since its reversion to China in 1999. The territory's
net exports of goods and services account for roughly 41% of GDP
with tourism and apparel exports as the mainstays. Although the
territory was hit hard by the 1998 Asian financial crisis and the
global downturn in 2001, its economy grew 9.5% in 2002. A rapid rise
in the number of mainland visitors because of China's easing of
restrictions on travel drove the recovery. The budget also returned
to surplus in 2002 because of the surge in visitors from China and a
hike in taxes on gambling profits, which generated about 70% of
government revenue. The liberalization of Macao's gambling monopoly
contributes to GDP growth, as the three companies awarded gambling
licenses have pledged to invest $2.2 billion in the territory. Much
of Macau's textile industry may move to the mainland as the
Multi-Fiber Agreement is phased out. The territory may have to rely
more on gambling and trade-related services to generate growth. The
government estimated GDP growth at 4% in 2003 with the drop in large
measure due to concerns over the Severe Acute Respiratory Syndrome
(SARS), but private sector analysts think the figure may have been
higher because of the continuing boom in tourism.

Macedonia
At independence in September 1991, Macedonia was the least
developed of the Yugoslav republics, producing a mere 5% of the
total federal output of goods and services. The collapse of
Yugoslavia ended transfer payments from the center and eliminated
advantages from inclusion in a de facto free trade area. An absence
of infrastructure, UN sanctions on Yugoslavia, one of its largest
markets, and a Greek economic embargo over a dispute about the
country's constitutional name and flag hindered economic growth
until 1996. GDP subsequently rose each year through 2000. However,
the leadership's commitment to economic reform, free trade, and
regional integration was undermined by the ethnic Albanian
insurgency of 2001. The economy shrank 4.5% because of decreased
trade, intermittent border closures, increased deficit spending on
security needs, and investor uncertainty. Growth barely recovered in
2002 to 0.9%, then rose to 2.8% in 2003. Unemployment at one-third
of the workforce remains the most critical economic problem. The
gray economy is estimated at around 40% of GDP. Politically, the
country is more stable than in 2002.

Madag