Economy of Haiti

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Economy of Haiti

Port-au-Prince, the financial centre of Haiti

Currency Haitian gourde (HTG)

Fiscal year 1 October – 30 September

Trade organizations CARICOM, WTO

Country group Least Developed[1]

Lower-middle income economy[2]

Statistics

GDP  $8.347 billion (nominal, 2020)[3]

 $19.704 billion (PPP, 2020)[3]

GDP rank 145th (nominal, 2020)

143rd (PPP, 2020)

GDP growth 1.5% (2018) −0.9% (2019e)

−3.5% (2020f) 1.0% (2021f)[4][note 1]
GDP per capita  $732 (nominal, 2020 est.)[3]

 $1,728 (PPP, 2020 est.)[3]

GDP per capita rank 172nd (nominal, 2020)

174th (PPP, 2020)

GDP by sector Agriculture 21.9%

industry 20.8%
 services 57.3% (2017 est.)[5]
Inflation (CPI) 12.885% (2018)[3]
Population 58.5% (2012 est.)[5]
below poverty line
Gini coefficient 41.1 medium (2012)[6]
Human Development  0.510 low (2019)[7] (170th)
Index
 0.303 low IHDI (2019)[8]
Labor force 4.594 million[5]
Labor force by Agriculture 38.1%
occupation
industry 11.5%

services 50.4% (2010 est.)

Unemployment 13.2%
Main industries Sugar refining, flour milling, textile, cement, light

assembly, industries based on imported parts

Ease-of-doing-business  179th (below average, 2020)[9]
rank

External

Exports $960.1 million (2017 est.)[5]

Export goods apparel, manufactures, essential oils (Vetiver), cocoa,

mangoes, coffee, bitter oranges (Grand Marnier)

Main export partners  United States 81%

 Canada 7% (2019)[10]

Imports $3.621 billion (2017 est.)[5]

Import goods food, manufactured goods, machinery and transport

equipment, fuels, raw materials

Main import partners  United States 39%

 China 22%

 Turkey 5% (2019)[11]
FDI stock $1.46 billion (31 December 2017 est.)[5]
Gross external debt $2.607 billion (31 December 2017 est.)[5]

Public finances
Public debt 31.1% of GDP (2017 est.)[5]

Revenues $1.58 billion (2017 est.)[5]

Expenses $2.251 billion (2017 est.)[5]

Economic aid $600 million (FY04 est.)

Foreign reserves $2.044 billion (31 December 2017 est.)[5]
 Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

Haiti is a free market economy[12][13] with low labor costs. A republic, it was a French
colony before gaining independence in an uprising by its enslaved people. It faced
embargoes and isolation after its independence as well as political crises punctuated by
foreign interventions and devastating natural disasters. Haiti's estimated population in
2018 was 11,439,646.[14][15] The Economist reported in 2010: "Long known as the poorest
country in the Western hemisphere, Haiti has stumbled from one crisis to another since
the Duvalier (François Duvalier) years."[16]
Haiti has an agricultural economy. Over half of the world's vetiver oil (an essential oil
used in high-end perfumes) comes from Haiti. Bananas, cocoa, and mangoes are
important export crops. Haiti has also moved to expand to higher-end manufacturing,
producing Android-based tablets[17] and current sensors and transformers.[18] Its major
trading partner is the United States (US), which provides the country with preferential
trade access to the US market through the Haiti Hemispheric Opportunity through
Partnership Encouragement (HOPE) and the Haiti Economic Lift Program
Encouragement Acts (HELP) legislation.
Vulnerability to natural disasters, as well as poverty and limited access to education are
among Haiti's most serious disadvantages.[5] Two-fifths of all Haitians depend on
the agriculture sector, mainly small-scale subsistence farming, and remain vulnerable to
damage from frequent natural disasters, exacerbated by the country's
widespread deforestation.[5] Haiti suffers from a severe trade deficit, which it is working
to address by moving into higher-end manufacturing and more value-added products in
the agriculture sector. Remittances are the primary source of foreign exchange,
equaling nearly 20% of GDP.[5] Haiti's economy was severely impacted by the 2010 Haiti
earthquake which occurred on 12 January 2010.[5]

Contents

 1Economic history
 2Debt cancellation
 3Primary Industries
o 3.1Agriculture, forestry, and fishing
o 3.2Mining and minerals
 3.2.1Gold
 4Secondary Industries
o 4.1Manufacturing
o 4.2Energy
 5Tertiary Industries
o 5.1Services
o 5.2Banking
o 5.3Tourism
 6Macro-Economic
 7See also
 8Footnotes
 9References
 10External links and further reading

