Economy - overview: Tonga has a small, open, island economy and is the last constitutional monarchy among the Pacific Island countries. It has a narrow export base in agricultural goods. Squash, vanilla beans, and yams are the main crops. Agricultural exports, including fish, make up two-thirds of total exports. Tourism is the second-largest source of hard currency earnings following remittances. Tonga had 53,800 visitors in 2015. The country must import a high proportion of its food, mainly from New Zealand.
The country remains dependent on external aid and remittances from overseas Tongans to offset its trade deficit. The government is emphasizing the development of the private sector, encouraging investment, and is committing increased funds for healthcare and education. Tonga's English-speaking and educated workforce offer a viable labor market, and the tropical climate provides fertile soil. Renewable energy and deep sea mining also offer opportunities for investment.
Tonga has a reasonably sound basic infrastructure and well developed social services. The government faces high unemployment among the young, moderate inflation, pressures for democratic reform, and rising civil service expenditures.
Definition: This entry briefly describes the type of economy, including the degree of market orientation, the level of economic development, the most important natural resources, and the unique areas of specialization. It also characterizes major economic events and policy changes in the most recent 12 months and may include a statement about one or two key future macroeconomic trends.
Source: CIA World Factbook - This page was last updated on July 9, 2017