Economy of Vanuatu

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Vanuatu's economy is primarily agricultural; 80% of the population is engaged in agricultural activities that range from subsistence farming to smallholder farming of coconuts and other cash crops. Copra is by far the most important cash crop (making up more than 35% of the country's exports), followed by timber, beef, and cocoa. Kava root extract exports also have become important. In addition, the government has maintained Vanuatu's preindependence status as a tax haven and international financial center. About 2,000 registered institutions offer a wide range of offshore banking, investment, legal, accounting, and insurance and trust company services. Vanuatu also maintains an international shipping register in New York City.

Copra, cocoa, kava and beef account for more than 60% of Vanuatu's total exports by value and agriculture accounts for approximately 20% of GDP. Tourism is Vanuatu's fastest-growing sector, having comprised 40% of GDP in 2000. Industry's portion of GDP declined from 15% to 10% between 1990 and 2000. Government consumption accounted for about 27% of GDP.

Vanuatu is a small country, with only a few commodities, mostly agricultural, produced for export. In 2000, imports exceeded exports by a ratio of nearly 4 to 1. However, this was offset by high services income from tourism, which kept the current account balance fairly even. After a slight downturn in 2001 and 2002 due to a decrease in tourism funding, the economy is expected to grow by 3.9%, increasing to 4.3% in 2007.

Vanuatu claims an exclusive economic zone of 680,000 square kilometers and possesses substantial marine resources. Currently, only a limited number of ni-Vanuatu are involved in fishing, while foreign fleets exploit this potential.

Luganville, the second largest city, is a hub for exports with 64.3% of domestic exports leaving it compared to 35.7% for the capital of Port Vila, whereas imports show the opposite trend with 86.9% entering through the capital and 13.1% through Luganville.^[1]

In 1997 the government, with the aid of the Asian Development Bank, committed itself to a 3-year comprehensive reform program. During the first year of the program the Government has adopted a value-added tax, consolidated and reformed government-owned banks, and started a 10% downsizing in the public service. The program was derailed when Barak Sope became Prime Minister. Under Prime Minister Edward Natapei, reform programs have slowly been reintroduced.

In 2007, the government declared the Year of the Traditional Economy (Bislama: kastom ekonomi), encouraging the trade of sea shells and pig tusks and discouraging cash transfers. By the end of the year, they decided to extend the experiment in to 2008.^[2]

GDP: purchasing power parity - $580 million (2003 est.)

GDP - real growth rate: 1,1% (2003 estimate)

GDP - per capita: purchasing power parity - $2 900 (1999 est.)

GDP - composition by sector:
agriculture: 26%
industry: 12%
services: 62% (2000 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices): 3,1% (2003 est.)

Labor force: NA

Labor force - by occupation: agriculture 65%, industry 5%, services 30% (2000 est.)

Unemployment rate: NA%

Budget:
revenues: $52,6 million
expenditures: $54,3 million, including capital expenditures of $700 000 (2003 est.)

Industries: food and fish freezing, wood processing, meat canning

Industrial production growth rate: 1% (1997 est.)

Electricity - production: 41 GWh (2003)

Electricity - production by source:
fossil fuel: 100%
hydro: 0%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 38,13 GWh (2003)

Electricity - exports: 0 kWh (2003)

Electricity - imports: 0 kWh (2003)

Agriculture - products: copra, coconuts, cocoa, coffee, taro, yams, coconuts, fruits, vegetables, fish, beef

Exports: $205 million (f.o.b., 2004 est.)

Exports - commodities: copra, beef, cocoa, timber, cava, coffee

Exports - partners: Thailand 46,1%, Malaysia 19,1%, Poland 8,1%, Japan 7,6% (2005)

Imports: $233 million (f.o.b., 2004)

Imports - commodities: machinery and equipment, foodstuffs, fuels

Imports - partners: Taiwan 20,2%, Australia 14,7%, Japan 13,5%, Singapore 11,9%, New Caledonia, Poland 7,1%, New Zealand 5,6%, Fiji 5,3% (2005)

Debt - external: $83,7 million (2002)

Economic aid - recipient: $27,5 million (2002)

Currency: 1 vatu (VT) = 100 centimes

Exchange rates: vatu (VT) per US$1 - 111,79 (2004), 122,19 (2003), 139,2 (2002), 145,31 (2001), 129,76 (December 1999), 129,08 (1999), 127,52 (1998), 115,87 (1997), 111,72 (1996), 112,11 (1995)

Fiscal year: calendar year

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