Gaza Strip
High population density, limited land and sea access,
continuing isolation, and strict internal and external security
controls have degraded economic conditions in the Gaza Strip - the
smaller of the two areas in the Palestinian Territories.
Israeli-imposed crossings closures, which became more restrictive
after HAMAS violently took over the territory in June 2007, and
fighting between HAMAS and Israel during December 2008-January 2009,
resulted in the near collapse of most of the private sector,
extremely high unemployment, and high poverty rates. Shortages of
goods are met through large-scale humanitarian assistance - led by
UNRWA - and the HAMAS-regulated black market tunnel trade that
flourishes under the Gaza Strip's border with Egypt. However,
chnages to the blockade in 2010 included moving from a white list -
in which only approved items were allowed into Gaza through the
crossings - to a black list, where all but non-approved items were
allowed into Gaza through the crossings. Israeli authorities have
recently signaled that exports from the territory might be possible
in the future, but currently regular exports from Gaza are not
permitted.
Georgia
Georgia's economy sustained GDP growth of more than 10% in
2006-07, based on strong inflows of foreign investment and robust
government spending. However, GDP growth slowed in 2008 following
the August 2008 conflict with Russia, and turned negative in 2009 as
foreign direct investment and workers' remittances declined in the
wake of the global financial crisis, but rebounded in 2010.
Georgia's main economic activities include the cultivation of
agricultural products such as grapes, citrus fruits, and hazelnuts;
mining of manganese and copper; and output of a small industrial
sector producing alcoholic and nonalcoholic beverages, metals,
machinery, aircraft and chemicals. Areas of recent improvement
include growth in the construction, banking services, and mining
sectors, but reduced availability of external investment and the
slowing regional economy are emerging risks. The country imports
nearly all its needed supplies of natural gas and oil products. It
has sizeable hydropower capacity, a growing component of its energy
supplies. Georgia has overcome the chronic energy shortages and gas
supply interruptions of the past by renovating hydropower plants and
by increasingly relying on natural gas imports from Azerbaijan
instead of from Russia. The construction on the Baku-T'bilisi-Ceyhan
oil pipeline, the Baku-T'bilisi-Erzerum gas pipeline, and the
Kars-Akhalkalaki Railroad are part of a strategy to capitalize on
Georgia's strategic location between Europe and Asia and develop its
role as a transit point for gas, oil and other goods. Georgia has
historically suffered from a chronic failure to collect tax
revenues; however, the government, since coming to power in 2004,
has simplified the tax code, improved tax administration, increased
tax enforcement, and cracked down on petty corruption. However, the
economic downturn of 2008-09 eroded the tax base and led to a
decline in the budget surplus and an increase in public borrowing
needs. The country is pinning its hopes for renewed growth on a
determined effort to continue to liberalize the economy by reducing
regulation, taxes, and corruption in order to attract foreign
investment, but the economy faces a more difficult investment
climate both domestically and internationally.
Germany
The German economy - the fifth largest economy in the world
in PPP terms and Europe's largest - is a leading exporter of
machinery, vehicles, chemicals, and household equipment and benefits
from a highly skilled labor force. Like its western European
neighbors, Germany faces significant demographic challenges to
sustained long-term growth. Low fertility rates and declining net
immigration are increasing pressure on the country's social welfare
system and necessitate structural reforms. The modernization and
integration of the eastern German economy - where unemployment can
exceed 20% in some municipalities - continues to be a costly
long-term process, with annual transfers from west to east amounting
in 2008 alone to roughly $12 billion. Reforms launched by the
government of Chancellor Gerhard SCHROEDER (1998-2005), deemed
necessary to address chronically high unemployment and low average
growth, contributed to strong growth in 2006 and 2007 and falling
unemployment, which in 2008 reached a new post-reunification low of
7.8%. These advances, as well as a government subsidized, reduced
working hour scheme, help explain the relatively modest increase in
unemployment during the 2008-09 recession - the deepest since World
War II - and its healthy decrease in 2010. GDP contracted nearly 5%
in 2009 but grew by 3.3% in 2010. Germany crept out of recession
thanks largely to rebounding manufacturing orders and exports -
primarily outside the Euro Zone - and relatively steady consumer
demand. Stimulus and stabilization efforts initiated in 2008 and
2009 and tax cuts introduced in Chancellor Angela MERKEL's second
term increased Germany's budget deficit to 3.3% in 2009 and to 3.6%
in 2010. The EU has given Germany until 2013 to get its consolidated
budget deficit below 3% of GDP. A new constitutional amendment
likewise limits the federal government to structural deficits of no
more than 0.35% of GDP per annum as of 2016.
