many to leave the islands. This lower-middle-income country is vulnerable to natural disasters - tropical storms wiped out substantial portions of crops in 1994, 1995, and 2002. In 2007, the islands had more than 200,000 tourist arrivals, mostly to the Grenadines. Saint Vincent is home to a small offshore banking sector and has moved to adopt international regulatory standards. The government's ability to invest in social programs and respond to external shocks is constrained by its high debt burden - 25% of current revenues are directed towards debt servicing. An agreement with Italy to write-off debt reduced the public debt-to-GDP ratio to about 70%. The GONSALVES administration is directing government resources to infrastructure projects, including a new international airport that is expected to be completed in 2011.
Samoa
The economy of Samoa has traditionally been dependent on
development aid, family remittances from overseas, agriculture, and
fishing. The country is vulnerable to devastating storms.
Agriculture employs two-thirds of the labor force and furnishes 90%
of exports, featuring coconut cream, coconut oil, and copra. The
fish catch declined during the El Nino of 2002-03 but returned to
normal by mid-2005. The manufacturing sector mainly processes
agricultural products. One factory in the Foreign Trade Zone employs
3,000 people to make automobile electrical harnesses for an assembly
plant in Australia. Tourism is an expanding sector accounting for
25% of GDP; 122,000 tourists visited the islands in 2007. The Samoan
Government has called for deregulation of the financial sector,
encouragement of investment, and continued fiscal discipline, while
at the same time protecting the environment. Observers point to the
flexibility of the labor market as a basic strength for future
economic advances. Foreign reserves are in a relatively healthy
state, the external debt is stable, and inflation is low.
San Marino
San Marino's economy relies heavily on its tourism and
banking industries, as well as from the manufacture and export of
ceramics, clothing, fabrics, furniture, paints, spirits, tiles, and
wine. The economy also benefits from foreign investment due to its
relatively low corporate taxes and low taxes on interest earnings.
The San Marino government, sworn in on 3 December 2008, will
continue to work towards an economic cooperation agreement with
Italy - a longstanding priority - as well as harmonizing its fiscal
laws with EU members. The per capita level of output and standard of
living are comparable to those of the most prosperous regions of
Italy, which supplies much of its food.
Sao Tome and Principe
This small, poor island economy has become
increasingly dependent on cocoa since independence in 1975. Cocoa
production has substantially declined in recent years because of
drought and mismanagement. Sao Tome has to import all fuels, most
manufactured goods, consumer goods, and a substantial amount of
food. Over the years, it has had difficulty servicing its external
debt and has relied heavily on concessional aid and debt
rescheduling. Sao Tome benefited from $200 million in debt relief in
December 2000 under the Highly Indebted Poor Countries (HIPC)
program, which helped bring down the country's $300 million debt
burden. In August 2005, Sao Tome signed on to a new 3-year IMF
Poverty Reduction and Growth Facility (PRGF) program worth $4.3
million. Considerable potential exists for development of a tourist
industry, and the government has taken steps to expand facilities in
recent years. The government also has attempted to reduce price
controls and subsidies. Potential exists for the development of
petroleum resources in Sao Tome's territorial waters in the oil-rich
Gulf of Guinea, which are being jointly developed in a 60-40 split
with Nigeria, but any actual production is at least several years
off. The first production licenses were sold in 2004, though a
dispute over licensing with Nigeria delayed Sao Tome's receipt of
more than $20 million in signing bonuses for almost a year. Real GDP
growth averaged about 6% in 2006-08, as a result of increases in
public expenditures and oil-related capital investment.
Saudi Arabia
Saudi Arabia has an oil-based economy with strong
government controls over major economic activities. It possesses
more than 20% of the world's proven petroleum reserves, ranks as the
largest exporter of petroleum, and plays a leading role in OPEC. The
petroleum sector accounts for roughly 80% of budget revenues, 45% of
GDP, and 90% of export earnings. About 40% of GDP comes from the
private sector. Roughly 6.4 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors. High oil prices through mid-2008 have boosted
growth, government revenues, and Saudi ownership of foreign assets,
while enabling Riyadh to pay down domestic debt. The government is
encouraging private sector growth - especially in power generation,
telecommunications, natural gas exploration, and petrochemicals - to
lessen the kingdom's dependence on oil exports and to increase
employment opportunities for the swelling Saudi population, nearly
40% of which are youths under 15 years old. Unemployment is high,
and the large youth population generally lacks the education and
technical skills the private sector needs. Riyadh has substantially
boosted spending on job training and education, infrastructure
development, and government salaries. As part of its effort to
attract foreign investment and diversify the economy, Saudi Arabia
acceded to the WTO in December 2005 after many years of
negotiations. The government has announced plans to establish six
"economic cities" in different regions of the country to promote
development and diversification. The last five years of high oil
prices have given the Kingdom ample financial reserves to manage the
impact of the global financial crisis, but tight international
credit, falling oil prices, and the global economic slowdown will
reduce Saudi economic growth in 2009.