Economic history[edit]

Historical GDP per capita development

Before the people enslaved in Haiti to work its plantations revolted against French
colonization in 1804, Haiti ranked as the world's richest and most productive colony. [19] In
the formative years of independence, Haiti suffered from isolation on the international
stage, as evidenced by the early lack of diplomatic recognition accorded to it by Europe
and the United States (which did not recognize it until 1862); this had a negative impact
on investment in Haiti. Another economic obstacle in Haiti's early independence was its
payment of 150 million francs to France beginning in 1825; this did much to drain the
country of its capital stock. France forced Haiti to pay for its independence and freedom
from colonization. According to a 2014 study, the Haitian economy stagnated due to a
combination of weak state power and adverse international relations. [20] The authors
write:[20]
For the newborn 'Negro republic', it was hard to become recognised as a sovereign
nation state, it was difficult to form strategic alliances, to get access to foreign loans,
and to safeguard trade interests, and it was overloaded with debt under threat of
external violence (the French indemnity). Self-chosen isolation, for instance by
prohibiting foreign landownership, further reduced the choice set of successive Haitian
administrations. When opportunities for export-led growth opened up in the late 19th
century, the odds were stacked against Haiti.
The United States invaded and occupied Haiti from 1915 to 1934.
In the aftermath of the 1994 restoration of constitutional governance, Haitian officials
have indicated their commitment to economic reform through the implementation of
sound fiscal and monetary policies and the enactment of legislation mandating the
modernization of state-owned enterprises. A council to guide the modernization
program (CMEP) was established and a timetable was drawn up to modernize nine
key parastatals. Although the state-owned flour-mill and cement plants have been
transferred to private owners, progress on the other seven parastatals has stalled. The
modernization of Haiti's state-enterprises remains a controversial political issue in Haiti.
Under President René Préval (1996–2001, 2006 – 14 May 2011), the country's
economic agenda included trade and tariff liberalization, measures to control
government expenditure and increase tax revenues, civil-service downsizing, financial-
sector reform, the privatization of state-owned enterprises, and the provision of private
sector management contracts, or joint public-private investment. Structural adjustment
agreements with the International Monetary Fund, World Bank, Inter-American
Development Bank, and other international financial institutions aiming at creating
necessary conditions for private sector growth, have proved only partly successful.
Comparative social and economic indicators show Haiti falling behind other low-income
developing countries (particularly in the Western hemisphere) since the 1980s. Haiti's
economic stagnation results from earlier[when?] inappropriate economic policies, political
instability, a shortage of good arable land, environmental deterioration, continued use of
traditional technologies, under-capitalization and lack of public investment in human
resources, migration of large portions of the skilled population, and a weak national
savings rate.[21]
Haiti continues to suffer the consequences of the 1991 coup. The irresponsible
economic and financial policies of de facto authorities greatly[citation needed] accelerated Haiti's
economic decline. Following the coup, the United States adopted mandatory sanctions,
and the OAS instituted voluntary sanctions aimed at restoring
constitutional government. International sanctions culminated in the May 1994 United
Nations embargo of all goods entering Haiti except humanitarian supplies, such as food
and medicine. The assembly sector, heavily dependent on U.S. markets for its products,
employed nearly 80,000 workers in the mid-1980s. During the embargo, employment
fell from 33,000 workers in 1991 to 400 in October 1995. Private, domestic and foreign
investment has been slow to return to Haiti. Since the return of constitutional rule,
assembly sector employment has gradually recovered with over 20,000 now employed,
but further growth has been stalled by investor concerns over safety and supply
reliability.
Remittances from abroad have consistently constituted a significant source of financial
support for many Haitian households.
The Haitian Ministry of Economy and Finance designed [citation needed] the Haiti economic
reforms of 1996 to rebuild the economy of Haiti after significant downturns suffered in
the previous years. The primary reforms centered around the Emergency Economic
Recovery Plan (EERP) and were followed by budget reforms.
Haiti's real GDP growth turned negative in FY 2001 after six years of growth. Real GDP
fell by 1.1% in FY 2001 and 0.9% in FY 2002. Macroeconomic stability was adversely
affected by political uncertainty, the collapse of informal banking cooperatives,
high budget deficits, low investment, and reduced international capital flows, including
suspension of IFI lending as Haiti fell into arrears with the Inter-American Development
Bank (IDB) and World Bank.
Haiti's economy stabilized in 2003. Although FY 2003 began with the rapid decline of
the gourde due to rumors that U.S. dollar deposit accounts would be nationalized and
due to the withdrawal of fuel subsidies, the government successfully stabilized the
gourde as it took the politically difficult decisions to float fuel prices freely according to
world market prices and to raise interest rates. Government agreement with
the International Monetary Fund (IMF) on a staff monitored program (SMP), followed by
its payment of its $32 million arrears to the IDB in July, paved the way for renewed IDB
lending. The IDB disbursed $35 million of a $50 million policy-based loan in July and
began disbursing four previously approved project loans totaling $146 million. The IDB,
IMF, and World Bank also discussed new lending with the government. Much of this
would be contingent on government adherence to fiscal and monetary targets and
policy reforms, such as those begun under the SMP, and Haiti's payment of its World
Bank arrears ($30 million at 9/30/03).
The IMF estimated that real GDP was flat in FY 2003 and projected 1% real GDP
growth for FY 2004. However, GDP per capita – amounting to $425 in FY 2002 – will
continue to decline[citation needed] as population growth is estimated at 1.3% p.a. While
implementation of governance reforms and peaceful resolution of the political stalemate
are key to long-term growth,[citation needed] external support remains critical in avoiding
economic collapse. The major element is foreign remittances, reported as $931 million
in 2002, primarily from the U.S. Foreign assistance, meanwhile, was $130 million in FY
2002. Overall foreign assistance levels have declined since FY 1995, the year elected
government was restored to power under a United Nations mandate, when
the international community provided over $600 million in aid.
A legal minimum wage of 36 gourdes a day (about U.S. $1.80) was set [by whom?] in 1995,
and applies to most workers in the formal sector. It was later raised to 70 gourdes per
day.[citation needed] This minimum is 200 gourdes a day (about U.S. $4.80). 39.175 gourds= a
U.S dollar.
Haiti's economy suffered a severe setback in January 2010 when a 7.0 magnitude
earthquake destroyed much of its capital city, Port-au-Prince, and neighboring areas.
Already the poorest country in the Americas with 80% of the population living under the
poverty line and 54% in abject poverty, the earthquake inflicted $7.8 billion in damage
and caused the country's GDP to contract 5.4% in 2010. Following the earthquake, Haiti
received $4.59 billion in international pledges for reconstruction, which has proceeded
slowly.[5]