Ghana
Ghana is well endowed with natural resources and agriculture
accounts for roughly one-third of GDP and employs more than half of
the workforce, mainly small landholders. The services sector
accounts for 50% of GDP. Gold and cocoa production and individual
remittances are major sources of foreign exchange. Oil production at
Ghana's offshore Jubilee field began in mid-December and is expected
to boost economic growth. Ghana signed a Millennium Challenge
Corporation (MCC) Compact in 2006, which aims to assist in
transforming Ghana's agricultural sector. Ghana opted for debt
relief under the Heavily Indebted Poor Country (HIPC) program in
2002, and is also benefiting from the Multilateral Debt Relief
Initiative that took effect in 2006. In 2009 Ghana signed a
three-year Poverty Reduction and Growth Facility with the IMF to
improve macroeconomic stability, private sector competitiveness,
human resource development, and good governance and civic
responsibility. Sound macro-economic management along with high
prices for gold and cocoa helped sustain GDP growth in 2008-10. In
early 2010 President John Atta MILLS targeted recovery from high
inflation and current account and budget deficits as his priorities.
Gibraltar
Self-sufficient Gibraltar benefits from an extensive
shipping trade, offshore banking, and its position as an
international conference center. Tax rates are low to attract
foreign investment. The British military presence has been sharply
reduced and now contributes about 7% to the local economy, compared
with 60% in 1984. The financial sector, tourism (almost 5 million
visitors in 1998), gaming revenues, shipping services fees, and
duties on consumer goods also generate revenue. The financial
sector, tourism, and the shipping sector contribute 30%, 30%, and
25%, respectively, of GDP. Telecommunications, e-commerce, and
e-gaming account for the remaining 15%. In recent years, Gibraltar
has seen major structural change from a public to a private sector
economy, but changes in government spending still have a major
impact on the level of employment.
Greece Greece has a capitalist economy with the public sector accounting for about 40% of GDP and with per capita GDP about two-thirds that of the leading euro-zone economies. Tourism provides 15% of GDP. Immigrants make up nearly one-fifth of the work force, mainly in agricultural and unskilled jobs. Greece is a major beneficiary of EU aid, equal to about 3.3% of annual GDP. The Greek economy grew by nearly 4.0% per year between 2003 and 2007, due partly to infrastructural spending related to the 2004 Athens Olympic Games, and in part to an increased availability of credit, which has sustained record levels of consumer spending. But the economy went into recession in 2009 as a result of the world financial crisis, tightening credit conditions, and Athens' failure to address a growing budget deficit, which was triggered by falling state revenues, and increased government expenditures. The economy contracted by 2% in 2009, and 4.8% in 2010. Greece violated the EU's Growth and Stability Pact budget deficit criterion of no more than 3% of GDP from 2001 to 2006, but finally met that criterion in 2007-08, before exceeding it again in 2009, with the deficit reaching 15.4% of GDP. Austerity measures reduced the deficit to 9.4% of GDP in 2010. Public debt, inflation, and unemployment are above the euro-zone average while per capita income is below; unemployment rose to 12% in 2010. Eroding public finances, a credibility gap stemming from inaccurate and misreported statistics, and consistent underperformance on following through with reforms prompted major credit rating agencies in late 2009 to downgrade Greece's international debt rating, and has led the country into a financial crisis. Under intense pressure by the EU and international market participants, the government has adopted a medium-term austerity program that includes cutting government spending, reducing the size of the public sector, decreasing tax evasion, reforming the health care and pension systems, and improving competitiveness through structural reforms to the labor and product markets. Athens, however, faces long-term challenges to push through unpopular reforms in the face of often vocal opposition from the country's powerful labor unions and the general public. Greek labor unions are striking over new austerity measures, but the strikes so far have had a limited impact on the government's will to adopt reforms. An uptick in widespread unrest, however, could challenge the government's ability to implement reforms and meet budget targets, and could also lead to rioting or violence. In April 2010 a leading credit agency assigned Greek debt its lowest possible credit rating; in May, the International Monetary Fund and Eurozone governments provided Greece emergency short- and medium-term loans worth $147 billion so that the country could make debt repayments to creditors. In exchange for the largest bailout ever assembled, the government announced combined spending cuts and tax increases totaling $40 billion over three years, on top of the tough austerity measures already taken. Greece, however, struggled to boost revenues and cut spending to meet 2010 targets set by the EU and the IMF, especially after Eurostat - the EU's statistical office - revised upward Greece's deficit and debt numbers for 2009 and 2010. Greece's lenders are calling on Athens to step up efforts in 2011 to increase tax collection, shore up public enterprises, and rein in health spending, and are planning to give Greece more time to repay its EU-IMF loan. Greece responded by introducing major structural reforms, but investors still question whether Greece can sustain fiscal efforts in the face of a bleak economic outlook and public discontent.
