Economy of Tuvalu - AbsoluteAstronomy.com

Lat. and Long.
Geographic coordinate system
A geographic coordinate system is a coordinate system that enables every location on the Earth to be specified by a set of numbers. The coordinates are often chosen such that one of the numbers represent vertical position, and two or three of the numbers represent horizontal position...

8.31°N 179.13 °W (Funafuti)

Tuvalu

Tuvalu

Tuvalu , formerly known as the Ellice Islands, is a Polynesian island nation located in the Pacific Ocean, midway between Hawaii and Australia. Its nearest neighbours are Kiribati, Nauru, Samoa and Fiji. It comprises four reef islands and five true atolls...

is a Polynesia

Polynesia

Polynesia is a subregion of Oceania, made up of over 1,000 islands scattered over the central and southern Pacific Ocean. The indigenous people who inhabit the islands of Polynesia are termed Polynesians and they share many similar traits including language, culture and beliefs...

n island nation

Island nation

An island country is a state whose primary territory consists of one or more islands or parts of islands. As of 2011, 47 of the 193 UN member states are island countries.-Politics:...

located in the Pacific Ocean

Pacific Ocean

The Pacific Ocean is the largest of the Earth's oceanic divisions. It extends from the Arctic in the north to the Southern Ocean in the south, bounded by Asia and Australia in the west, and the Americas in the east.At 165.2 million square kilometres in area, this largest division of the World...

, midway between Hawaii

Hawaii

Hawaii is the newest of the 50 U.S. states , and is the only U.S. state made up entirely of islands. It is the northernmost island group in Polynesia, occupying most of an archipelago in the central Pacific Ocean, southwest of the continental United States, southeast of Japan, and northeast of...

and Australia

Australia

Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...

. The economy of Tuvalu

Tuvalu

is constrained by its remoteness and lack of economies of scale. Government revenues largely come from the lease of its highly fortuitous .tv

.tv

The domain name .tv is the Internet country code top-level domain for the islands of Tuvalu.Except for reserved names like com.tv, net.tv, org.tv and others, any person may register second-level domains in tv...

Top Level Domain (TLD); sales of stamp

Postage stamp

A postage stamp is a small piece of paper that is purchased and displayed on an item of mail as evidence of payment of postage. Typically, stamps are made from special paper, with a national designation and denomination on the face, and a gum adhesive on the reverse side...

s and coin

Coin

A coin is a piece of hard material that is standardized in weight, is produced in large quantities in order to facilitate trade, and primarily can be used as a legal tender token for commerce in the designated country, region, or territory....

s; fishing licenses (primarily paid under the South Pacific Tuna Treaty); direct grants from international donors (government donors as well as from the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

); and income from the Tuvalu Trust Fund

Tuvalu Trust Fund

The Tuvalu Trust Fund is an international sovereign wealth fund developed by Tuvalu, a small, central Pacific island nation, as a supplement to cover shortfalls in the national budget.-Establishment:...

(established in 1987 by the United Kingdom

United Kingdom

The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...

, Australia

Australia

, New Zealand

New Zealand

New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...

).

Subsistence farming of copra

Copra

Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...

and fishing remain the primary economic activities, particularly off the capital island of Funafuti

Funafuti

Funafuti is an atoll that forms the capital of the island nation of Tuvalu. It has a population of 4,492 , making it the most populated atoll in the country. It is a narrow sweep of land between 20 and 400 metres wide, encircling a large lagoon 18 km long and 14 km wide, with a surface of...

. There is no apparent large income disparity among the residents, although virtually the only jobs in the islands that pay a steady wage or salary are with the government, which make up about two thirds of those in formal employment. About 15% of adult males work as seamen on foreign flagged merchant ships. Population growth on the outer islands, the limits as to available land and the lack of employment opportunities, results in a flow of people from the outer islands to to the capital in Funafuti

Funafuti

with further pressure to migrate to Australia

Australia

or New Zealand

New Zealand

. There is high youth unemployment and few new jobs being created. Given the absence of natural resources (apart from tuna

Tuna

Tuna is a salt water fish from the family Scombridae, mostly in the genus Thunnus. Tuna are fast swimmers, and some species are capable of speeds of . Unlike most fish, which have white flesh, the muscle tissue of tuna ranges from pink to dark red. The red coloration derives from myoglobin, an...

in the territorial waters, and the constrains imposed on the Tuvaluan economy by its remoteness and lack of economies of scale, practical policies are needed for improvements to the livelihoods of the growing numbers of young Tuvaluans who aspire to a more affluent lifestyle than older generations.

