Guernsey economy: Rough seas ahead.

An attractive tax haven, with low taxes, no exchange controls, and no restrictions on inward or outward investment, or on repatriation of profits, dividends, interest income, etc., Guernsey, a British Overseas Territory, is an attractive destination for businesses looking for minimal formalities of incorporation and ease of operations. Other facilities that help the Island attract international firms are good communications, and professional services. Of course, the proximity to the EU markets is a big plus for firms to set up shop.

However, it must be said to the credit of the Islands’ Administration, that it does not allow all and sundry firms to establish themselves there. It is quite selective in this matter, and does not offer any incentives to foreign investors and tight fisted in immigration matters.

Next to financial services, tourism occupies an important place in the country’s development, though it cannot be said to be booming. Guernsey also benefits from its expatriate citizens who remit money home in good amounts every year.

Guernsey does have its share of problems that are related to integration with the EU, taxation issues, and budget deficits. The difference in its earnings and expenditure is said to be uncomfortably low, and may force the Island to take unpopular measures to shore up its economy.

The Islands Administration has taken steps to improve the investment environment and has also built up sizeable reserves to help it in the transition in 2010. Guernsey needs to diversify its economic base by expanding upon the existing but depleting sources of revenues like horticulture, floriculture, etc. The coming years may be a difficult time for the Islands and require some deft handling to escape the worst effects of the economic downturn that has gripped the better part of the world.

Cayman Islands economy: Continues to Prosper.

The British Overseas Territory of Cayman Islands has, for long, been a major international financial center. With no direct taxes, income tax, property tax, capital gains tax; in other words, no tax of any sort, this tiny Island has attracted firms from all over the world, that have set up shop there to take advantage of the liberal laws.

At last count, there were reported to be upwards of 80,000 companies, nearly 300 Banks, and over 800 insurance firms operating out of the Cayman Islands. The fact that such a large number of firms have invested their money, apart from reputation and prestige speaks a lot about the conducive economic, financial and commercial environment that has been assiduously built up over the years on the Island. Off shore finance and Banking is the Island’s forte and there are few competitors in the field for it to contend with.

With so many firms setting up shop, and operating out of the Islands, the Government derives handsome revenues by way of stamp duty and import duties. Tourism is the second most important economic activity with high end tourists coming to enjoy the clean and charming beaches and being high spenders mainly from North America, pump in the dollars into the local economy. These two services, i.e. finance and tourism contribute to about 96% of the Islands GDP.

Being a British Overseas Territory, the Islands don’t have to spend on defense and related matters that are taken care of by the United Kingdom, and this has also helped the Islands in dealing with the recent global economic downturn. Though there are said to be differences between the Cayman Islands and their Principals, the United Kingdom, in fiscal matters.

With the OECD removing Cayman Islands from their blacklist, testifying to the Islands compliance with global tax standards, the Islands do not have much to worry about, except to keep up the tempo and stay the course.

Cape Verde economy: Limited Potential.

The Island nation of Cape Verde, like many of its counterparts around the world, has a small population, as well as limited natural resources. As such, it has limited scope for development, but definitely it can provide for a high standard of living for its citizens, within its limitations.

The Cape Verde Government has done well by taking several steps over the years to free the economy and allow the private sector to develop it. It has also encouraged foreign investors through liberal laws and incentives. The results have been quite encouraging. Foreign investment has gone mainly into the tourist industry, fisheries, other industry, mainly light industry and infrastructure.

The Government has also invested in developing infrastructure by way of ports and airports. Ship repair and berthing facilities have been developed to take advantage of the country’s strategic location in the Atlantic. A network of roads are also available to facilitate movement of public and goods on the Islands.

The major sources of revenues for the Island are tourism, foreign remittances from Cape Verdeans working abroad, export of manufactured goods from the light industries on the Island, etc. The country produces coffee, sugarcane, bananas, peanuts, beans, corn, etc., by way of agricultural produce. And manufactures shoes, garments, apart from other industrial activities like ship repairing, fish processing, salt mining, etc. Industrial production growth rate is a healthy 8%, and in fact, the industrial sector contributes about 17% to the country’s GDP, which is more than double the contribution of agriculture. The GDP growth rate of the country is about 6%.

The Island exports shoes, garments, hides, fish, etc., and imports foodstuffs, transport equipment, industrial products, etc. Portugal, Spain, the Netherlands, Morocco, France, etc., are the major trading partners.

Cape Verde has to keep up its efforts to retain its present level of economic development, and try to realize its optimum potential.

Colombian economy: Grappling with problems.

Colombia, known more for its cocaine culture, has a thriving economy, whose GDP(purchasing power parity) for the year 2008, touched USD 400.00 billion. The country’s per capita GDP for the same year was nearly USD 9000.00. Not at all a bad figure, given the general impression of this Latin American country.

Colombia had enjoyed sustained economic growth till 2008, when the global recession caught up with it. Especially, in the context of its America-centric trade, the country has had to bear the burden of the overflow of the economic crisis from the U.S.

