Lithuania
Lithuania gained membership in the World Trade
Organization and joined the EU in May 2004. Despite Lithuania's EU
accession, Lithuania's trade with its Central and Eastern European
neighbors, and Russia in particular, accounts for a growing
percentage of total trade. Privatization of the large, state-owned
utilities is nearly complete. Foreign government and business
support have helped in the transition from the old command economy
to a market economy. Lithuania's economy grew on average 8% per year
for the four years prior to 2008 driven by exports and domestic
demand. However, GDP plunged nearly 15% in 2009 - during the 2008-09
crisis the three former Soviet Baltic republics had the world's
worst economic declines. In 2009, the government launched a
high-profile campaign, led by Prime Minister KUBILIUS, to attract
foreign investment and to develop export markets. The current
account deficit, which had risen to roughly 15% of GDP in 2007-08,
recovered to a surplus of 4% 2009 and 3.5% in 2010 in the wake of a
cutback in imports to almost half the 2008 level. Nevertheless,
economic growth was flat and unemployment continued upward to 16% in
2010.

Luxembourg
This small, stable, high-income economy - benefiting from
its proximity to France, Belgium, and Germany - has historically
featured solid growth, low inflation, and low unemployment. The
industrial sector, initially dominated by steel, has become
increasingly diversified to include chemicals, rubber, and other
products. Growth in the financial sector, which now accounts for
about 28% of GDP, has more than compensated for the decline in
steel. Most banks are foreign owned and have extensive foreign
dealings, but Luxembourg has lost some of its advantages as a tax
haven because of OECD and EU pressure. The economy depends on
foreign and cross-border workers for about 60% of its labor force.
Luxembourg, like all EU members, suffered from the global economic
crisis that began in late 2008, but unemployment has trended below
the EU average. Following strong expansion from 2004 to 2007,
Luxembourg's economy contracted and 3.4% in 2009, but rebounded 2.6%
in 2010. The country continues to enjoy an extraordinarily high
standard of living - GDP per capita ranks third in the world, after
Liechtenstein and Qatar, and is the highest in the EU. Turmoil in
the world financial markets and lower global demand during 2008-09
prompted the government to inject capital into the banking sector
and implement stimulus measures to boost the economy. Government
stimulus measures and support for the banking sector, however, led
to a 5% government budget deficit in 2009, however, the deficit was
cut below 3% in 2010.

Macau
Macau's economy slowed dramatically in 2009 as a result of the
global economic slowdown, but strong growth resumed in 2010, largely
on the back of strong 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 Macau into one of the world's largest
gaming center. Macau's gaming and tourism businesses were fueled by
China's decision to relax travel restrictions on Chinese citizens
wishing to visit Macau. By 2006, Macau's gaming revenue surpassed
that of the Las Vegas strip, and gaming-related taxes accounted for
more than 70% of total government revenue. In 2008, Macau introduced
measures to cool the rapidly developing sector. This city of nearly
570,000 hosted more than 21 million visitors in 2009. Almost 51%
came from mainland China. Macau's traditional manufacturing industry
has virtually disappeared since the termination of the Multi-Fiber
Agreement in 2005. In 2009, total exports were less than US$1
billion, while gaming receipts were almost US$15 billion. By October
2010, gross gaming revenue had already reached US$19 billion for the
year. The Macau government plans to tighten control over the opening
of new casinos and strengthen supervision of local casino operations
in 2011 and has introduced measures to diversify the economy. The
Closer Economic Partnership Agreement (CEPA) between Macau and
mainland China that came into effect on 1 January 2004 offers
Macau-made products tariff-free access to the mainland;
nevertheless, China remains Macau's third largest goods export
market, behind Hong Kong and the United States. 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. Since then, 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 33%, 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 large trade deficit, but
the financial system remained sound. Macroeconomic stability was
maintained by a prudent monetary policy, which kept the domestic
currency at the pegged level against the euro, at the expense of
raising interest rates. As a result, GDP fell in 2009. but returned
to positive in 2010.

Madagascar
After discarding socialist economic policies in the
mid-1990s, Madagascar followed a World Bank- and IMF-led policy of
privatization and liberalization that has been undermined since the
start of the political crisis. 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. However,
Madagascar's failure to comply with the requirements of the African
Growth and Opportunity Act (AGOA) led to the termination of the
country's duty-free access in January 2010. Deforestation and
erosion, aggravated by the use of firewood as the primary source of
fuel, are serious concerns. Former President RAVALOMANANA worked
aggressively to revive the economy following the 2002 political
crisis, which triggered a 12% drop in GDP that year. The current
political crisis which began in early 2009 has dealt additional
blows to the economy. Tourism dropped more than 50% in 2009,
compared with the previous year, and many investors are wary of
entering the uncertain investment environment.

