Overview: Haiti’s economy remains the least developed in the western hemisphere. The potential for economic growth is stymied by political instability, lack of infrastructure, and severe deforestation and soil erosion. Income distribution is highly skewed, and poverty is widespread (about 80 percent of the population lives below the poverty line). Job opportunities are extremely limited. Only one in 50 Haitians has a steady wage-earning job. Rising poverty in Haiti is directly linked to long periods of economic stagnation. Additionally, the country has had the highest rate of inflation among all Caribbean countries.
Gross Domestic Product (GDP): In 2005 Haiti had an estimated GDP of US$4.3 billion (US$12.9 billion in terms of purchasing power parity). Haiti’s estimated per capita GDP of US$1,600 in terms of purchasing power parity ranks last in the western hemisphere and 193rd in the world. After experiencing –3.5 percent real GDP contraction in 2004, Haiti’s economy saw a modest recovery in 2005, with real GDP growing by 1.5 percent.
GOVERNMENT Budget: During 2005government expenditures were estimated to be US$600.8 million and revenues, about US$400 million. The government relies heavily on international economic assistance for fiscal sustainability.
Inflation: Purchasing power in Haiti has fluctuated dramatically throughout the past 15 years. Rising fuel prices and weak domestic demand, coupled with political instability, have produced nearly uncontrollable inflation at times. In 1994 the inflation rate reached 40 percent before an austerity policy and an influx of foreign aid brought it back under control. The inflation rate fell to a manageable 8.7 percent in 1999. However, exchange rate depreciation again pushed inflation to 40 percent in 2003. The inflation rate was about 22 percent in 2004 and an estimated 15 percent in 2005.
Agriculture, Forestry, and Fishing: Although many Haitians make their living through subsistence farming, Haiti also has an agricultural export sector. Agriculture, together with forestry and fishing, accounts for about one-quarter (28 percent in 2004) of Haiti’s annual gross domestic product and employs about two-thirds (66 percent in 2004) of the labor force. However, expansion has been difficult because mountains cover much of the countryside and limit the land available for cultivation. Of the total arable land of 550,000 hectares, 125,000 hectares are suited for irrigation, and of those only 75,000 hectares actually have been improved with irrigation. Haiti’s dominant cash crops include coffee, mangoes, and cocoa. Haiti has decreased its production of sugarcane, traditionally an important cash crop, because of declining prices and fierce international competition. Because Haiti’s forests have thinned dramatically, timber exports have declined. Roundwood removals annually total about 1,000 kilograms. Haiti also has a small fishing industry. Annual catches in recent years have totaled about 5,000 tons.
Mining and Minerals: Haiti has a small mining industry, extracting minerals worth approximately US$13 million annually. Bauxite, copper, calcium carbonate, gold, and marble are the most extensively mined minerals in Haiti.
Industry and Manufacturing: In 2004 industry accounted for about 20 percent of the gross domestic product (GDP), and less than 10 percent of the labor force worked in industrial production. As a portion of the GDP, the manufacturing sector has contracted since the 1980s. The United Nations embargo of 1994 put out of work most of the 80,000 workers in the assembly sector. Additionally, the years of military rule following the presidential coup in 1991 resulted in the closure of most of Haiti’s offshore assembly plants in the free zones surrounding Port-au-Prince. When President Aristide returned to Haiti, some improvements did occur in the manufacturing sector. Haiti’s cheap labor brought some textile and garment assembly work back to the island in the late 1990s. However, these gains ultimately were undercut by international competition.
The leading industries in Haiti produce beverages, butter, cement, detergent, edible oils, flour, refined sugar, soap, and textiles. Growth in both manufacturing and industry as a whole has been slowed by a lack of capital investment. Grants from the United States and other countries have targeted this problem, but without much success. Private home building and construction appear to be one subsector with positive prospects for growth.
Energy: Haiti uses very little energy, about 250 kilograms of oil equivalent per head per year. In 2003 Haiti produced 546 million kilowatt-hours of electricity while consuming 508 million kilowatt-hours. Most of the country’s energy comes from burning wood. Haiti imports oil and consumes about 11,800 barrels per day, as of 2003. The Péligre Dam, the country’s largest, provides the capital city of Port-au-Prince with energy. Thermal plants provide electricity to the rest of the country. Traditionally, the supply of electricity has been sporadic and prone to shortages⎯even with the country’s low demand. Mismanagement by the state has offset more than US$100 million in foreign investment targeted at improving Haiti’s energy infrastructure. Businesses have resorted to securing back-up power sources to deal with the regular outages. The potential for greater hydropower exists, should Haiti have the desire and means to develop it. The government controls oil and gas prices, insulating Haitians, to an extent, from international price fluctuations.
Services: Haiti’s services sector made up 52 percent of the country’s gross domestic product in 2004 and employed 25 percent of the labor force. According to World Bank statistics, the services sector is one of the only sectors of Haiti’s economy that sustained steady, if modest, growth throughout the 1990s.