Tuvalu comprises four reef

Reef

In nautical terminology, a reef is a rock, sandbar, or other feature lying beneath the surface of the water ....

islands and five true atoll

Atoll

An atoll is a coral island that encircles a lagoon partially or completely.- Usage :The word atoll comes from the Dhivehi word atholhu OED...

s that result in a contiguous zone: 24 nmi (44 km) exclusive economic zone: 200 nmi (370.4 km) territorial sea: 12 nmi (22 km) Its nearest neighbours are Kiribati

Kiribati

Kiribati , officially the Republic of Kiribati, is an island nation located in the central tropical Pacific Ocean. The permanent population exceeds just over 100,000 , and is composed of 32 atolls and one raised coral island, dispersed over 3.5 million square kilometres, straddling the...

, Nauru

Nauru

Nauru , officially the Republic of Nauru and formerly known as Pleasant Island, is an island country in Micronesia in the South Pacific. Its nearest neighbour is Banaba Island in Kiribati, to the east. Nauru is the world's smallest republic, covering just...

, Samoa

Samoa

Samoa , officially the Independent State of Samoa, formerly known as Western Samoa is a country encompassing the western part of the Samoan Islands in the South Pacific Ocean. It became independent from New Zealand in 1962. The two main islands of Samoa are Upolu and one of the biggest islands in...

and Fiji

Fiji

Fiji , officially the Republic of Fiji , is an island nation in Melanesia in the South Pacific Ocean about northeast of New Zealand's North Island...

. The population of 10,472 makes Tuvalu the third-least populous sovereign state

Sovereign state

A sovereign state, or simply, state, is a state with a defined territory on which it exercises internal and external sovereignty, a permanent population, a government, and the capacity to enter into relations with other sovereign states. It is also normally understood to be a state which is neither...

in the world; as compared to its immediate neighbours, it has a larger population than Nauru

Nauru

, but is smaller than Kiribati

Kiribati

which has a permanent population of just over 100,000 (2011). In terms of physical land size, at just 26 square kilometres (10 sq mi) Tuvalu is the fourth smallest country in the world; as compared to its immediate neighbours, Tuvalu

Tuvalu

is larger than Nauru

Nauru

, which is 21 km² (8.1 sq mi), and smaller than Kiribati

Kiribati

, which is comprised of groups of atoll

Atoll

An atoll is a coral island that encircles a lagoon partially or completely.- Usage :The word atoll comes from the Dhivehi word atholhu OED...

s dispersed over 3.5 million square kilometres, (1,351,000 square miles) of the Pacific Ocean

Pacific Ocean

.

Tuvalu is considered a safe country of unspoiled natural beauty and friendly people. However, due to its remoteness, the cost of travelling to the island and limited air traffic to the country, limited numbers of tourists visit each year. The majority of visitors to Tuvalu are government officials, aid workers, NGO

Non-governmental organization

A non-governmental organization is a legally constituted organization created by natural or legal persons that operates independently from any government. The term originated from the United Nations , and is normally used to refer to organizations that do not form part of the government and are...

officials or consultants.

Island economy

Tuvaluans are primarily involved in traditional agriculture and fishing. About 500 Tuvalu men are employed abroad at any given time as sailors, primarily on German

Germany

Germany , officially the Federal Republic of Germany , is a federal parliamentary republic in Europe. The country consists of 16 states while the capital and largest city is Berlin. Germany covers an area of 357,021 km2 and has a largely temperate seasonal climate...

-owned ships. Another 300 sailors are in Tuvalu on leave between rigorous, 12-plus-month cruises. Remittances from seafarers is a major source of income for families in the country. In 2002, the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

approved an assistance package to upgrade the Tuvalu Maritime Training Institute which trains young Tuvaluans so they can work aboard foreign vessels.

From 1996 to 2002, Tuvalu was one of the best performing Pacific Island economies and achieved an average real gross domestic product (GDP) growth rate of 5.6 per cent per annum. Since 2002 economic growth has slowed as Tuvalu was exposed to rapid rises in world prices fuel and food with the level of inflation peaking at 13.4% in 2008, and falling to -1¾% in November 2010. The International Monetary Fund 2010 Report on Tuvalu describes the economy as contracted over recent years, with real GDP growth of: 7.0 (2008), -1.7 (2009), 0.2 (2010), 0.0 (2011 est.).

The public sector enterprises are the National Bank of Tuvalu, Development Bank of Tuvalu, Tuvalu Electricity Corporation, Tuvalu Telecommunications Corporation, National Fishing Company of Tuvalu, Philatelic Bureau, Tuvalu Marine Training Institute and Vaiaku Lagi Hotel

Vaiaku Lagi Hotel

The Vaiaku Langi Hotel, or Vaiaku Lagi Hotel, is situated in Funafuti, in the Pacific island nation of Tuvalu.-Features:It is Tuvalu's only hotel, though there are a few other small lodges without all the hotel amenities...

