Economy - overview: This South Pacific island economy is based primarily on small-scale agriculture, which provides a living for about two-thirds of the population. Fishing, offshore financial services, and tourism, with nearly 350,000 visitors in 2016, are other mainstays of the economy. Tourism has struggled after Efate, the most populous and popular island for tourists, was damaged by Tropical Cyclone Pam in 2015. Ongoing infrastructure difficulties at Port Vila’s Bauerfield Airport have caused air travel disruptions, further hampering tourism numbers. Australia and New Zealand are the main source of tourists and foreign aid. A small light industry sector caters to the local market. Tax revenues come mainly from import duties. Mineral deposits are negligible; the country has no known petroleum deposits.
Economic development is hindered by dependence on relatively few commodity exports, vulnerability to natural disasters, and long distances from main markets and between constituent islands. In response to foreign concerns, the government has promised to tighten regulation of its offshore financial center.
Since 2002, the government has stepped up efforts to boost tourism through improved air connections, resort development, and cruise ship facilities. Agriculture, especially livestock farming, is a second target for growth.
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