Haiti - Economy

One of the richest colonial possessions based on its slave-operated sugar plantations, and site of the world's first successful slave revolt, Haiti is now one of the world's poorest countries, separated on the island of Hispanola from the prospering Dominican Republic by racial and linguistic divisions, and a river named Massacre. About 80% of the population lives in abject poverty, engaged mainly in subsistence agriculture. The economy is basically agricultural: coffee, mangoes, sugar, rice, corn, sorghum, and wood are the main products. Some cottage industries were developed in the mid 1940s, and in the late 1950s and early 1960s the mining sector, particularly bauxite and copper, grew to provide important export items. By the early 1980s, however, mining was losing its importance, and light export-oriented industry, based on cheap labor, was the main growing area. The informal market is growing including the black market transshipment of cocaine. In 2003, Haiti remains one of the 23 countries on the US government's list of major drug-producing or drug-transit countries.

Haiti has suffered a series of natural and political setbacks. Hurricanes have often destroyed substantial parts of the coffee and sugar crops. During 1960–70, the real GDP declined annually by 0.2%. The accession of Jean-Claude Duvalier in 1971 improved the economy, and between 1970 and 1979, the average annual growth of the GDP was 4%. The economy took a downward turn in the early 1980s, growing by only 0.90% between 1977 and 1987.

On 30 September 1991 a military coup headed by General Cedras deposed the democratically elected government of President Jean-Bertrand Aristide. The OAS and the United States imposed several economic sanctions following this military coup. The accumulated contraction in the economy from 1991–94 amounted to about 30%, leaving per capita income at about $260. A UN-mediated agreement called for President Aristide's return to power, which occurred in 1994.

In 1995, GDP growth reached a recent high of 4.5% due mainly to public investment equal to 7.2% of GDP (compared to0.6% in 1994). Inflation fell to 30.2%, down from 36.1% in 1994. In 1996, GDP growth moderated to 2.78% as inflation fell to 20%. From 1997 to 1999, annual GDP growth averaged 2.1% and inflation fell to single digits, 8.3% in 1998 and 9.9% in 1999. With extensions of credit under the IMF's Enhanced Structural Adjustment Facility (ESAF), the government initiated fiscal policy and structural reforms. After Aristide was voted out of office in 1996, the Prime Minister resigned in 1997, and the legislature broke up in 1999; all these factors contributed to a cessation of economic reforms. In 2000, violence, civil unrest and fraud that marred the presidential election and led donor countries to put a hold on about $500 million of economic assisstance, helped bring GDP growth down to a negligible 0.9% as inflation increased to 15.3%. A new agreement in November 2000 with the IMF was voted down by the legislature. In 2001, continued political unrest, the freezing of over $1 billion in credits from international financial institutions, and the deterioration in the external economy following recession in the United States and the 11 September 2001 terrorist attacks brought on Haiti's first contraction since 1994 as GDP fell 1.1%. In 2002, the US government (George W. Bush administration) continued to block aid to Haiti on condition that political reforms, specific arrests and disarmament would first have to be carried out, and sent assistance to the Dominican Republic to help their military seal their border against Haitian refugees along the Massacre River. Economic growth for 2002 was estimated at 0%, with inflation at 10.1%. Unemployment was an estimated 60%.