. Tuvaluan radio services are operated by the Tuvalu Media Corporation.

The Tuvalu National Provident Fund provides its members with loans, for which each member’s account is used as collateral. The Tuvalu Cooperative Society is the main wholesaler and retailer in Tuvalu.

Development of Economic and Social Policy

Te Kakeega II is the statement of the national strategy for the sustainable development of Tuvalu, with economic and social goals intended to be achieved in the period 2005 to 2015. After consultations on each islands the National Summit on Sustainable Development (NSSD), was held at the Tausoalima Falekaupule in Funafuti from 28 June to 9 July 2004. The meeting resulted in the Malefatuga Declaration, which is the foundation of Te Kakeega II. The follow-up document, the 2008 Kakeega Matrix Returns, “contained all the known aid projects, programmes, development initiatives and ideas adopted by the donors and the two successive Tuvalu governments (2004-2006 and 2006 to present)”.

The Tuvalu Trust Fund and international aid

The Tuvalu Trust Fund

Tuvalu Trust Fund

(TTF) was established in 1987 by the United Kingdom

United Kingdom

, Australia

Australia

, New Zealand

New Zealand

. The TTF, a prudently managed overseas investment fund, has contributed roughly 11% of the annual government budget each year since 1990. With a capital value of about 2.5 times GDP, the TTF provides an important cushion for Tuvalu's volatile income sources from fishing and royalties from the sale of the dot-TV domain. With an initial capital of about A$27 million at independence, it now totals about A$100 million.

Australia and New Zealand continue to contribute capital to the Tuvalu Trust Fund

Tuvalu Trust Fund

and provide other forms of development assistance. The US government is also a major revenue source for Tuvalu, with 1999 payments from the South Pacific Tuna Treaty (SPTT) at about $9 million, a total which is expected to rise annually. The SPTT entered into force in 1988 with the current SPTT agreement expiring on June 14, 2013.

Financial support to Tuvalu is also provide by Japan

Japan

Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...

, South Korea

South Korea

The Republic of Korea , , is a sovereign state in East Asia, located on the southern portion of the Korean Peninsula. It is neighbored by the People's Republic of China to the west, Japan to the east, North Korea to the north, and the East China Sea and Republic of China to the south...

and the European Union

European Union

The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...

.

Tuvalu joined the Asian Development Bank

Asian Development Bank

The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...

(ADB) in 1993. To improve aid effectiveness, the government of Tuvalu, ADB, AusAID, and NZAID signed the Development Partners Declaration (DPD) in 2009. The DPD is designed to improve aid effectiveness, both in the implementation of specific projects and in assisting the Tuvaluan government achieve performance benchmark indicators.

In 1999 the ADB and the government of Tuvalu set up the Falekaupule Trust Fund, which is intended to improve services on the outer islands. The island councils - composed of traditional leaders - are responsible for managing their own finances from a budget allocated from the Tuvaluan government from the Falekaupule Trust Fund. Under the Falekaupule Act, Falekaupule means “traditional assembly in each island...composed in accordance with the Aganu of each island”. Aganu means traditional custom and culture. The initial capital of Falekaupule Trust Fund was A$12m and at the end of 2009 the market value of the Falekaupule Trust Fund was approximately A$25 million.

Tuvalu became a member of the International Monetary Fund (IMF) in July 2010.

Tuvalu participates in the Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries (EIF), which was established in October 1997 under the auspices of the World Trade Organisation.

Government revenue

Government revenues largely come from sales of stamp

Postage stamp

s and coin

Coin

s, fishing licenses, income from the TTF, and from the lease of its highly fortuitous .tv Internet

Internet

The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...

Top Level Domain (TLD). In 1998, Tuvalu began deriving revenue from use of its area code for "900" lines

Premium-rate telephone number

Premium-rate telephone numbers are telephone numbers for telephone calls during which certain services are provided, and for which prices higher than normal are charged. Unlike a normal call, part of the call charge is paid to the service provider, thus enabling businesses to be funded via the calls...

and from the sale of its ".tv

.tv

" Internet domain name. Domain name income paid most of the cost of paving the streets of Funafuti and installing street lighting in mid-2002.

