Coral Sea Islands
no economic activity
Costa Rica
Prior to the global economic crisis, Costa Rica enjoyed
stable economic growth. The economy contracted 0.7% in 2009, but
resumed growth at more than 3% in 2010. While the traditional
agricultural exports of bananas, coffee, sugar, and beef are still
the backbone of commodity export trade, a variety of industrial and
specialized agricultural products have broadened export trade in
recent years. High value added goods and services, including
microchips, have further bolstered exports. 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; and Costa Rica has attracted one of the highest
levels of foreign direct investment per capita in Latin America.
However, many business impediments, such as high levels of
bureaucracy, difficulty of enforcing contracts, and weak investor
protection, remain. Poverty has remained around 15-20% 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. Unlike the rest of Central America,
Costa Rica is not highly dependent on remittances as they only
represent about 2% of GDP. 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. The US-Central
American-Dominican Republic Free Trade Agreement (CAFTA-DR) entered
into force on 1 January 2009, after significant delays within the
Costa Rican legislature. CAFTA-DR will likely lead to increased
foreign direct investment in key sectors of the economy, including
the insurance and telecommunications sectors recently opened to
private investors. President CHINCHILLA is likely to push for fiscal
reform in the coming year, seeking to boost revenue, possibly
through revised tax legislation, to fund an increase in security
services and education.
Cote d'Ivoire
Cote d'Ivoire is heavily dependent on agriculture and
related activities, which engage roughly 68% of the population. 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. Cocoa, oil, and coffee are the country's top
export revenue earners, but the country is also producing gold.
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 more than 2% in
2008 and around 4% per year in 2009-10. Per capita income has
declined by 15% since 1999, but registered a slight improvement in
2009-10. Power cuts caused by a turbine failure in early 2010 slowed
economic activity. Cote d'Ivoire in 2010 signed agreements to
restructure its Paris Club bilateral, other bilateral, and London
Club debt. Cote d'Ivoire's long term challenges include political
instability and degrading infrastructure.
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. The
government announced it would eliminate 500,000 state jobs by March
2011 and has expanded opportunities for self-employment. President
CASTRO said such changes were needed to update the economic model to
ensure the survival of socialism. 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.
Curacao
Tourism, petroleum refining, and offshore finance are the
mainstays of this small economy, which is closely tied to the
outside world. Although GDP grew slightly during the past decade,
the island enjoys a high per capita income and a well-developed
infrastructure compared with other countries in the region. Curacao
has an excellent natural harbor that can accommodate large oil
tankers. The Venezuelan state oil company leases the single refinery
on the island from the government; most of the oil for the refinery
is imported from Venezuela; most of the refined products are
exported to the US. Almost all consumer and capital goods are
imported, with the US, Brazil, Italy, and Mexico being the major
suppliers. The government is attempting to diversify its industry
and trade and has signed an Association Agreement with the EU to
expand business there. Poor soils and inadequate water supplies
hamper the development of agriculture. Budgetary problems complicate
reform of the health and pension systems for an aging population.
Cyprus
The area of the Republic of Cyprus under government control
has a market economy dominated by the service sector, which accounts
for nearly four-fifths 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 4.7%. This prosperity came under
pressure in 2009, as construction and tourism slowed in the face of
reduced foreign demand triggered by the ongoing global financial
crisis. Although Cyprus lagged its EU peers in showing signs of
stress from the global crisis, the economy tipped into recession in
mid 2009 and contracted 1.8% for the year. In addition, the budget
deficit is on the rise and reached 5.7% of GDP in 2010, a violation
of the EU's budget deficit criteria of no more than 3% of GDP. In
response to the country's deteriorating finances, Nicosia is
promising to implement measures to cut the cost of the state
payroll, curb tax evasion, and revamp social benefits. However, it
has been slow to act, lacking a consensus in parliament and among
the social partners for its proposed measures.
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 small, open, export-driven Czech
economy grew by over 6% annually from 2005-2007 and by 2.5% in 2008.
The conservative Czech financial system has remained relatively
healthy throughout 2009. Nevertheless, the real economy contracted
by 4.1% in 2009, mainly due to a significant drop in external demand
as the Czech Republic's main export markets fell into recession. GDP
is expected to grow by 2.4% in 2010, driven largely by a rebound in
external demand, particularly from Gremany.
Denmark
This thoroughly modern market economy features a high-tech
agricultural sector, state-of-the-art industry with world-leading
firms in pharmaceuticals, maritime shipping and renewable energy,
and a high dependence on foreign trade. The Danish economy is also
characterized by extensive government welfare measures, an equitable
distribution of income, and comfortable living standards. Denmark is
a net exporter of food and energy and enjoys a comfortable balance
of payments surplus. After a long consumption-driven upswing,
Denmark's economy began slowing in 2007 with the end of a housing
boom. Housing prices dropped markedly in 2008-09. The global
financial crisis has exacerbated this cyclical slowdown through
increased borrowing costs and lower export demand, consumer
confidence, and investment. The global financial crises cut Danish
GDP by 0.9% in 2008 and 4.7% in 2009. Historically low levels of
unemployment rose sharply with the recession but remain below 5%,
about half the level of the EU. Denmark made a modest recovery in
2010 in part because of increased government spending. An impending
decline in the ratio of workers to retirees will be a major
long-term issue. Denmark maintained a healthy budget surplus for
many years up to 2008, but the budget balance swung into deficit
during 2009-10. Nonetheless, Denmark's fiscal position remains among
the strongest in the EU. Despite previously meeting the criteria to
join the European Economic and Monetary Union (EMU), so far Denmark
has decided not to join, although the Danish krone remains pegged to
the euro.
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.