Banking and Finance: Lack of a stable and trustworthy banking system has impeded Haiti’s economic development. Banks in Haiti have collapsed on a regular basis. Most Haitians do not have access to loans of any sort. When reelected in 2000, President Aristide promised to remedy this situation but instead introduced a non-sustainable plan of “cooperatives” that guaranteed investors a 10 percent rate of return. By 2000 the cooperatives had crumbled, and Haitians collectively had lost more than US$200 million in savings.
Haiti’s central bank, the Banque de la République d’Haïti, oversees 10 commercial banks and two foreign banks operating in the country. Most banking takes place in the capital city of Port-au-Prince. The United Nations and the International Monetary Fund have led efforts to diversify and expand the finance sector, making credit more available to rural populations. In 2002 the Canadian International Development Agency led a training program for Haitian Credit Unions. Haiti has no stock exchange.
Tourism: Not surprisingly, tourism in Haiti has suffered from the country’s political upheaval. Inadequate infrastructure also has limited visitors to the island. In the 1970s and 1980s, however, tourism was an important industry, drawing an average of 150,000 visitors annually. Following the 1991 coup, tourism has recovered slowly. The Caribbean Tourism Organization (CTO) has joined the Haitian government in efforts to restore the island’s image as a tourist destination. In 2001, 141,000 foreigners visited Haiti. Most came from the United States. Further improvements in hotels, restaurants, and other infrastructure still are needed to make tourism a major industry for Haiti.
Labor: Most Haitians do not have formal jobs. Unemployment and underemployment are rampant. Some estimates suggest that two-thirds of the country’s 3.6 million workers are without consistent work. Many Haitians survive through subsistence farming rather than looking for jobs in the overcrowded urban areas. Legal protection does exist for those Haitians employed in the formal sector. Workers have the right of association and collective bargaining. Additionally, the labor code protects workers’ unions from recrimination by employers. The country’s minimum wage is 70 gourdes per day, equivalent to about US$1.70.
In addition to high unemployment, Haiti also lacks the skilled labor necessary to expand its economy. A brain drain has occurred, and many of the country’s skilled workers leave Haiti for better economic opportunities abroad. Annually, thousands of Haitians cross the border to work in the factories of the Dominican Republic. The income they send back to Haiti is significant. Beyond the island of Hispaniola, political turmoil has resulted in many of Haiti’s most valuable workers emigrating to the United States and Canada. The 500,000 Haitians living in New York City and the 380,000 in Miami represent a loss of training and expertise that Haiti has been unable to replace.
Foreign Economic Relations: The World Economic Forum ranked Haiti last in its 2003 Global Competitiveness Report. Thus, Haiti’s role in the global economy often has been confined to receiving foreign aid. The United States has been the leading donor to development in Haiti and plays a vital role in Haiti’s economy. Haiti maintains active membership in a variety of multinational economic organizations, including the International Coffee Organization, Latin American Economic System, and Caribbean Community and Common Market. Haiti also is a signatory to the Cotonou Convention⎯an economic community seeking to foster trade among African, Caribbean, and Pacific countries.
Imports: Haitian imports totaled an estimated US$1.5 billion in 2005. About 35 percent of imports came from the United States. Other significant sources of imports that year included the Netherlands Antilles, Malaysia, and Colombia. Haiti’s primary import items are food, fuels (including oil), machinery, and manufactured goods.
Exports: In 2005 Haiti’s exports totaled an estimated US$391 million. More than 80 percent of that revenue came from exports to the United States. Other major export partners in 2005 included the Dominican Republic and Canada. Assembled manufactures, coffee, edible oils, cocoa, and mangoes compose the majority of Haiti’s exports.
Trade Balance: Haiti annually has a large trade deficit. In 2005 the country had an estimated trade deficit of about US$1.1 billion.
Balance of Payments: In 2003 Haiti’s balance of payments was negative US$4.6 million. Haiti’s large trade deficit is partially offset by transfers received, including international aid.
External Debt: Haiti’s total external debt surpasses US$1 billion. In 2005 it reached an estimated US$1.3 billion. Following the promising democratic election of Aristide in December 1990, many international creditors responded by canceling significant amounts of Haiti’s debt, bringing the total down to US$777 million in 1991. However, new borrowing during the 1990s swelled the debt to more than US$1 billion.
Foreign Investment: Haiti has received very little foreign investment over the past 20 years. Development aid and loans have been the only consistent source of outside capital. In order to encourage foreign investment, in 2004 the interim government approved a three-year “tax holiday” for all foreign businesses that invest in Haiti.
Foreign Aid: Between 1999 and 2004, Haiti’s foreign benefactors—the United States, the European Union, the Inter-American Development Bank and the World Bank—jointly suspended aid disbursements in response to evidence of systematic electoral fraud and the failure of the Haitian government to implement accountability measures. Aid was restored in July 2004 after an interim administration was named. Haiti was scheduled to receive more than US$1 billion in pledged aid for 2005 and 2006. The United States pledged US$230 million in aid through fiscal year 2006.
Currency and Exchange Rate: The Haitian currency is the gourde (HTG). In 2005 the exchange rate averaged 40.4 gourdes per US$1. The rate in early May 2006 was 39.65 gourdes per US$1.
Fiscal Year: The Haitian fiscal year begins on October 1 and ends on September 30.