The Asian Development Bank described the Global Economic Crisis (GEC) as impacting on Tuvalu through: “(i) lower demand for Tuvalu seafarers and, therefore, falling remittances; (ii) volatile exchange rate movements affecting the value of remittances, revenues from fishing license fees, and food prices; and (iii) lower market value of the Tuvalu Trust Fund (TTF), which at the end of May 2010 was about 12% below the maintained value. Thus, as a direct result of the GEC, no distribution was made from the fund to the budget for 2010 and further distributions are unlikely while there is uncertainty in international financial markets.”

The IMF 2010 Country Report describes economic activity in Tuvalu as dampened by lower offshore earnings, with “[t]he economy is expected to have almost no growth in 2010, and growth is projected to be zero or even turn negative in 2011, led by lower government spending, and remain low over the medium term.”

GDP and other economic performance indicators

The Australian dollar

Australian dollar

The Australian dollar is the currency of the Commonwealth of Australia, including Christmas Island, Cocos Islands, and Norfolk Island, as well as the independent Pacific Island states of Kiribati, Nauru and Tuvalu...

(A$) is the currency of Tuvalu.
Further information sourced from:

GDP: purchasing power parity $36 million (2010 est.)

GDP: official exchange rate $32 million (2010 est.)

GDP - real growth rate: -1.7% (2009); 0.2% (2010 est.) 0% (2011 proj.)

GDP - per capita: $2,447 (2009)

GDP – composition by sector: (2002)

Agriculture: 16.6%

Industry: 27.2%

Services: 56.2%

Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...

rate (consumer prices): -1¾% (November 2010)
Total population: 10,544 (July 2011 est.)

Labor force - by occupation: people make a living mainly through exploitation of the sea

Sea

A sea generally refers to a large body of salt water, but the term is used in other contexts as well. Most commonly, it means a large expanse of saline water connected with an ocean, and is commonly used as a synonym for ocean...

, reef

Reef

In nautical terminology, a reef is a rock, sandbar, or other feature lying beneath the surface of the water ....

s, and atoll

Atoll

An atoll is a coral island that encircles a lagoon partially or completely.- Usage :The word atoll comes from the Dhivehi word atholhu OED...

s and from wages sent home by those working abroad in Australia

Australia

and New Zealand

New Zealand

and sailors working of merchant ships.

Labour force: 3,615 (2004 est.)

Unemployment rate: 16.3% (2004)
Budget:
(millions)
Total revenues and grants: A$24.6 million (2010 budget); A$424.0 (2010 est.)

Total expenditures: A$32.6 million (2010 budget); A$34.0 (2010 est.)
Government finance:
(in percentage of GDP)

Revenue and grants: 89.8% (2009); 69.0% (2010 est.)

Current Revenue: 59.4% (2009) 49.3% (2010 est.)

Grants: 30.4% (2009); 19.7% (2010 est.)

Expenditure and net lending: 93.5% (2009); 97.75% (2010 est.)

Current expenditure: 78.0% (2009); 84.3% (2010 est.)

Capital Expenditure and net lending: 15.5% (2009); 13.5% (2010 est.)

Overall balance: -3.7% (2009); 28.7% (2010 est.)
Electricity - production: 3 GWh (1995)

Electricity - consumption: 3 GWh (1995)
Industries: fishing, tourism

Tourism

Tourism is travel for recreational, leisure or business purposes. The World Tourism Organization defines tourists as people "traveling to and staying in places outside their usual environment for not more than one consecutive year for leisure, business and other purposes".Tourism has become a...

, copra

Copra

Agriculture - products: coconut

Coconut

The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...

s; fish

Exports: $1 million (f.o.b., 2004)

Exports - commodities: copra, fish

Exports - partners: Germany 56.8%, Fiji 14.4%, Italy 10.9%, UK 7.7%, Poland 4.9% (2004)

Imports: $12.91 million (c.i.f., 2005)

Imports - commodities: food, animals, mineral fuels, machinery, manufactured goods

Imports - partners: Fiji

Fiji

Fiji , officially the Republic of Fiji , is an island nation in Melanesia in the South Pacific Ocean about northeast of New Zealand's North Island...

50.2%, Japan

Japan

18.1%, Australia

Australia

9.6%, China

China

Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...

8%, New Zealand

New Zealand

5.5% (2004)
Economic aid - recipient: $30.4 (2009); $19.7 million (2010 est.) note - major donors are Australia

Australia

, New Zealand

New Zealand

, European Union

European Union

, Japan

Japan

, and the US

United States

The United States of America is a federal constitutional republic comprising fifty states and a federal district...

Currency: 1 Tuvaluan dollar ($T) or 1 Australian dollar (A$) = 100 cents

Exchange rates: Tuvaluan dollars or Australian dollars per US dollar - 1.0902 (2010), 1.2822 (2009), 1.2137 (2007), 1.3285 (2006)

Fiscal year: calendar year

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