Chart showing the history of Haiti's GDP.

US economic engagement under the Haitian Hemispheric Opportunity through
Partnership Encouragement (HOPE) Act, passed in December 2006, has boosted
apparel exports and investment by providing duty-free access to the US. Congress
voted in 2010 to extend the legislation until 2020 under the HELP Act; the apparel
sector accounts for about 90% of Haitian exports and nearly one-tenth of GDP.
Remittances are the primary source of foreign exchange, equaling nearly 20% of GDP
and more than twice the earnings from exports. Haiti suffers from a lack of investment,
partly because of limited infrastructure and a lack of security. In 2005, Haiti paid its
arrears to the World Bank, paving the way for reengagement with the Bank. Haiti
received debt forgiveness for over $1 billion through the Highly-Indebted Poor Country
initiative in mid-2009. The remainder of its outstanding external debt was cancelled by
donor countries following the 2010 earthquake but has since risen to over $600 million.
The government relies on formal international economic assistance for fiscal
sustainability, with over half of its annual budget coming from outside sources.
The Michel Martelly administration in 2011 launched a campaign aimed at drawing
foreign investment into Haiti as a means for sustainable development.[5]

Debt cancellation[edit]
In 2005 Haiti's total external debt reached an estimated US$1.3 billion, which
corresponds to debt per capita of US$169, in contrast to the debt per capita of the
United States which is US$40,000.[22] Following the democratic election of Aristide in
December 1990, many international creditors responded by cancelling significant
amounts of Haiti's debt, bringing the total down to US$777 million in 1991. However,
new borrowing during the 1990s swelled the debt to more than US$1 billion.
At peak, Haiti's total external debt was estimated at 1.8 billion dollars, including half a
billion dollars to the Inter-American Development Bank, Haiti's largest creditor. In
September 2009, Haiti met the conditions set out by the IMF and World Bank's Heavily
Indebted Poor Countries program, qualifying it for cancellation of some of its external
debt. This amounted to a cancellation of $1.2 billion. Despite this as of 2010 calls for
cancellation of its remaining $1 billion debts came strongly from civil society groups
such as the Jubilee Debt Campaign in reaction to the effects of the earthquake that hit
the country.[23]

Primary Industries[edit]

