Economy of the Marshall Islands

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Economy of Marshall Islands

Copra making on the islands in 1932

Statistics

 $0.214 billion (nominal, 2018 est.)[1]

GDP
 $0.208 billion (PPP, 2018 est.)[1]
GDP growth 1.8% (2016) 4.5% (2017)

2.6% (2018e) 2.4% (2019e)[1]

GDP per capita  $3,879 (nominal, 2018 est.)[1]

 $3,770 (PPP, 2018 est.)[1]

Inflation (CPI) 0.781% (2018 est.)[1]
Main data source: CIA World Fact Book
All values, unless otherwise stated, are in US dollars.

The government of the Marshall Islands is the largest employer, employing 30.6% of the
work force, down by 3.4% since 1988. GDP is derived mainly from payments made by
the United States under the terms of the amended Compact of Free Association. Direct
U.S. aid accounted for 60% of the Marshall Islands' $90 million budget. The economy
combines a small subsistence sector and a modern urban sector.

Contents

 1Subsistence economy
 2Modern economy
 3Coconut oil
 4Digital currency
 5Gross domestic product
 6Marshall Island productivity
 7See also
 8References

Subsistence economy[edit]
The subsistence economy consists of fishing and breadfruit, banana, taro,
and pandanus cultivation. On the outer islands, production
of copra and handicrafts provide cash income. The modern service-oriented economy is
located in Majuro and Ebeye. It is sustained by government expenditures and the U.S.
Army installation at Kwajalein Atoll. The airfield there also serves as a second national
hub for international flights.

Modern economy[edit]
The modern sector consists
of wholesale and retail trade; restaurants; banking and insurance; offshore companies
registration; construction, repair, and professional services; and copra processing.
Company formation in the Marshall Islands is available for residents and non-residents.
Non-residents enjoy privacy benefits and zero local taxes. Copra cake and oil are by far
the nation's largest exports. A tuna processing plant employs 300 workers, mostly
women, at $1.50 per hour. Copra production, the most important single commercial
activity for the past 100 years, now depends on government subsidies. The subsidies,
more a social policy than an economic strategy, help reduce migration from outer atolls
to densely populated Majuro and Ebeye.
Marine resources, including fishing, aquaculture, tourism development, and agriculture,
are top government development priorities. The Marshall Islands sells fishing rights to
other nations as a source of income. In recent years, the Marshall Islands has begun to
offer ship registrations under the Marshall Islands flag. As a small nation, the Marshall
Islands must import a wide variety of goods, including foodstuffs, consumer goods,
machinery, and petroleum products.

Coconut oil[edit]
Power authorities, private companies, and entrepreneurs are experimenting
with coconut oil as an alternative to diesel fuel for vehicles, power generators, and
ships. Coconut trees abound in the Pacific's tropical islands. One liter of oil can be
produced from the copra of 6–10 coconuts.[2]

Digital currency[edit]
In February 2018, the Marshallese government enacted the Sovereign Currency Act of
2018 to develop a national digital currency, the Marshallese Sovereign (SOV), that
would reduce the country's dependence on the U.S. dollar. [3][4] The SOV plan prompted a
vote of no confidence in President Hilda Heine, who was in favour of the scheme, in
November 2018,[5] which failed when parliament deadlocked on the question. [6]
The SOV is intended to serve as a second legal tender for the Marshall Islands,
alongside the U.S. dollar; however, the International Monetary Fund has stated that it
does not meet the definition of a central bank digital currency. [7] The IMF also raised
concerns about macroeconomic and financial integrity risks associated with the digital
currency.[8] Despite the objections of the IMF, the U.S. Treasury Department, and banks,
the Marshallese government has continued to work toward the development of the
SOV.[9] The country is using Algorand open-source blockchain technology for the
SOV ledger.[10]

Gross domestic product[edit]

GDP: purchasing power parity - $150 million (2011 est.)
GDP - real growth rate: 3% (2011 est.)
GDP - per capita: purchasing power parity - $2 500 (2011 est.)
GDP - composition by sector:
agriculture: 22%
industry: 18%
services: 60% (2008)
The islands have few natural resources, and their imports far exceed exports. According
to the CIA, the value of exports in 2013 was approximately $53.7 million while estimated
imports were $133.7 million. Agricultural products include coconuts, tomatoes, melons,
taro, breadfruit, fruits, pigs and chickens. Industry is made up of the production of copra
and craft items, tuna processing and tourism. The CIA estimates that the GDP in 2016
was an estimated $180 million, with a real growth rate of 1.7% while the GDP per capita
was $3,300.[11]

Marshall Island productivity[edit]

Population below poverty line: NA%
Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%
Inflation rate (consumer prices): 5% (2007)
Labor force: NA
Labor force - by occupation: agriculture 48%, industry 12%, services 40% (2008)
Unemployment rate: 8% (2011 est.)
Budget:
revenues: $169.5 million
expenditures: $112.1 million, including capital expenditures of $19.5 million (FY08/09
est.)
Industries: copra, fish, tourism, craft items from shell, wood, and pearls, offshore
banking (embryonic)
Industrial production growth rate: NA%
Electricity - production: 114 GWh (2008)
Electricity - production by source:
fossil fuel: NA%
hydro: NA%
nuclear: NA%
other: NA%
Electricity - consumption: 57 GWh (1994)
Electricity - exports: 0 kWh (1994)
Electricity - imports: 0 kWh (1994)
Agriculture - products: coconuts, cacao, taro, breadfruit, fruits; pigs, chickens
Exports: $132 million (f.o.b., 2008 est.)
Exports - commodities: fish, coconut oil, trochus shells
Exports - partners: United States, Japan, Australia, New Zealand
Imports: $125 million (f.o.b., 2008 est.)
Imports - commodities: foodstuffs, machinery and equipment, fuels, beverages
and tobacco
Imports - partners: United States, Japan, Australia, New Zealand, Guam, Singapore
Debt - external: $68 million (2008 est.)
Economic aid - recipient: approximately $40 million annually from the US
Currency: 1 United States dollar (US$) = 100 cents
Exchange rates: US currency is used
Fiscal year: 1 October - 30 September

See also[edit]
 Ministry of Finance (Marshall Islands)
 Marshall Islands