Investing Blog

With all eyes on Haiti after an earthquake of unbelievable magnitude, the world has learned so much about such a small country. After hearing day in and day out about the disaster that has taken such a toll, I thought it would be interesting to look at the Haitian economy, a country I had never before investigated.

The Basics of Haiti’s Economy

The 7.3 magnitude couldn’t have come at a worse time. Prior to the disaster, Haiti’s economy had been growing since 2005, quite an achievement for a country that has a long history of corruption and an unstable banking system. One of the biggest recent successes was the extension of the Haitian Hemispheric Opportunity through Partnership Encouragement Act, which allowed exports to the United States with no duty fees. The HOPE act, as it is known, greatly increased the production of apparel and other products which helped to support an otherwise agriculture-led economy.

A Nation of Dependency

The apparel industry, one of few still operating in Haiti, is still not the most significant driver of economic growth. In fact, remittances, or money sent from laborer’s back to their home country (Haiti), generate more than 25% of all economic activity. The nation is the poorest in the Western Hemisphere, generating a GDP per capita of $1300.

Currently, 75% of the nations exports are sent to the United States, which account for a total of $600 million per year. Apparel is the biggest export, and until October 2009, showed annual growth of roughly 22%, a trend that was sure to help develop a country riddled with poverty.

Most of the economy is dependent on small farms, which produce little more than what is needed to sustain the population. A full 80% live under the poverty line, and most live on less than $2 a day. Interestingly, the country shows relatively healthy levels of debt at less than 10% of GDP, however, the nations trade imbalance furthers the decline in wealth.

Natural Disasters are Frequent

The geographical location couldn’t be worse for natural disasters. Prior to this week’s earthquake, four hurricanes struck Haiti in 2008, and the country is listed 4 times on the list of the 30 most deadly hurricanes. In 1946, the largest earthquake ever recorded was centered in Haiti’s eastern neighbor, the Dominican Republic, and spread hardship throughout the island.

Help if You Can

Now more than ever, Haitians need global support. Organizations like Red Cross among others, are already on the ground and providing the supplies Haitians need most. Please, remember that donations should be made in cash so that the aid can be sent as quickly as possible. When it comes to natural disasters, even a few hours count!

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