Malawi
Landlocked Malawi ranks among the world's most densely
populated and least developed countries. The economy is
predominately agricultural with about 80% of the population living
in rural areas. Agriculture, which has benefited from fertilizer
subsidies since 2006, 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 2006, Malawi was approved for relief under the Heavily
Indebted Poor Countries (HIPC) program. In December 2007, the US
granted Malawi eligibility status to receive financial support
within the Millennium Challenge Corporation (MCC) initiative. 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. 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. The government has announced infrastructure
projects that could yield improvements, such as a new oil pipeline,
for better fuel access, and the potential for a waterway link
through Mozambican rivers to the ocean, for better transportation
options. Since 2009, however, Malawi experienced some setbacks,
including a general shortage of foreign exchange, which has damaged
its ability to pay for imports, and fuel shortages that hinder
transportation and productivity. Investment fell 23% in 2009. The
government has failed to address barriers to investment such as
unreliable power, water shortages, poor telecommunications
infrastructure, and the high costs of services.

Malaysia
Malaysia, a middle-income country, has transformed itself
since the 1970s from a producer of raw materials into an emerging
multi-sector economy. Under current Prime Minister NAJIB, Malaysia
is attempting to achieve high-income status by 2020 and to move
farther up the value-added production chain by attracting
investments in Islamic finance, high technology industries, medical
technology, and pharmaceuticals. The NAJIB administration also is
continuing efforts to boost domestic demand and 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, combined with strained government
finances, has forced Kuala Lumpur to reduce government subsidies.
The government is also trying to lessen its dependence on state oil
producer Petronas, which supplies at least 40% of government
revenue. The central bank maintains healthy foreign exchange
reserves and its well-developed regulatory regime has limited
Malaysia's exposure to riskier financial instruments and the global
financial crisis. Nevertheless, decreasing worldwide demand for
consumer goods hurt Malaysia's exports and economic growth in 2009,
although both showed signs of recovery in 2010. In order to attract
increased investment, NAJIB has also sought to revise the special
economic and social preferences accorded to ethnic Malays under the
New Economic Policy of 1970, but he has encountered significant
opposition, especially from Malay nationalists.

Maldives
Tourism, Maldives' largest economic activity, 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. The Maldivian Government implemented economic reforms,
beginning in 1989 that initially lifted import quotas, opened some
exports to the private sector, and liberalized regulations to allow
more foreign investment. Real GDP growth averaged over 7.5% per year
for more than a decade, and registered 18% in 2006, due to a rebound
in tourism and reconstruction following the tsunami of December
2004. GDP slowed in 2007-08, then contracted in 2009 due to the
global recession. Falling tourist arrivals and fish exports,
combined with high government spending on social needs, subsidies,
and civil servant salaries contributed to a balance of payments
crisis, which was eased with a December 2009, $79.3 million dollar
IMF standby agreement. Diversifying the economy beyond tourism and
fishing, reforming public finance, and increasing employment
opportunities are 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
Among the 25 poorest countries in the world, Mali is a
landlocked country highly dependent on gold mining and agricultural
exports for revenue. The country's fiscal status fluctuates with
gold and agricultural commodity prices and the harvest. Mali remains
dependent on foreign aid. Economic activity is largely confined to
the riverine area irrigated by the Niger River and about 65% of its
land area is desert or semidesert. 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. The government has continued an IMF-recommended
structural adjustment program that has helped the economy grow,
diversify, and attract foreign investment. Mali is developing its
cotton and iron ore extraction industries to diversify its revenue
sources because gold production has started to fall. Mali has
invested in tourism but security issues are hurting the industry.
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 1996-2010. 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. In 2010, Mali experienced a regional
drought that hurt livestock and livelihoods.

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 target for
illegal immigration, which has strained Malta's political and
economic resources. Malta adopted the euro on 1 January 2008.
Malta's financial services industry has grown in recent years and in
2008-09 it escaped significant damage from the international
financial crisis, largely because the sector is centered on the
indigenous real estate market and is not highly leveraged. Locally,
the restricted damage from the financial crisis has been attributed
to the stability of the Maltese banking system and to its prudent
risk-management practices. The global economic downturn and high
electricity and water prices hurt Malta's real economy, which is
dependent on foreign trade, manufacturing - especially electronics
and pharmaceuticals - and tourism, but growth bounced back as the
global economy recovered in 2010. Following a 1.2% contraction in
2009, GDP grew 2% in 2010.