Economical overview
From the colonial period until the 1990s,
Naurus's economy was based entirely on phosphate
exports. Otherwise, the island lacks largely natural
resources and must import almost everything, including
food and water. A widening of the economic base led to
Nauru becoming a tax haven in the 1990s, and since the
2000s, an Australian internment camp for refugees has
become a new source of income.
The economic conditions are difficult: Nauru is very
small and distant, nature is scarce, resources are
limited and it is difficult to create jobs for a growing
population.
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Countryaah.com:
Major imports by Nauru, covering a full list of top products imported by the country and trade value for each product category.
For decades, however, phosphate resources gave the
country one of the world's highest gross domestic
products (GDP) per inhabitant. The phosphate was of the
highest quality and the income meant that the
inhabitants could choose not to work (see further Modern
History).
But phosphate assets declined and recovery eventually
ceased. Production fell from just over 1.5 million
tonnes a year to nothing in 2003. At the same time, it
was clear for some time that the economy was
catastrophically failing in the good years. Money that
went to an investment fund would secure the future of
the population, but large sums had been wasted on the
boast of building abroad and similar projects. The
accounts were largely missing. At the same time, the
then governments borrowed money to cover the budget
deficits.
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Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including NRU which represents the country of Nauru.
The decline began in the 1990s and became
increasingly serious after the turn of the millennium.
In April 2004, the crisis became acute. An American
finance company demanded that the government repay a
loan that had gone into investment in real estate. Since
Naurus's last fixed assets in Australia (and thus
abroad) were seized, the country was on a steep slope,
and in July 2004 Australia took over responsibility for
Naurus finances (see Modern History). Economically,
Nauru survived for a few years through loans and
assistance.
With the help of Australian, new phosphate reserves
were then found, and after some new investments in the
plants, some exports resumed in 2006. Rising world
market prices led to phosphate mining becoming
profitable again in 2012 and the economy grew by close
to 5 percent. During the previous ten-year period,
growth averaged 0.8 percent. In 2011, the Asian
Development Bank (ADB) decided to assist Nauru in
setting up a new investment fund.
In an attempt to save the economy, Nauru began in the
1990s to try to attract foreign banking and finance
companies. The country developed into an international
tax haven. It was rumored that the "Russian mafia" used
Nauru to "wash" money for millions. The operation led to
threats of sanctions from abroad, threats that were
intensified in the course of the hunt for terrorists
following the attacks on the United States in September
2001. Naurus parliament gradually adopted laws to stop
money laundering and regulate the financial sector. Up
to 400 offshore banks on the island were forced to
close. The economic cooperation organization OECD
removed Nauru from its list of tax havens in 2003, and
2005 from the list of countries that allow money
laundering. In April 2008, Nauru was also removed from a
US list of countries that allow money laundering.
The refugee camp established by Australia at Nauru in
2001 soon became an important source of income (see also
Foreign Policy and Defense). In the mid-2010s, the camp
contributed strongly to the country's high GDP growth.
During the period 2012–2017, Nauru received a total of $
90 million in aid from Australia to house asylum seekers
on the island. The International Monetary Fund (IMF)
loan agency estimated that the Nauru government withdrew
just over $ 54 million in revenue from the camp in the
2015/2016 financial year, which represented 41 percent
of GDP.
Sales of fishing licenses to China, Japan, South
Korea, Taiwan, New Zealand and the United States also
contribute to the Treasury. These incomes have increased
significantly in the 2010s and in 2016 accounted for
just over a quarter of GDP.
In order to further broaden and increase the state's
income, in 2014 the government decided to introduce a 10
per cent tax for high-income earners from October of the
same year and some corporate income tax from July 2015.
This was the first time that income or corporate tax was
collected in Nauru.
Despite the recovery, a number of problems remain,
which are rooted in previous years' waste. Dependence on
external support remains high and government debt is
high. Large fluctuations in phosphate production as well
as in the world market price mean that there is
sometimes a sharp deficit and sometimes a large surplus
in the trade balance. In the fall of 2014, Nauru was
once again threatened with bankruptcy after a US
investment fund demanded a debt back. An Australian
court decided to temporarily freeze the island's funded
money until the bank's claims had been investigated.
FACTS - FINANCE
GDP per person
US $ 9,030 (2018)
Total GDP
US $ 115 million (2018)
GDP growth
-3.5 percent (2018)
Agriculture's share of GDP
3.6 percent (2015)
Manufacturing industry's share of GDP
0.0 percent (2015)
The service sector's share of GDP
81.6 percent (2015)
Inflation
2.5 percent (2019)
Government debt's share of GDP
58.3 percent (2018)
Currency
Australian dollar
Commodity trade's share of GDP
112 percent (2018)
Main export goods
phosphate
Largest trading partner
Australia, Nigeria (2015)
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