Haiti Export Treemap

Primary industries include the following:
Agriculture, forestry, and fishing[edit]
See also: Agriculture in Haiti
Although many Haitians make their living through subsistence farming, Haiti also has an
agricultural export sector. Agriculture, together with forestry and fishing, accounts for
about one-quarter (28% in 2004) of Haiti's annual gross domestic product and employs
about two-thirds (66% in 2004) of the labor force. However, expansion has been difficult
because mountains cover much of the countryside and limit the land available for
cultivation. Of the total arable land of 550,000 hectares, 125,000 hectares are suited for
irrigation, and of those only 75,000 hectares actually have been improved with irrigation.
Haiti's dominant cash crops include coffee, mangoes, and cocoa. Haiti has decreased
its production of sugarcane, traditionally an important cash crop, because of declining
prices and fierce international competition. Because Haiti's forests have thinned
dramatically, timber exports have declined. Roundwood removals annually total about
1,000 kilograms. Haiti also has a small fishing industry. Annual catches in recent years
have totaled about 5,000 tons.
Mining and minerals[edit]
Haiti has a mining industry which extracted minerals worth approximately US$13 million
in 2013. Bauxite, copper, calcium carbonate, gold, and marble [24] were the most
extensively extracted minerals in Haiti. Lime and aggregates and to a lesser extent
marble are extracted. Gold was mined by the Spanish in early colonial times. Bauxite
was mined for a number of years in recent times at a site near Miragoâne on the
Southern peninsula. Operating from 1960 to 1972 International Halliwell Mines, Ltd.
("Halliwell"), a Canadian corporation, through its wholly owned Haitian subsidiary, La
Societe d'Exploitation et de Developpement Economique et Natural d'Haiti ("Sedren")
[25]
 mined copper near Gonaïves.
0.5 million tons of ore were exported. The copper ore was valued at about $83.5 million.
The government of Haiti received about $3 million. [26] As of 2012 there was promise of
gold and copper mining in northern Haiti.[27]
Gold[edit]
In 2012, it was reported that confidential agreements and negotiations had been
entered into by the Haitian government granting licenses for exploration or mining of
gold and associated metals such as copper for over 1,000 square miles (2,600 km2) in
the mineralized zone stretching from east to west across northern Haiti. Estimates for
the value of the gold which might be extracted through open-pit mining are as high as
US$20 billion. Eurasian Minerals and Newmont Mining Corporation are two of the firms
involved. According to Alex Dupuy, Chair of African American Studies and John E.
Andrus Professor of Sociology at Wesleyan University the ability of Haiti to adequately
manage the mining operations or to obtain and use funds obtained from the operations
for the benefit of its people is untested and seriously questioned. Lakwèv, where earth
dug from hand-made tunnels is washed for specks of free gold by local residents, is one
of the locations. In the same mineralized zone in the Dominican Republic Barrick
Gold and Goldcorp are planning on reopening the Pueblo Viejo mine. [26][27][28]
Secondary Industries[edit]
Secondary industries include the following:
Manufacturing[edit]
The leading industries in Haiti produce beverages, butter, cement, detergent, edible oils,
flour, refined sugar, soap, and textiles. Growth in both manufacturing and industry as a
whole has been slowed by a lack of capital investment. Grants from the United States
and other countries have targeted this problem, but without much success. Private
home building and construction appear to be one subsector with positive prospects for
growth.[citation needed]
In 2004 industry accounted for about 20 percent of the gross domestic product (GDP),
and less than 10 percent of the labor force worked in industrial production. As a portion
of the GDP, the manufacturing sector has contracted since the 1980s. The United
Nations embargo of 1994 put out of work most of the 80,000 workers in the assembly
sector. Additionally, the years of military rule following the presidential coup in 1991
resulted in the closure of most of Haiti's offshore assembly plants in the free zones
surrounding Port-au-Prince. When President Aristide returned to Haiti, some
improvements did occur in the manufacturing sector. [citation needed]
Haiti's cheaper labor brought some textile and garment assembly work back to the
island in the late 1990s. Although these gains were undercut by international
competition, the apparel sector in 2008 made up two-thirds [29] of Haiti's annual 490
million US dollars exports.[30] USA economic engagement under the HOPE Act, from
December 2006, increased apparel exports and investment by providing tariff-free
access to the USA. HOPE II, in October 2008, further improved the situation by
extending preferences to 2018.
Energy[edit]
See also: Electricity sector in Haiti
Haiti uses very little energy, the equivalent of approximately 250 kilograms of oil per
head per year. In 2003, Haiti produced 546 million kilowatt-hours of electricity while
consuming 508 million kilowatt-hours. In 2013, it stood 135th out of 135 countries in net
total consumption of electricity.[31]
Most of the country's energy comes from the burning of wood. Haiti imports oil,
consuming about 11,800 barrels per day (1,880 m3/d), as of 2003. The Péligre Dam, the
country's largest, provides the capital city of Port-au-Prince with energy. Thermal plants
provide electricity to the rest of the country. Even with the country's low level of demand
for energy, the supply of electricity traditionally has been sporadic and prone to
shortages. Mismanagement by the state has offset more than US$100 million in foreign
investment targeted at improving Haiti's energy infrastructure. Businesses have resorted
to securing back-up power sources to deal with the regular outages. The potential for
greater hydropower exists, should Haiti have the desire and means to develop it. The
government controls oil and gas prices, to an extent insulating Haitians from
international price fluctuations.[citation needed]
Tertiary Industries[edit]
Tertiary industries include the following:
Services[edit]
Haiti's services sector made up 52 percent of the country's gross domestic product in
2004 and employed 25 percent of the labor force. According to World Bank statistics,
the services sector is one of the few sectors of Haiti's economy that sustained steady, if
modest, growth throughout the 1990s.
Banking[edit]
Lack of a stable and trustworthy banking system has impeded Haiti's economic
development. Banks in Haiti have collapsed on a regular basis. Most Haitians do not
have access to loans of any sort. When reelected in 2000, President Aristide promised
to remedy this situation but instead introduced a non-sustainable plan of "cooperatives"
that guaranteed investors a 10 percent rate of return. By 2000, the cooperatives had
crumbled and Haitians had collectively lost more than US$200 million in savings. [citation needed]
Haiti's central bank, the Bank of the Republic of Haiti, oversees 10 commercial banks
and two foreign banks operating in the country. Most banking takes place in the capital
city of Port-au-Prince. The United Nations and the International Monetary Fund have led
efforts to diversify and expand the finance sector, making credit more available to rural
populations.[citation needed] In 2002, the Canadian International Development Agency led a
training program for Haitian Credit Unions. Haiti has no stock exchange.
Tourism[edit]
Main article: Tourism in Haiti
Tourism in Haiti has suffered from the country's political upheaval. Inadequate
infrastructure also has limited visitors to the island. In the 1970s and 1980s, however,
tourism was an important industry, drawing an average of 150,000 visitors annually.
Since the 1991 coup, tourism has recovered slowly. The Caribbean Tourism
Organization (CTO) has joined the Haitian government in an effort to restore the island's
image as a tourist destination. In 2001, 141,000 foreigners visited Haiti. Most came from
the United States. To make tourism a major industry for Haiti, further improvements in
hotels, restaurants and other infrastructure still are needed.

