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Asia and Oceania
Tuvalu |
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Last reviewed: 31 March 2009 |
Country information
Economy
Basic economic facts
GDP: US$26.7 million (2007 est)
GDP per capita: US$2,718 (2007 est)
Annual growth: 2.5% (2008 UN ESCAP)
Inflation: 4.6% (second quarter 2008)
Major industries: fishing and copra
Major trading partners: Japan, US, NZ, Australia
Exchange rate: (Tuvalu uses the Australian dollar)
Please see the Government of Tuvalu Biannual Statistical Report June 2008 for latest statistics about Tuvalu.
Tuvalu is one of the smallest countries of the region. Its economy was for many years based on fishing and subsistence farming. The sale of fishing licences was, until recently, one of the main sources of foreign exchange and revenue. Tuvalu has bilateral fishing agreements with the USA, South Korea, Japan and Taiwan. About 800 sailors from Tuvalu work abroad foreign ships and remittances from these seamen provide a further source of foreign exchange.
In 2000 Tuvalu leased its internet top level domain name (.tv) to a North American company for a reported US$50m over 12 years. Income from this venture has fluctuated and not met expectations.
The Tuvalu Trust Fund, an investment vehicle owned by the state of Tuvalu, was established in 1987 to help the government achieve greater financial autonomy in the management of its financial affairs, and to help maintain or improve the levels of social infrastructure and services. The Fund was established with significant contributions from the governments of the UK, Australia and New Zealand, with smaller amounts being added subsequently by Japan and the Republic of Korea. Over the years, both the government and donors have contributed to increasing the capital of the Fund, which has established a reputation for open and effective management. This has contributed to helping the government manage its budget effectively. With market volatility in recent years, low returns have reduced the sums available for public expenditure. The capital of the Fund, however, has been maintained and represents an important asset for Tuvalu.
Tuvalu’s public sector accounts for 70% of the GDP, and in an effort to reduce its dependence on foreign aid, the Tuvalu government is pursing public sector reforms, including privatisation of some government functions and personnel cuts of up to 7%.
Due to its remoteness, tourism does not provide much income. Almost all visitors are government officials, non-governmental organisation officials or consultants.
