ABOUT LIBERIA - ECONOMY

Economy

Liberia is one of the world's poorest countries, with a formal employment rate of only 15%.[32] GDP per capita peaked in 1980 at US$496, when it was comparable to Egypt's.[41] In 2010, the country's nominal GDP was US$974 million, while nominal GDP per capita stood at US$226, the third-lowest in the world.[2] Historically, the Liberian economy has depended heavily on foreign aid, foreign direct investment and exports of natural resources such as iron ore, rubber and timber.[39]

Following a peak in growth in 1979, the Liberian economy began a steady decline due to economic mismanagement following the 1980 coup.[42] This decline was accelerated by the outbreak of civil war in 1989; GDP was reduced by an estimated 90% between 1989 and 1995, one of the fastest declines in history.[42] Upon the end of the war in 2003, GDP growth began to accelerate, reaching 9.4% in 2007.[43] The global financial crisis slowed GDP growth to 4.6% in 2009,[43] though a strengthening agricultural sector led by rubber and timber exports increased growth to 5.1% in 2010 and an expected 7.3% in 2011, making the economy one of the 20 fastest growing in the world.[44][45] Current impediments to growth include a small domestic market, lack of adequate infrastructure, high transportation costs, poor trade links with neighboring countries and the high dollarization of the economy.[44] Liberia used the United States dollar as its currency from 1943 until 1982 and continues to use the U.S. dollar alongside the Liberian dollar.[46] Following a decrease in inflation beginning in 2003, inflation spiked in 2008 as a result of worldwide food and energy crises,[47] reaching 17.5% before declining to 7.4% in 2009.[43] Liberia's external debt was estimated in 2006 at approximately $4.5 billion, 800% of GDP.[42] As a result of bilateral, multilateral and commercial debt relief from 2007–2010, the country's external debt fell to $222.9 million by 2011.[48]

While official commodity exports declined during the 1990s as many investors fled the civil war, Liberia's wartime economy featured the exploitation of the region's diamond wealth.[49] The country acted as a major trader in Sierra Leonian blood diamonds, exporting over US$300 million in diamonds in 1999.[50] This led to a United Nations ban on Liberian diamond exports in 2001, which was lifted in 2007 following Liberia's accession to the Kimberley Process Certification Scheme.[51] In 2003, additional UN sanctions were placed on Liberian timber exports, which had risen from US$5 million in 1997 to over US$100 million in 2002 and were believed to be funding rebels in Sierra Leone.[52][53] These sanctions were lifted in 2006.[54] Due in large part to foreign aid and investment inflow following the end of the war, Liberia maintains a large account deficit, which peaked at nearly 60% in 2008.[44] Liberia gained observer status with the World Trade Organization in 2010 and is in the process of acquiring full member status.[55]

Liberia has the highest ratio of foreign direct investment to GDP in the world, with US$16 billion in investment since 2006.[45] Following the inauguration of the Sirleaf administration in 2006, the country signed several multi-billion dollar concession agreements in the iron ore and palm oil industries with numerous multinational corporations, including BHP Billiton, ArcelorMittal, and Sime Darby.[56] The Firestone Tire and Rubber Company has operated the world's largest rubber plantation in Liberia since 1926.[57] Liberia has also begun exploration for offshore oil; unproven oil reserves may be in excess of one billion barrels.[58] The government divided its offshore waters into 17 blocks and began auctioning off exploration licenses for the blocks in 2004, with further auctions in 2007 and 2009.[59][60][61] An additional 13 ultra-deep offshore blocks were demarcated in 2011 and planned for auction.[62] Among the companies to have won licenses are Repsol, Chevron, Anadarko and Woodside Petroleum.[63]

Due to its status as a flag of convenience, the country has the second-largest maritime registry in the world behind Panama, with 3,500 vessels registered under its flag accounting for 11% of ships worldwide.[64][65]