lic, Hungary holds the highest rating among the Central
European transition economies. Rating agencies, however, have
expressed concerns over Hungary's fiscal and current account
deficits. Inflation has declined from 14% in 1998 to 3.7% in 2006.
Unemployment has persisted above 6%. Hungary's labor force
participation rate of 57% is one of the lowest in the Organization
for Economic Cooperation and Development (OECD). Germany is by far
Hungary's largest economic partner. Policy challenges include
cutting the public sector deficit to 3% of GDP by 2008, from about
6.5% in 2006, and orchestrating an orderly interest rate reduction
without sparking capital outflows.

Iceland
Iceland's Scandinavian-type economy is basically
capitalistic, yet with an extensive welfare system (including
generous housing subsidies), low unemployment, and remarkably even
distribution of income. In the absence of other natural resources
(except for abundant geothermal power), the economy depends heavily
on the fishing industry, which provides nearly 60% of export
earnings and employs 6% of the work force. The economy remains
sensitive to declining fish stocks as well as to fluctuations in
world prices for its main exports: fish and fish products, aluminum,
and ferrosilicon. Government policies include reducing the current
account deficit, limiting foreign borrowing, containing inflation,
revising agricultural and fishing policies, and diversifying the
economy. The government remains opposed to EU membership, primarily
because of Icelanders' concern about losing control over their
fishing resources. Iceland's economy has been diversifying into
manufacturing and service industries in the last decade, and new
developments in software production, biotechnology, and financial
services are taking place. The tourism sector is also expanding,
with the recent trends in ecotourism and whale watching. Since 2000
growth has varied from a -1% in 2002 to 8% in 2004.

Iles Eparses
no economic activity

India
India's diverse economy encompasses traditional village
farming, modern agriculture, handicrafts, a wide range of modern
industries, and a multitude of services. Services are the major
source of economic growth, accounting for more than half of India's
output with less than one quarter of its labor force. About
three-fifths of the work force is in agriculture, leading the UPA