In 2011, the Haitian economy had begun recovering slowly from the effects of the earthquake and a tumultuous electoral period the previous year. However, adverse natural shocks affecting
agricultural output and the slow execution of public capital spending negatively affected the economic recovery in 2012. According to the Haitian Statistical Unit (IHSI), its preliminary
estimate for GDP growth for 2012 is 2.8 percent, down from 5.6 percent in 2011.The IMF predicts growth of 6.5% in 2013
Haiti is a free market economy that enjoys the advantages of low labor costs and tariff-free access to the US for many of its exports. Poverty, corruption, and poor access to education for much of the population are among Haiti’s most serious disadvantages. 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 Western Hemisphere 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 internatioonal pledges for reconstruction, which has proceeded slowly.
Two-fifths of all Haitians depend on the agricultural sector, mainly small-scale subsistence farming, and remain vulnerable to damage from frequent natural disasters, exacerbated by the country’s widespread deforestation. 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 Haiti Economic Lift Program Act (HELP); 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 MARTELLY administration in 2011 launched a campaign aimed at drawing foreign investment into Haiti as a means for sustainable development.