Global Study On Child Poverty And Disparities (PDF) - Social Policy ...

occurred because of the narrow base of the
economy, the significant contribution of agriculture
and associated volatile international prices, as
well as vulnerability to natural disasters. Political
instability and government fiscal policy also
played a role (ADB 2009b).
Since 2003, Vanuatu has become one of the
fastest-growing economies in the Pacific region,
with economic growth driven primarily by tourism,
construction and aid inflows. Annual growth, which
averaged only 2.5 per cent per year between
1982 and 2003, grew to average almost 6 per
cent between 2003 and 2008 and is estimated to
have reached 6.8 per cent in 2007 and 6.2 per
cent in 2008 (VNSO 2008). The impact of the
global recession slowed GDP growth to 3.5 per
cent in 2009 and 2.2% in 2010 (Reserve Bank of
Vanuatu, 2011). The economy is based primarily
on subsistence and small-scale agriculture, which
provides a living for the majority of the population.
Mineral deposits are negligible, and the country
has no known petroleum deposits. A small light
industry sector caters to the local market. The
economy is small, has few trade restrictions
and relies on a few types of exports. The bulk
of export earnings come from tourism and the
fishing industry, with other exports including
copra, coconut oil, beef, kava and timber. During
2002, the government stepped up efforts to boost
tourism by improving air connections, resort
development, and cruise ship facilities, and since
2004 visitor arrivals have grown by 13 per cent
per year (IMF 2009).
Table 1.2: Structure of the Vanuatu economy, 2000 and 2007
The relative importance of agriculture to GDP has
declined somewhat, as has industry, but services
Livestock farming is a second target for growth,
and have grown. Australia and New Zealand are
the main suppliers of tourists and foreign aid.
Table 1.2 summarises the structure of the Vanuatu
economy.
However, although agriculture only accounts
for 14.4 per cent of GDP, it is the backbone of
the subsistence of the population, with about 80
per cent of the population living in agricultural
households (VSNO 2006). From 2000 to 2007,
the fastest-growing sectors were finance and
insurance, construction and real estate and
business services, while agricultural exports,
forestry and logging and manufacturing fell in real
terms.
Vanuatu is dependent on imports of basic
goods and processed food items. The majority
of its agricultural products are exported to New
Zealand, Australia, Japan, the United States and
the European Union, and those counties are also
the major sources of imports, together with other
Pacific Island countries such as Fiji. Vanuatu is
also a member of the Pacific Island Country Trade
Agreement, which is the free trade agreement
among Forum Islands Countries.
Official development assistance is also significant,
accounting for more than 5 per cent of GDP. As
2000 (%) 2007 (%)
Agriculture, fishing and forestry 15.6 14.4
Traditional agriculture 9.2 9.2
Export agriculture 5.0 4.3
Other commercial agriculture 0.4 0.4
Forestry and logging 0.9 0.4
Industry 9.3 8.8
Manufacturing 4.4 3.1
Electricity 1.8 2.0
Construction 3.2 3.7
Services 75.1 76.8
Wholesale and retail trade 31.7 30.9
Hotels and restaurants 8.1 6.7
Transport and communication 12.1 12.8
Finance and insurance 6.4 8.7
Real estate and business services 5.9 6.7
Government services 13.4 14.6
Personal services 1.1 1.0
Domestic services 1.1 1.1
Less imputed bank service charge 4.8 5.7
Gross domestic product (GDP) 100.0 100.0
Source: VNSO, 2010a
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