Colombia is said to have achieved remarkable progress in reducing poverty and unemployment, ever since it adopted pro-market policies, and opened up its doors to foreign investment. The passage of the FTA with the United States is keenly awaited, and it would open up more opportunities for economic development for Colombia and its citizens.

Coffee is the major crop of Colombia, and others include rice, tobacco, bananas, sugarcane, corn, oilseeds, cocoa, etc. In the industrial sector, food processing, textiles, footwear, clothing, chemicals, beverages, etc., are worth mentioning. The country exports petroleum, coffee, apparel, bananas, cut flowers, etc., and imports consumer goods, chemicals, industrial equipment, paper products, fuels, and energy. The United States, Venezuela, China, Mexico, and Brazil are among its major trading partners.

Presently, Colombia is grappling with problems like falling industrial production, rising unemployment, decline in exports to traditional markets like the U.S. and an overall decline in the GDP that is expected to grow by only 0.5% to 1.5% instead of 3% to 3.5% growth that was forecast earlier.

According to the National Statistics Department of Colombia, the overall economic growth for the year 2010 is expected to be in the region of less than 5%. The slight improvement in the global economic environment holds out a small opportunity to Colombia to regain its earlier growth trajectory, if a bit more sedately.

Gambian economy: Making the right moves.

If one were to go by the verdict of the International Monetary Fund, then Gambia is going in the right direction economically speaking, and is expected to climb up the value chain of development and record 4.5% to5% growth in its GDP in 2009.

Two things that emerged from the IMF report on Gambia are that, the country has a high debt burden, and though its agricultural sector has performed better than expected in 2009, poor weather conditions in 2010 might hamper its further development.

Gambia is a Sub-Saharan African country whose 75% of population depends on agriculture, including livestock breeding for their livelihood. Agriculture contributes over 30% of the GDP, and the major produce includes, groundnuts, rice, millet, sorghum, corn, cassava, sesame, etc. Cattle, sheep, and goat rearing is an important activity allied to agriculture.

Industrial activity is restricted to small scale units engaged in processing of hides, fish, groundnuts, beverages, assembly of small agricultural machinery, etc. The country exports peanuts, cotton, fish, etc., and imports include foodstuffs, fuels, machinery, and other itmes. India, China, U.K., France, and Brazil, are the major trading partners of Gambia.

Among the major issues facing the Gambian economy are a heavy public debt, public expenditure, and lax tax administration. Poverty is widespread and so is illiteracy. The IMF had extended the Poverty Reduction and Growth Facility to Gambia, and the country is said to have made good use of the same. In the same way, Gambia also gave a good account of itself in implementing the various economic programs under the WAMZ, the West African Monetary Zone.

Under President Jamme, the country has given special importance to promoting literacy and the President is personally in charge of the “Education For All” initiative. Gambia is apparently making the right moves towards economic development, and the results should be apparent in the coming years.

Brunei economy: Nothing much to worry about.

A small country soaked in oil and natural gas, enjoying the highest per capita GDP in the world, that’s Brunei. Among the richest countries in the world with its citizens enjoying all the goodies of the modern world, from free education to medical facilities, and everything in between subsidized. And it’s Monarch considered the richest person in the world, with a personal fortune said to worth upwards of USD 20.00 billion. Quite a few superlatives!

The oil and gas sectors contribute over half of the GDP of the country, and earn over 90% of its exports revenues. Nearly 60% of the labor force is engaged in industry, followed by the services sector that provides jobs to 33% of the labor. Agriculture is a minor but important activity, contributing about 4.5% to the GDP.

The country produces rice, vegetables, and fruits, primarily for domestic consumption. Livestock breeding including water buffalo, takes care of a part of the domestic requirements, and the rest is met through imports, mainly from Australia. Apart from the oil and gas industry, construction, perhaps inevitably, is the second major industry. The industrial production growth rate is around 2%.

While Brunei exports oil and gas, it imports all kinds of consumer goods, capital goods, chemicals, foodstuffs, etc. Japan, Australia, U.K., Malaysia, etc., are it’s major trading partners.

The fall in the international prices of oil have affected Brunei economically, but with a low population and high revenues, the impact has been minimal. With a low inflation rate and a manageable rate of unemployment, there are no serious implications for Brunei on account of the global economic problems.

On its part, the Government is taking steps to alleviate the problems of unemployment, and to develop the Banking and Trousim industries, in order to broadbase the economy.

Bahrain economy: Cruising along.

A tiny Island off the Saudi Arabian coast, and linked to Saudi Arabia via the famed causeway, an engineering marvel in the sea, Bahrain has come a long way from its nomadic past.

With oil came prosperity, which was, by and large, invested wisely, to create an economic base for the future progress of the country. The oil industry continues to dominate the economy, contributing over 10% to its GDP, 60% of its exports revenues, and over 70% to the Government kitty. It is also the major source of employment for the workforce.

The GDP of Bahrain has been running at a steady rate of 6.5% in 2007, 6.1% in 2008, and expected to be around 6% in 2009. The inflation rate is around 7%, and industrial production growth rate is about 5%. Bahrain is the only Gulf State to have a Free Trade Agreement(FTA) with the United States. Bahrain also scores high on the Heritage Foundation Index of Economic Freedom. For the year 2008, Bahrain was reported to be the 19th freest economy in the world.

