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Micronesia Economical Facts

 

Economical overview

The economy of the Micronesia Federation is largely based on aid. Most of the aid comes from the United States. In addition, the fishing industry is an important industry. Many residents feed on agriculture and fishing for their own use.

Tourism has increased in importance, but inadequate infrastructure and the fact that the country is so remote puts a limit on the development of the industry. The country also receives revenue from the sale of fishing licenses to foreign fishing fleets, mainly Japanese. Money sent home by Micronesia working abroad also provides an important financial contribution. In recent years, sales of the country's domain names on the Internet (.fm) have also generated revenue.

  • Countryaah.com: Major imports by Micronesia, covering a full list of top products imported by the country and trade value for each product category.

The state sector dominates the economy. For a long time, the state was largely the only employer. Even today, over half of the salaried employees are found in the state sector. The government's ambition is to try to stimulate the growth of a private business sector, but the level of wages in the state sector is so high that it wants to invest in private enterprise.

Guaranteed assistance until 2024

An extension of the economic parts of the Compact of Free Association with the United States was negotiated in 2003. The new agreement provided the Micronesian Federation with a total financial support of $ 1.8 billion over a 20-year period, but part of the money is invested in a fund for future use, which means that the annual support has in practice decreased. Otherwise, the assistance is mainly focused on a few areas, such as education, health care and the environment.

Economical Facts of Micronesia

At the same time, the United States places higher demands on accounting of how the appropriations are used and also on certain control of grants; criticism of the fact that people in a senior position have enriched themselves has occurred. A foundation has been formed whose task is to prepare the country for reduced US grants in the future.

  • Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including FM which represents the country of Micronesia.

Since 1990, US support has gradually decreased. By 2023, however, the country is expected to receive close to $ 100 million a year in direct support from the United States. The fund for future use is jointly managed by the Micronesia Federation and the United States.

Investing in tourism

There is a large deficit in foreign trade; imports are several times greater than exports. Exports mainly consist of fish sold primarily to the USA and Japan. Other export products are seafood, clothing and other textiles, bananas, betel nuts, kava, copra (dried coconut meat) and black pepper. Imports consist of everything from food, machinery and beverages to tobacco and fuel. More than a quarter of the import value in 2013 was fuel in the form of oil products. The US and Japan are also the most important trading partners on the import side.

Economic growth may vary rapidly depending on the international economy which affects demand for the country's export goods and on weather conditions, such as hurricanes or drought. Since the turn of the millennium, the Micronesian economy has had declines around 2004, 2008 and 2013/2014.

In order to broaden and stabilize the economy, the government has invested in developing tourism. The country has strived to increase foreign investment and improve infrastructure. Among other things, the runway at Pohnpei International Airport was extended to allow larger aircraft to land.

With the exception of 2011, inflation has been low in the 2010s, unlike in the 2000s when the country struggled with rising consumer prices. The country's foreign debt was $ 81 million in 2015. The cost of the debt then corresponded to 10 percent of the export value, a slight increase compared to 2011 when the figure was just over 7 percent.

FACTS - FINANCE

GDP per person

US $ 3,058 (2018)

Total GDP

US $ 345 million (2018)

GDP growth

1.4 percent (2018)

Agriculture's share of GDP

27.1 percent (2016)

Manufacturing industry's share of GDP

0.6 percent (2016)

The service sector's share of GDP

61.9 percent (2015)

Inflation

1.8 percent (2019)

Government debt's share of GDP

20.3 percent (2018)

Currency

US dollar

Merchandise exports

US $ 88 million (2014)

Imports

US $ 154 million (2014)

Current account

US $ 22 million (2014)

Commodity trade's share of GDP

54 percent (2018)

Main export goods

fish, seafood, betel nuts, kava

Largest trading partner

USA, Guam, Japan, Australia

 

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