Economical overview
The Marshall Islands economy consists of a
traditional part, mainly based on cultivation, fishing
and animal husbandry for self-catering, and a modern
service sector which is found in the metro areas of
Majuro and Ebeye. The modern sector is largely kept up
to date through aid, mainly from the United States.
The aid accounts for more than half of the state's
revenue. Under the Compact of Free Association agreement
(see Foreign Policy and Defense) with the United States,
the Marshall Islands are guaranteed financial support
from the United States of approximately $ 30 million
annually until 2024, as well as $ 7 million in annual
contributions to a kind of future fund for use after the
US the support ceased.
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Countryaah.com:
Major imports by Marshall Islands, covering a full list of top products imported by the country and trade value for each product category.
The public sector is large. Before the renegotiation
of the agreement on free association in the early 2000s,
which meant lower levels of subsidy, the government
reduced the number of government employees and
liberalized the economy. For example, import duties were
sharply lowered.
The services sector contributes to almost three
quarters of the country's gross domestic product (GDP).
The tourism industry gained importance during the 1990s
and is now the country's most important source of
foreign currency. Investments are being made in
developing tourism, in cooperation with Taiwan, which is
the country's second largest donor after the US. Taiwan
promised major investments in 2004 and more than $ 40
million in aid over a 20-year period.
During the 1990s, the Marshall Islands also invested
in developing financial services and attracting banks
and insurance companies through favorable tax and
confidentiality rules. Banking supervision was tightened
in the early 2000s after the industrialized countries'
cooperative organization OECD accused the country of
allowing so-called money laundering, that is, through
various transactions to transform illegal income into
legal. But when the EU published its first "black list"
of tax havens in December 2017, the Marshall Islands was
one of 17 designated countries and territories.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including MHL which represents the country of Marshall Islands.
Fishing is an important industry and includes a tuna
industry. Fish accounts for the majority of exports.
Sales of fishing licenses to foreign fishing fleets also
generate good income. In 2015, license sales accounted
for almost one-third of total revenues to the Treasury,
unless aid is included. However, the following year,
revenues from license fishing were estimated to
decrease, as the agreement with the US fishing fleet was
renegotiated with lower catch quotas as a result.
In the late 1990s and early 2000s, the country's GDP
fell several years in a row. The reasons were, among
other things, the cuts in state administration, reduced
aid from the US, drought and the financial crisis in
Asia 1998-1999. Only in 2004, when money from the new
agreement with the United States began to flow in, did
the economy grow again. A contributing reason was that
the agreement with the US gave room for investment in
infrastructure and building projects, which were carried
out by private companies.
In the first half of the 2010 GDP grew by an average
of a few percent per year, but growth varied
considerably from year to year. While in 2010 exceeded 6
per cent, growth in 2014 was at a minus. The
fluctuations are largely due to the amount of government
investments made in infrastructure and other
construction projects. The external debt in 2016 was $
91 million, a slight increase from the previous year.
Annual inflation fell from just over 6 percent in 2011
to a moderate 0.7 percent in 2016.
The Marshall Islands have a large trade deficit with
foreign countries. Fish, especially tuna, is by far the
most important export product, followed by coconut
products such as copra (dried coconut meat) and coconut
oil. Imports consist of everything from food and fuel to
machinery and transport equipment. The largest exporting
country is the United States, while imports are mainly
from the USA, Japan and Australia.
The Marshall Islands are fighting several obstacles
to continued economic development. The country is small
with a limited home market. It is remote, which leads to
high transport costs. It is also sometimes exposed to
natural disasters such as droughts and tropical storms.
Another problem is major deficiencies in the
infrastructure of many of the islands. In addition, the
state companies, such as the airline Air Marshall
Islands, usually suffer losses that drain the Treasury.
FACTS - FINANCE
GDP per person
US $ 3,621 (2018)
Total GDP
US $ 212 million (2018)
GDP growth
2.5 percent (2018)
Agriculture's share of GDP
16.8 percent (2017)
Manufacturing industry's share of GDP
1.8 percent (2017)
The service sector's share of GDP
70.2 percent (2017)
Inflation
0.6 percent (2019)
Government debt's share of GDP
25.2 percent (2018)
Currency
US dollar
Merchandise exports
US $ 38 million (2016)
Imports
US $ 104 million (2016)
Current account
- US $ 16 million (2016)
Commodity trade's share of GDP
67 percent (2018)
Main export goods
fish, coconut oil, copra (dried coconut meat)
Largest trading partner
USA, Japan, Australia
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