Economy
GDP (2005): $343.6 million.
Per capita income (2005): $1,576.
Real growth rate (2005): 3.1%.
Avg. inflation rate (2005): 2.6%.
Natural resources: Forests, agricultural land, marine resources.
Agriculture: Products--copra, cocoa, coffee, cattle, timber.
Industry: Types--copra production, beef processing, sawmilling, tourism, financial services.
Trade (2003): Exports--$135.27 million: coconut oil, copra, kava, beef. Major markets--EU 44.9%, Australia 12.1%, Japan 6.8%, New Caledonia 4.6%. Imports--$181.4 million: machines and transport equipment, food and live animals, basic manufactures, mineral fuels. Major suppliers--Australia 42.5%, New Zealand 13.0%, Fiji 8.6%, Singapore 6.2%.
Exchange rate (2005 avg.): 109.25 vatu=U.S.$1.

GEOGRAPHY
Vanuatu is a 'Y' shaped archipelago of 83 islands. It is located about 1,750 kilometers east of Australia. Fiji lies to the east, New Caledonia to the south, and the Solomon Islands to the northwest, all within the area of the South Pacific called Melanesia.

The two largest islands, Espiritu Santo (or Santo) and Malakula, account for nearly one-half of the total land area. They are volcanic, with sharp mountain peaks, plateaus, and lowlands. The larger islands of the remaining half also are volcanic but are overlaid with limestone formations; the smaller ones are coral and limestone. Volcanic activity is common with an ever-present danger of a major eruption, the last of which occurred in 1945. Rainfall averages about 2,360 millimeters (94 in.) per year but can be as high as 4,000 millimeters (160 in.) in the northern islands.

VANUATU ECONOMY
Vanuatu's economy is primarily agricultural; 80% of the population is engaged in agricultural activities that range from subsistence farming to smallholder farming of coconuts and other cash crops. Copra is by far the most important cash crop (making up more than 35% of the country's exports), followed by timber, beef, and cocoa. Kava root extract exports also have become important. In addition, the government has maintained Vanuatu's preindependence status as a tax haven and international off-shore financial center. About 2,000 registered institutions offer a wide range of offshore banking, investment, legal, accounting, and insurance and trust-company services. Vanuatu also maintains an international shipping register in New York City. In 2002, following increasing international concern over money laundering, Vanuatu increased oversight and reporting requirements for its off-shore sector.

Coconut oil, copra, kava and beef account for more than 75% of Vanuatu's total agricultural exports and agriculture accounts for approximately 20% of GDP. Tourism is Vanuatu's fastest-growing sector, having comprised 40% of GDP in 2000. Industry's portion of GDP declined from 15% to 10% between 1990 and 2000. Government consumption accounted for about 27% of GDP.

Vanuatu is a small country, with only a few commodities, mostly agricultural, produced for export. In 2003, imports exceeded exports by a ratio of nearly 3 to 2. However, this was partially offset by high services income from tourism, keeping the current account balance at $-28.4 million.

Vanuatu claims an exclusive economic zone of 680,000 square kilometers and possesses substantial marine resources. Currently, only a limited number of ni-Vanuatu are involved in fishing, while foreign fleets exploit this potential.

In 1997 the government, with the aid of the Asian Development Bank, committed itself to a 3-year comprehensive reform program. During the first year of the program the government adopted a value-added tax, consolidated and reformed government-owned banks, and started a 10% downsizing in the public service. An important part of the reform installed career civil servants as Director Generals in charge of each ministry, helping to ensure continuity of service despite the frequent changes in government.