Tuvalu Economy Profile 2008

Economy - overview

Tuvalu consists of a densely populated, scattered group of nine coral atolls with poor soil. The country has no known mineral resources and few exports. Subsistence farming and fishing are the primary economic activities. Fewer than 1,000 tourists, on average, visit Tuvalu annually. Job opportunities are scarce and public sector workers make up the majority of those employed. About 15% of the adult male population work as seamen on merchant ships abroad and remittances are a vital source of income, contributing around $4 million in 2006. Substantial income is received annually from the Tuvalu Trust Fund (TTF), an international trust fund established in 1987 by Australia, NZ, and the UK and supported also by Japan and South Korea. Thanks to wise investments and conservative withdrawals, this fund grew from an initial $17 million to an estimated value of $77 million in 2006. The TFF contributed nearly $9 million towards the government budget in 2006 and is an important cushion for meeting shortfalls in the government's budget. The US Government is also a major revenue source for Tuvalu because of payments from a 1988 treaty on fisheries. In an effort to ensure financial stability and sustainability, the government is pursuing public sector reforms, including privatization of some government functions and personnel cuts. Tuvalu also derives royalties from the lease of its ".tv" Internet domain name, with revenue of more than $2 million in 2006. A minor source of government revenue comes from the sale of stamps and coins. With merchandise exports only a fraction of merchandise imports, continued reliance must be placed on fishing and telecommunications license fees, remittances from overseas workers, official transfers, and income from overseas investments. Growing income disparities and the vulnerability of the country to climatic change are among leading concerns for the nation.

GDP (purchasing power parity)

$14.94 million (2002 est.)

GDP (official exchange rate)

$14.94 million (2002)

GDP - real growth rate

3% (2006 est.)

GDP - per capita (PPP)

$1,600 (2002 est.)

GDP - composition by sector

agriculture: 16.6%
industry: 27.2%
services: 56.2% (2002)

Population below poverty line

NA%

Household income or consumption by percentage share

lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices)

3.8% (2006 est.)

Labor force

3,615 (2004 est.)

Labor force - by occupation

note: people make a living mainly through exploitation of the sea, reefs, and atolls and from wages sent home by those abroad (mostly workers in the phosphate industry and sailors)

Unemployment rate

NA%

Budget

revenues: $21.54 million
expenditures: $23.05 million (2006)

Industries

fishing, tourism, copra

Industrial production growth rate

NA%

Current Account Balance

-$11.68 million (2003)

Agriculture - products

coconuts; fish

Exports

$1 million f.o.b. (2004 est.)

Exports - commodities

copra, fish

Exports - partners

Germany 60.5%, Italy 20.1%, Fiji 6.9% (2006)

Imports

$12.91 million c.i.f. (2005)

Imports - commodities

food, animals, mineral fuels, machinery, manufactured goods

Imports - partners

Fiji 46.1%, Japan 18.9%, China 18.2%, Australia 7.7%, NZ 4.1% (2006)

Debt - external

$NA

Economic aid - recipient

$10.49 million
note: includes distributions from the Tuvalu Trust Fund (2006)

Currency (code)

Australian dollar (AUD); note - there is also a Tuvaluan dollar

Exchange rates

Tuvaluan dollars or Australian dollars per US dollar - 1.2137 (2007), 1.3285 (2006), 1.3095 (2005), 1.3598 (2004), 1.5419 (2003)

Fiscal year

calendar year