Senegal
In January 1994, Senegal undertook a bold and ambitious
economic reform program with the support of the international donor
community. This reform began with a 50% devaluation of Senegal's
currency, the CFA franc, which was linked at a fixed rate to the
French franc. Government price controls and subsidies have been
steadily dismantled. After seeing its economy contract by 2.1% in
1993, Senegal made an important turnaround, thanks to the reform
program, with real growth in GDP averaging over 5% annually during
1995-2008. Annual inflation had been pushed down to the single
digits. As a member of the West African Economic and Monetary Union
(WAEMU), Senegal is working toward greater regional integration with
a unified external tariff and a more stable monetary policy. High
unemployment, however, continues to prompt illegal migrants to flee
Senegal in search of better job opportunities in Europe. Senegal was
also beset by an energy crisis that caused widespread blackouts in
2006 and 2007. The phosphate industry has struggled for two years to
secure capital, and reduced output has directly impacted GDP. In
2007, Senegal signed agreements for major new mining concessions for
iron, zircon, and gold with foreign companies. Firms from Dubai have
agreed to manage and modernize Dakar's maritime port, and create a
new special economic zone. Senegal still relies heavily upon outside
donor assistance. Under the IMF's Highly Indebted Poor Countries
(HIPC) debt relief program, Senegal has benefited from eradication
of two-thirds of its bilateral, multilateral, and private-sector
debt. In 2007, Senegal and the IMF agreed to a new, non-disbursing,
Policy Support Initiative program.
Serbia
MILOSEVIC-era mismanagement of the economy, an extended
period of international economic sanctions, and the damage to
Yugoslavia's infrastructure and industry during the NATO airstrikes
in 1999 left the economy only half the size it was in 1990. After
the ousting of former Federal Yugoslav President MILOSEVIC in
September 2000, the Democratic Opposition of Serbia (DOS) coalition
government implemented stabilization measures and embarked on a
market reform program. After renewing its membership in the IMF in
December 2000, Yugoslavia continued to reintegrate into the
international community by rejoining the World Bank (IBRD) and the
European Bank for Reconstruction and Development (EBRD). A World
Bank-European Commission sponsored Donors' Conference held in June
2001 raised $1.3 billion for economic restructuring. In November
2001, the Paris Club agreed to reschedule the country's $4.5 billion
public debt and wrote off 66% of the debt. In July 2004, the London
Club of private creditors forgave $1.7 billion of debt just over
half the total owed. Belgrade has made progress in trade
liberalization and enterprise restructuring and privatization,
including telecommunications and small- and medium-size firms. It
has made halting progress towards EU membership despite signing a
Stabilization and Association Agreement with Brussels in May 2008.
Serbia is also pursuing membership in the World Trade Organization.
Unemployment and the large current account deficit remain ongoing
political and economic problems.
Seychelles
Since independence in 1976, per capita output in this
Indian Ocean archipelago has expanded to roughly seven times the
pre-independence, near-subsistence level, moving the island into the
upper-middle income group of countries. Growth has been led by the
tourist sector, which employs about 30% of the labor force and
provides more than 70% of hard currency earnings, and by tuna
fishing. In recent years, the government has encouraged foreign
investment to upgrade hotels and other services. At the same time,
the government has moved to reduce the dependence on tourism by
promoting the development of farming, fishing, and small-scale
manufacturing. GDP grew about 7-8% per year in 2006-07, driven by
tourism and a boom in tourism-related construction. The Seychelles
rupee was allowed to depreciate in 2006 after being overvalued for
years and fell by 10% in the first 9 months of 2007. Despite these
actions, the Seychelles economy has struggled to maintain its gains
and in 2008 suffered from food and oil price shocks, a foreign
exchange shortage, high inflation and large financing gaps, with GDP
growth reduced to about 3% in 2008. In July 2008 the government
defaulted on a Euro amortizing note worth roughly US$80 million,
leading to a downgrading of Seychelles credit rating. Seychelles
requested an IMF Stand-By Agreement in December 2008.
Sierra Leone
Sierra Leone is an extremely poor nation with
tremendous inequality in income distribution. While it possesses
substantial mineral, agricultural, and fishery resources, its
physical and social infrastructure is not well developed, and
serious social disorders continue to hamper economic development.
Nearly half of the working-age population engages in subsistence
agriculture. Manufacturing consists mainly of the processing of raw
materials and of light manufacturing for the domestic market.
Alluvial diamond mining remains the major source of hard currency
earnings accounting for nearly half of Sierra Leone's exports. The
fate of the economy depends upon the maintenance of domestic peace
and the continued receipt of substantial aid from abroad, which is
essential to offset the severe trade imbalance and supplement
government revenues. The IMF has completed a Poverty Reduction and
Growth Facility program that helped stabilize economic growth and
reduce inflation. A recent increase in political stability has led
to a revival of economic activity such as the rehabilitation of
bauxite and rutile mining.
Singapore
Singapore has a highly developed and successful
free-market economy. It enjoys a remarkably open and corruption-free
environment, stable prices, and a per capita GDP higher than that of
most developed countries. The economy depends heavily on exports,
particularly in consumer electronics, information technology
products, pharmaceuticals, and on a growing service sector. Real GDP
growth averaged 7% between 2004 and 2007, but dropped to 1.1% in
2008 as a result of the global financial crisis. The economy
contracted in the last three quarters of 2008. Prime Minister LEE
and other senior officials have dampened expectations for a quick
rebound in 2009. Over the longer term, the government hopes to
establish a new growth path that will be less vulnerable to global
demand cycles especially for information technology products. It has
attracted major investments in pharmaceuticals and medical
technology production and will continue efforts to establish
Singapore as Southeast Asia's financial and high-tech hub.