Greenland
The economy remains critically dependent on exports of
shrimp and fish and on a substantial subsidy - about $650 million in
2009 - from the Danish Government, which supplies nearly 60% of
government revenues. The public sector, including publicly owned
enterprises and the municipalities, plays the dominant role in
Greenland's economy. Greenland's GDP contracted about 2% in 2009 as
a result of the global economic slowdown. Budget surpluses turned to
deficits beginning in 2007 and unemployment has risen. During the
last decade the Greenland Home Rule Government (GHRG) pursued
conservative fiscal and monetary policies, but public pressure has
increased for better schools, health care and retirement systems.
The Greenlandic economy has benefited from increasing catches and
exports of shrimp, Greenland halibut and, more recently, crabs. Due
to Greenland's continued dependence on exports of fish - which
account for 82% of exports - the economy remains very sensitive to
foreign developments. International consortia are increasingly
active in exploring for hydrocarbon resources off Greenland's
western coast, and international studies indicate the potential for
oil and gas fields in northern and northeastern Greenland. In May
2007 a US aluminum producer concluded a memorandum of understanding
with the Greenland Home Rule Government to build an aluminum smelter
and a power generation facility, which takes advantage of
Greenland's abundant hydropower potential. Within the area of
mining, olivine sand continues to be produced and gold production
has resumed in south Greenland. Tourism also offers another avenue
of economic growth for Greenland, with increasing numbers of cruise
lines now operating in Greenland's western and southern waters
during the peak summer tourism season.
Grenada
Grenada relies on tourism as its main source of foreign
exchange especially since the construction of an international
airport in 1985. Hurricanes Ivan (2004) and Emily (2005) severely
damaged the agricultural sector - particularly nutmeg and cocoa
cultivation - which had been a key driver of economic growth.
Grenada has rebounded from the devastating effects of the hurricanes
but is now saddled with the debt burden from the rebuilding process.
Public debt-to-GDP is nearly 110%, leaving the THOMAS administration
limited room to engage in public investments and social spending.
Strong performances in construction and manufacturing, together with
the development of tourism and an offshore financial industry, have
also contributed to growth in national output; however, economic
growth was stagnant in 2010 after a sizeable contraction in 2009,
because of the global economic slowdown's effects on tourism and
remittances.
Guam
The economy depends largely on US military spending and
tourism. Total US grants, wage payments, and procurement outlays
amounted to $1.3 billion in 2004. Over the past 30 years, the
tourist industry has grown to become the largest income source
following national defense. The Guam economy continues to experience
expansion in both its tourism and military sectors.
Guatemala
Guatemala is the most populous of the Central American
countries with a GDP per capita roughly one-half that of the average
for Latin America and the Caribbean. The agricultural sector
accounts for nearly 15% of GDP and half of the labor force; key
agricultural exports include coffee, sugar, and bananas. The 1996
peace accords, which ended 36 years of civil war, removed a major
obstacle to foreign investment, and since then Guatemala has pursued
important reforms and macroeconomic stabilization. The Central
American Free Trade Agreement (CAFTA) entered into force in July
2006 spurring increased investment and diversification of exports,
with the largest increases in ethanol and non-traditional
agricultural exports. While CAFTA has helped improve the investment
climate, concerns over security, the lack of skilled workers and
poor infrastructure continue to hamper foreign direct investment.
The distribution of income remains highly unequal with the richest
decile comprising over 40% of Guatemala's overall consumption. More
than half of the population is below the national poverty line and
15% lives in extreme poverty. Poverty among indigenous groups, which
make up 38% of the population, averages 76% and extreme poverty
rises to 28%. 43% of children under five are chronically
malnourished, one of the highest malnutrition rates in the world.
President COLOM entered into office with the promise to increase
education, healthcare, and rural development, and in April 2008 he
inaugurated a conditional cash transfer program, modeled after
programs in Brazil and Mexico, that provide financial incentives for
poor families to keep their children in school and get regular
health check-ups. Given Guatemala's large expatriate community in
the United States, it is the top remittance recipient in Central
America, with inflows serving as a primary source of foreign income
equivalent to nearly two-thirds of exports. Economic growth fell in
2009 as export demand from US and other Central American markets
fell and foreign investment slowed amid the global recession, but
the economy recovered gradually in 2010 and will likely return to
more normal growth rates by 2012. President COLOM, in his last year
in office, will likely face opposition to economic reform,
particularly over a long-delayed tax reform and an IMF-recommended
reform to strengthen the banking sector. Larger budget deficits and
increased debt can be expected in 2011.