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Nauru - Economy

KEY FACTS 2005

  • GDP PPP: US$60m
  • GNI p c: US$5,000
  • GDP growth: 2.3% p.a. 2003–04

Overview:Nauru’s economy is based on phosphate mining, and phosphate revenues have given the country a relatively high per capita income (though little economic data is published). Phosphate reserves are not, however, expected to last beyond the mid-2010s, and the government has been exploring other sources of income (for example, fishing, tourism and offshore financial services). There is very limited potential for agriculture and the country is dependent on imports for basic necessities such as food, consumer and capital goods. Very few Nauruans work, or are permanently resident, abroad.

Surpluses from the phosphate industry have been invested abroad by the Nauru Phosphate Royalties Trust to provide income as the phosphate runs out. The management of these funds has for years been one of the major issues on the island.

The Nauru Agency Corporation was established to encourage foreign investment in international financial services; it assists with the registration of holding and trading companies and in obtaining banking, trust and insurance licences.

In January 1999 Nauru signed its first loan agreement with the Asian Development Bank, under which the government was to diversify the economy to prepare for the exhaustion of phosphate reserves and to embark on a programme of economic reforms, including a sharp reduction in public sector expenditure and rises in taxes and duties.

From 2001, when its camp for processing asylum-seekers was established, Australia made substantial contributions to government revenues and there has been for several years a boost for the catering sector. As of 2007, revenues generated by the processing camp amounted to around a fifth of the country’s GDP.

Trade: Food, fuels, building materials, and capital and consumer goods are imported, mainly from Australia. The only export is phosphate: mainly to India, Australia and New Zealand.

Fishing: A statutory marine and fisheries authority was established in 1997 for the development and regulation of fishing. The country has bilateral fishing agreements with China, Japan, South Korea, Taiwan and the USA.