n and a lack of adequate facilities hinder development. In
1996, the country experienced a 20% reduction in revenues from the
Compact of Free Association - the agreement between the US and
Micronesia in which Micronesia receives $1.3 billion in financial
and technical assistance over a 15-year period until 2001 - as a
result of the second step-down under the agreement. Since these
revenues accounted for 57% of consolidated government revenues,
reduced Compact funding resulted in a severe depression. While
Micronesia's economy appears to have bottomed out in 1999, the
country's medium-term economic outlook remains fragile due to likely
further reductions in external grants made under the US Compact
funding. Geographical isolation and a poorly developed
infrastructure remain major impediments to long-term growth.

GDP: purchasing power parity - $263 million (1999 est.)

note: GDP is supplemented by grant aid, averaging perhaps $100
million annually

GDP - real growth rate: 0.3% (1999 est.)

GDP - per capita: purchasing power parity - $2,000 (1999 est.)

GDP - composition by sector: agriculture: 19%

industry: 4%

services: 77% (1996 est.)

Population below poverty line: NA%

Household income or consumption by percentage share: lowest 10%: NA%

highest 10%: NA%

Inflation rate (consumer prices): 2.6% (FY98/99)

Labor force: NA

Labor force - by occupation: two-thirds are government employees

Unemployment rate: 16% (1999 est.)

Budget: revenues: $161 million ($69 million less grants)

expenditures: $160 million, including capital expenditures of $NA
(1998 est.)

Industries: tourism, construction, fish processing, craft items from
shell, wood, and pearls

Industrial production growth rate: NA%

Electricity - production: NA kWh

Electricity - production by source: fossil fuel: NA%

hydro: NA%

nuclear: NA%

other: NA%

Electricity - consumption: NA kWh

Agriculture - products: black pepper, tropical fruits and
vegetables, coconuts, cassava (tapioca), sweet potatoes; pigs,
chickens

Exports: $73 million (f.o.b., 1996 est.)

Exports - commodities: fish, garments, bananas, black pepper

Exports - partners: Japan, US, Guam

Imports: $168 million (c.i.f., 1996 est.)

Imports - commodities: food, manufactured goods, machinery and
equipment, beverages

Imports - partners: US, Japan, Australia

Debt - external: $111 million (1997 est.)

Economic aid - recipient: under terms