 Federated States of Micronesia (FSM)
FSM, which is made up of four highly autonomous island states in the northern Pacific: Chuuk, Kosrae, Pohnpei, and Yap, retains a close affiliation to the United States under the Compact of Free Association. Compact I, from 1987-2001, provided grants which made up about half of GDP. With average aid per capita totalling US$963 from 1999-2002, the FSM is strongly dependent on development assistance. A new Compact agreement (Compact II), covering the 20 years from 2004-2023, entails lower United States grant assistance. Growth contracted by 3.8 percent in 2004, reflecting lower Compact transfers but in 2005, it is expected to increase by 0.3 percent with the arrival of new Compact funds and a slight expansion in private sector activity.
More information:
 Federated States of Micronesia - Country Overview (26kb pdf), Pacific Islands Strategy, 2005.
 Fiji
Fiji's economy is the largest and most developed in the South Pacific region (excluding Papua New Guinea) and with aid per capita averaging US$38 between 1999 and 2002, it is the least aid-dependent Pacific nation. Growth of 1.5 percent and 0.7 percent are projected for 2005 and 2006 respectively, reflecting the likely effects of greater competition flowing from the loss of preferential trade arrangements with the United States and the European Union in the garment and sugar industries. Fiji's population, estimated at 861,000 in 2005, is growing at 1.4 percent a year. In January 2005, Ratu Joni Madraiwiwi was sworn-in as the new Vice President, replacing Ratu Jope Seniloli, who resigned after being released from prison on health grounds. He had served three months of a four-year jail sentence for his part in the 2000 coup.
More information:
Fiji - Country Overview (34kb pdf), Pacific Islands Strategy, 2005. Back to top
 Kiribati
The Republic of Kiribati is one of the most isolated countries in the world, consisting of 33 low-lying atolls spread across 3.5 million square kilometres of the north Pacific Ocean. Its strong traditional culture provides social stability and promotes family welfare. Income per capita in Kiribati declined by 15 percent from 1999 levels to US$880 in 2003 making it one of the lowest income countries in the Pacific. Kiribati has a narrow economic base with subsistence agriculture – copra being the key export – and fishing as the main economic activities. In 2002-03, agriculture performed poorly, partly because of the decline in copra and seaweed production while fishing license revenues fell by 22 percent. Kiribati's Gross National Income is estimated to have contracted by 5.6 percent and 7.3 percent in 2002 and 2003 respectively, owing to a decline in fishing license revenues.
More information:
Kiribati - Country Overview (29kb pdf), Pacific Islands Strategy, 2005.
 Marshall Islands
TheRepublic of the Marshall Islands is a group of 29 small atolls in the northern Pacific Ocean, with most of its 57,000 population concentrated on the islands of Majuro and Ebeye. A new 20-year Compact agreement (2004-23) with the United States includes a temporary increase in grants to help finance the Compact Trust Fund, created to replace grant funding after 2023. Aid per capita in the Marshall Islands is the second highest among Pacific Island countries at around US$1227 from 1999 to 2002. Economic growth rebounded to an estimated 3 percent during 2002-03, following negative growth in 2001. This reflected stronger government spending flowing from higher external aid flows. Tourism, although it employs less than 10 percent of the labour force, is on the increase. Visitor arrivals increased by 10 percent in 2002 from the 2001 level and continued to rise by 20 percent in 2003. Real GDP was estimated to grow by 1.5 percent in 2004.
More information:
Marshall Islands - Country Overview (24kb pdf), Pacific Islands Strategy, 2005.
 Palau
In 1994, the Republic of Palau became an independent nation and was admitted to the United Nations. Situated in the Micronesian group of islands in the northern Pacific, it has the highest income per capita (US$7500 in 2003) in the Pacific and the highest level of aid per capita (averaging US$1712 over 1999-2002). Palaureceives substantial assistance from the United States through the Compact of Free Association. Its major source of external income is tourism. Forecasts for real GDP growth in 2004 and 2005 are about 2 percent.
More information:
Palau - Country Overview (24kb pdf), Pacific Islands Strategy, 2005.
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 Samoa
Lying half way between Hawaii and New Zealand, the volcanic islands of Samoa are in the very center of Polynesia. The two major islands, Upolo and Savai'i, are home to the majority of the country’s estimated 180,000 people. The Independent State of Samoa is moderately dependent on external grants with aid per capita averaging US$189 from 1999-2002. In 1993, the Government launched a major economic reform program that transformed the economy into one of the better-performing economies in the Pacific. Samoa's economy depends mainly on agriculture, fishing, tourism and remittances from Samoans living overseas. After the destruction wrought by Cyclone Heta in 2004, the agriculture sector regained its strength towards the end of the year. Growth is forecast at 3.2 percent for 2005.
More information:
Samoa - Country Overview (35kb pdf), Pacific Islands Strategy, 2005.
 Solomon Islands
Made up of 992 islands and covering a sea area of more than 1.35 million square kilometres, the Solomon Islands is the third largest archipelago in the South Pacific. Following the arrival of the Australian-led regional assistance mission in 2003 aimed at restoring law and order after three years of civil conflict, the economy has rebounded dramatically. The government is considering the adoption of a new constitution based on a federal system of government. The draft federal constitution is expected to be presented in Parliament in June 2005 for debate. The economy, which relies on agriculture, fishing and forestry remains beset with problems. While growth has increased, it is heavily reliant on unsustainable logging rates with timber exports up by 30 percent in 2003 and still growing. Population growth continues to be very high at 3.1 per cent, the highest in the Pacific. Real GDP growth in 2004-06 is projected to be about 4-5 percent.
More information:
Solomon Islands - Country Overview (45kb pdf), Pacific Islands Strategy, 2005.
 Tonga
The Kingdom of Tonga, the last remaining constitutional monarchy in the Pacific, is experiencing growing calls for democratic reform as its 106,000 people come to terms with worsening social indicators and declining services. Average aid per capita stood at US$205 between 1999 and 2002. In 2004 three cabinet ministers were sacked after the collapse of the State-owned Royal Tongan Airlines. Despite this, tourism is on the increase with visitor numbers up by 7 percent in the first half of 2004 compared to the year before. Remittances from Tongans living overseas far outweighs earnings from commodities, tourism or any other activity. Annual real GDP growth in 2001-04 averaged just over 2 percent. The growth forecast for 2005 is 2.8 percent, with expected growth in agriculture as the main driver.
More information:
Tonga - Country Overview (45kb pdf), Pacific Islands Strategy, 2005.
 Vanuatu
Vanuatu, which is made up of a group of 83 islands in the south-west Pacific, is governed as an independent republic by its indigenous people – the ni-Vanuatu as they are known. Agriculture, fishing and tourism are the main contributors to Vanuatu's economy. Copra production increased by a massive 62 percent in 2002-03 on the year before and continued to rise by 40 percent in the first quarter of 2004 due to high prices in the domestic export market. Coconut oil production has also shot up with output more than doubling in the first three quarters of 2004 compared to the same period the year before. Tourism is also growing as a result of increased airline capacity with visitor numbers increasing by 25 percent in 2003 from 1997 levels. Vanuatu's economic growth forecast for 2005 is 2.6 percent.
More information:
Vanuatu - Country Overview (36kb pdf), Pacific Islands Strategy, 2005.
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