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Nauru Economical Facts

 

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.

  • 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.

  • 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.

Economical Facts 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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