or tourism is promising, especially with the
easing of border restrictions with the Greek Cypriots in April 2003.

Czech Republic
The Czech Republic is one of the most stable and
prosperous of the post-Communist states of Central and Eastern
Europe. Growth in 2000-04 was supported by exports to the EU,
primarily to Germany, and a strong recovery of foreign and domestic
investment. Domestic demand is playing an ever more important role
in underpinning growth as interest rates drop and the availability
of credit cards and mortgages increases. Current account deficits of
around 5% of GDP are beginning to decline as demand for Czech
products in the European Union increases. Inflation is under
control. Recent accession to the EU gives further impetus and
direction to structural reform. In early 2004 the government passed
increases in the Value Added Tax (VAT) and tightened eligibility for
social benefits with the intention to bring the public finance gap
down to 4% of GDP by 2006, but more difficult pension and healthcare
reforms will have to wait until after the next elections.
Privatization of the state-owned telecommunications firm Cesky
Telecom is scheduled to take place in 2005. Intensified
restructuring among large enterprises, improvements in the financial
sector, and effective use of available EU funds should strengthen
output growth.

Denmark
This thoroughly modern market economy features high-tech
agriculture, up-to-date small-scale and corporate industry,
extensive government welfare measures, comfortable living standards,
a stable currency, and high dependence on foreign trade. Denmark is
a net exporter of food and energy and enjoys a comfortable balance
of payments surplus. Government objectives include streamlining the
bureaucracy and further privatization of state assets. The
government has been successful in meeting, and even exceeding, the
economic convergence criteria for participating in the third phase
(a common European currency) of the European Economic and Monetary
Union (EMU), but Denmark has decided not to join 12 other EU members
in the euro; even so, the Danish krone remains pegged to the euro.
Growth in 2004 was sluggish, yet above the scanty 0.3% of 2003.
Because of high GDP per capita, welfare benefits, a low Gini index,
and political stability, the Danish people enjoy living standards
topped by no other nation. A majo