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Tuvalu - Economy (Notes)

ECONOMY The economy suffers from Tuvalu's remoteness and lack of natural resources. Virtually the only jobs in the islands that pay a steady wage or salary are with the government, and nearly 70 percent of the formal workforce is employed in the public sector. Subsistence farming and fishing remain the primary economic activities, particularly away from the capital island of Funafuti. There is relatively little disparity between rich and poor in the country. The Australian dollar (A$) is the currency of Tuvalu. Tuvalu's GDP per capita was about U.S.$2,000 in 2004. Only about one third of the labor force participates in the formal wage economy. The remaining 70% work primarily in rural subsistence and livelihood activities. There is growing youth unemployment and few new jobs are being created. Some 900-1,000 Tuvaluan men are trained, certified and active as seafarers. The Asian Development Bank estimates that, at any one time, about 15 percent of the adult male population works abroad as seafarers. Remittances from seafarers (estimated at U.S. $1.5-3 million per annum) are a major source of income for families in the country, and there is a steady annual uptake of young Tuvaluan men to the Tuvalu Maritime Training Institute. The Tuvalu Trust Fund (TTF), a prudently managed overseas investment fund, has contributed roughly 11% of the annual government budget each year since 1990. The TTF was created from donations by Australia, New Zealand and the United Kingdom (along with Tuvalu?s own contribution) at independence. The TTF has grown from about A$27 million to some A$100 million (est. 2006). Earnings from the TTF provide an important cushion against Tuvalu's volatile income from fishing license fees and royalties from the sale of the dot-TV Internet domain. Initial windfall income from the domain name paid most of the costs of paving the streets of Funafuti and installing street lighting in mid-2002. Sales of national stamps and coins provide another minor source of income for the government. Tuvalu is a safe country of unspoiled natural beauty and friendly people, but remoteness and lack of infrastructure have constricted Tuvalu?s ability to develop its tourism potential.