Saint Pierre and Miquelon
The inhabitants have traditionally earned
their livelihood by fishing and by servicing fishing fleets
operating off the coast of Newfoundland. The economy has been
declining, however, because of disputes with Canada over fishing
quotas and a steady decline in the number of ships stopping at Saint
Pierre. In 1992, an arbitration panel awarded the islands an
exclusive economic zone of 12,348 sq km to settle a longstanding
territorial dispute with Canada, although it represents only 25% of
what France had sought. France heavily subsidizes the islands to the
great betterment of living standards. The government hopes an
expansion of tourism will boost economic prospects. Fish farming,
crab fishing, and agriculture are being developed to diversify the
local economy. Recent test drilling for oil may pave the way for
development of the energy sector.
Saint Vincent and the Grenadines 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 2008, the islands had more than 200,000 tourist arrivals, mostly to the Grenadines, a drop of nearly 20% from 2007. 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 public debt burden, which was over 90% of GDP at the end of 2010. Following the global downturn, St. Vincent and the Grenadines saw an economic decline in 2009, after slowing since 2006, when GDP growth reached a 10-year high of nearly 7%. 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
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. In late September 2009, an
earthquake and the resulting tsunami severely damaged Samoa, and
nearby American Samoa, disrupting transportation and power
generation, and resulting in about 200 deaths. 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 on the manufacture and export of
ceramics, clothing, fabrics, furniture, paints, spirits, tiles, and
wine. 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. San Marino boasts the world's longest
life expectancy for men with 80 years. The economy benefits from
foreign investment due to its relatively low corporate taxes and low
taxes on interest earnings. San Marino has recently faced increased
international pressure to improve cooperation with foreign tax
authorities and transparency within its own banking sector, which
generates about one-fifth of the country's tax revenues. Italy's
implementation in October 2009 of a tax amnesty to repatriate
untaxed funds held abroad has resulted in financial outflows from
San Marino to Italy worth more than $4.5 billion. Such outflows,
combined with a money-laundering scandal at San Marino's largest
financial institution and the recent global economic downturn, have
contributed to a deep recession and growing budget deficit. However,
San Marino has no national debt, and an unemployment rate half the
size of Italy's. The San Marino government has adopted measures to
counter the downturn, including subsidized credit to businesses. San
Marino also continues to work towards harmonizing its fiscal laws
with EU members and international standards. In September 2009, the
OECD removed San Marino from its list of tax havens that have yet to
fully implement global tax standards.
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 and Principe 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 and Principe 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, the government 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 and Principe'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 the country's receipt of more than $20 million in
signing bonuses for almost a year.
Saudi Arabia
Saudi Arabia has an oil-based economy with strong
government controls over major economic activities. It possesses
about 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. Saudi Arabia is encouraging the
growth of the private sector in order to diversify its economy and
to employ more Saudi nationals. Diversification efforts are focusing
on power generation, telecommunications, natural gas exploration,
and petrochemical sectors. Almost 6 million foreign workers play an
important role in the Saudi economy, particularly in the oil and
service sectors, while Riyadh is struggling to reduce unemployment
among its own nationals. Saudi officials are particularly focused on
employing its large youth population, which generally lacks the
education and technical skills the private sector needs. Riyadh has
substantially boosted spending on job training and education, most
recently with the opening of the King Abdallah University of Science
and Technology - Saudi Arabia's first co-educational university. As
part of its effort to attract foreign investment, Saudi Arabia
acceded to the WTO in December 2005 after many years of
negotiations. The government has begun establishing six "economic
cities" in different regions of the country to promote foreign
investment and plans to spend $373 billion between 2010 and 2014 on
social development and infrastructure projects to advance Saudi
Arabia's economic development.
Senegal
Senegal relies heavily on donor assistance. The country's
key export industries are phosphate mining, fertilizer production,
and commercial fishing. The country is also working on iron ore and
oil exploration projects. In January 1994, Senegal undertook a bold
and ambitious economic reform program with the support of the
international donor community. 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. The country was adversely affected by the
global economic downturn in 2009 and GDP growth fell below 2%. 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. Under the
IMF's Highly Indebted Poor Countries (HIPC) debt relief program,
Senegal 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
which was completed in 2010. Senegal received its first disbursement
from the $540 million Millennium Challenge Account compact it signed
in September 2009 for infrastructure and agriculture development. In
2010, the Senegalese people protested against frequent power cuts.
The government pledged to expand capacity by 2012 and to promote
renewable energy but until Senegal has more capacity, more protests
are likely and economic activity will be hindered. During the year,
bakers protested government price controls on bread. Foreign
investment in Senegal is constrained by Senegal's business
environment, which has slipped in recent years, and by perceptions
of corruption.
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). Belgrade
has made progress in trade liberalization and enterprise
restructuring and privatization, including telecommunications and
small- and medium-size firms. It has made some progress towards EU
membership, signing a Stabilization and Association Agreement with
Brussels in May 2008, and with full implementation of the Interim
Trade Agreement with the EU in February 2010. Serbia is also
pursuing membership in the World Trade Organization. Reforms needed
to ensure the country's long-term viability have largely stalled
since the onset of the global financial crisis. Serbia is grappling
with fallout from crisis, which has led to a sharp drop in exports
to Western Europe and a decline in manufacturing output.
Unemployment and limited export earnings remain ongoing political
and economic problems. Serbia signed an augmented $4 billion Stand
By Arrangement with the IMF in May 2009. IMF conditions on Serbia
constrain the use of stimulus efforts to revive the economy, while
Serbia's concerns about inflation and exchange rate stability
preclude the use of expansionary monetary policy. Serbia's economy
grew by 1.8% in 2010 after a 3% contraction in 2009 as a recovery in
Western Europe began.
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, large financing gaps, and the
global recession. In July 2008 the government defaulted on a Euro
amortizing note worth roughly US$80 million, leading to a
downgrading of Seychelles credit rating, but in October 2010 the EU
approved a $2.9 million grant as part of a larger four-year program
for Seychelles. In response to Seychelles successful implementation
of tighter monetary and fiscal policies, the IMF upgraded Seychelles
to a three-year exteneded fund facility (EFF) of $31 million in
December 2009. In 2008, GDP fell more than 1% due to declining
tourism, but the economy recovered in 2009-10 with a notable
increase in tourist numbers for 2010.
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 has yet to recover from the civil
war, 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 and in 2010 approved a new program worth
$45 million over three years. Political stability has led to a
revival of economic activity such as the rehabilitation of bauxite
and rutile mining, which are set to benefit from planned tax
incentives. A number of offshore oil discoveries were announced in
2009 and 2010. The development on these reserves, which could be
significant, is still several years away.