Among the major economic activities of the country, apart from the oil and gas industry, are other industries like aluminium, the Banking and Financial Services, including Islamic Banking, and the contruction industry. Bahrain is making special efforts to develop the Island as an international financial center, especially for Islamic Finance and Banking.

It is noteworthy that the Bahraini Banking and Financial services industry has not suffered the same fate as its Western counterparts, mainly because it does not have exposure to toxic assets, and is better regulated.

The problems facing Bahrain in the long run, relate to the depletion of its oil and natural gas reserves, and the social problems resulting from a huge expatriate population.

Macau economy: Thriving on sin.

Macau, the former Portuguese colony, now under Chinese jurisdiction, has a thriving economy based on gaming and gambling, that make up most of the GDP of the country, and contributing over 75% of revenues to the Government.

A tiny country of 500000 souls, Macau attracts tourists or ’sinners’ if one may call them that, numbering well over 30 million! A truly mind-boggling figure. The majority of these tourists come from mainland China, attracted by the chance to make a killing at gaming and gambling, and of course, for a soothing and caressing massage. The sex industry is also a thriving segment of Macau’s economy.

Macau does have a traditional economy comprising of some manufacturing activity in textiles, footwear, electronics, toys, etc. Especially, the textiles and apparel sector was an important activity till the year 2005, when the Multi-Fiber Agreement was terminated, leading to a decline in the activity.

Macau exports textiles, garments, electronics, toys, etc., and imports consumer goods, capital goods, fuels, etc. China, Hong Kong, U.S.A., etc., are the major trading partners. The GDP growth rate of Macau for 2008 was a high 15%, and expected to be more or less the same for fiscal 2009. The inflation rate is around 7%, and unemployment rate is about 3%. Macau enjoys tariff free movement of its goods to China under the Closer Economic Partnership Agreement (CEPA).

Macau does not appear to have serious problems on the economic front, except perhaps, those emanating on account of policy changes in China. With human nature, what it is, and sin and greed always taking the better of human judgement, Macau has little reason to fear any really serious economic challenges due to the current downturn in the global economy.

Gibraltar economy: In need of fine tuning.

The Island of Gibraltar, occupying a strategic geography, has encashed its advantages quite well. Shipping, Offshore Banking, Gambling and Gaming, etc., are the major activities of the country, and quite profitable too.

As a matter of fact, the major adverse affect on the Gibraltar economy has been on account of the reduction of British military presence, that in the early ’80s was reportedly contributing upto 60% of the nation’s GDP.

The services sector contributes over 60% of the GDP, and industry, the remaining 40%. There is no agricultural activity worth the name. Tourism is the King of the services sector, with an estimated 7 million tourists landing on its shores every year. Gibraltar also earns considerable revenues by way of fees from shipping companies that fly its flag of convinience, and through the provision of berthing and repair facilities.

Gibraltar has attracted a large number of gaming and gambling companies that find it an attractive low tax destination. With liberal laws for establishment of such companies and few regulatory roadblocks, Gibraltar has become home for hundreds of such companies.

The country primarily exports petroleum and other manufactured goods, and imports foodstuffs, fuels, etc. Spain, Russia, U.K., Italy, etc., are its major trading partners. Offshore Banking is also a major sctivity though the Anti-Money laundering laws may affectg this sector in the long run.

As such there are no major issues affecting the economy, except that Gibraltar is said to have a very inefficient public service, and the State spends a lot of money on this segment of the population, that is not giving back adequate returns.

What Gibraltar needs to do is to fine tune its economy to take advantage of emerging opportunities.

Fiji economy: Caught in a bind.

A scienic Island nation in the Pacific Ocean, it is also a well developed economy. But the military coup of 2006 has created hurdles in the further development of the economy, with the European Union suspending all aid to the country.

The three major sources of revenues to the state of Fiji are sugar exports, remittances from Fijians working abroad, and tourism. As for sugar exports, the EU has cut subsidies on sugar, thereby making Fijian sugar less competitive in terms of price. Remittances from expatriate Fijians are down on account of the global economic slowdown, and also the war in Iraq. And tourism is also affected on acocunt of the economic slowdown in different parts of the world.

The country’s GDP is expected to grow by about 1% for 2009, with unemployment crossing 7%, and inflation touching 5%. The Government has taken several steps to stimulate the economy. Among them are tax exemptions and other incentives to hotels to boost tourism. The Fijian Government has also tried to control expenditure and reform the tax structure. Generally, it has taken steps to deregulate the economy.

Fiji produces sugarcane, coconuts, rice, bananas, cassava, etc. In the industrial sector, it manufactures sugar, garments, coconut oil, etc. Fiji exports sugar, garments, etc., and imports machinery, transport equipment, food, chemicals, etc. The United States, the U.K., Singapore, etc., are the major trading partners.

Fiji is caught in a trap of its own making after the coup. Unless it sets right its house and takes steps to initiate the democratic process, it will find it difficult to move forward economically. But otherwise, the country has a great future economically.

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