Macro-Economic[edit]
The following table shows the main economic indicators in 1980–2017. [32]

198 198 199 199 200 200 200 20 200 20 20 20 20 20 20 20 201 201
Year
0 5 0 5 0 5 6 07 8 09 10 11 12 13 14 15 6 7

GDP 6.3 8.0 9.2 9.5 11. 12. 13. 14. 14. 15. 14. 15 16. 17. 18. 18. 19. 19.
in $ 9 5 9 8 79 88 58 41 81 38 72 .8 61 59 41 83 35 93
Bln Bln Bln Bln Bln Bln Bln Bl Bln Bl Bl 5 Bl Bl Bl Bl Bln Bln
 Bl
(PPP) . . . . . . . n. . n. n. n. n. n. n. . .
n.

GDP
per 1,
1,0 1,2 1,3 1,2 1,3 1,3 1,4 1,5 1,5 1,5 1,4 1,6 1,6 1,7 1,7 1,7 1,8
capita 56
77 41 10 24 78 91 43 07 26 61 71 14 86 41 58 83 14
in $ 2
(PPP)

GDP −5. 5.
growt 7.3 0.8 −0. 9.9 0.9 1.8 2.2 3.3 0.8 0.9 2.9 4.2 2.8 1.2 1.5 1.2
5 5
h % % 4% % % % % % % % % % % % % %
% %
(real)

Inflati -
on 17. 10. 21. 27. 13. 15. 13. 8.5 15. 8. 6.2 5.8 4.5 9.0 13. 14.
0.0 5.7
(consu 78 65 28 61 71 73 07 2 52 4 9 5 7 2 83 67
2 %
mer % % % % % % % % % % % % % % % %
prices) %

Gove
rnme
nt
debt 55 47 39 35 38 28 17 12 16 21 26 30 34 32
... ... ... ...
(Perce % % % % % % % % % % % % % %
ntage
of
GDP)

See also[edit]
 List of Haitian companies
 List of Latin American and Caribbean countries by GDP (nominal)
 List of Latin American and Caribbean countries by GDP (PPP)