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Country Highlights

Vanuatu and Its Economic Growth & Development

Vanuatu has seen steady economic growth and development in recent years which is largely driven by agriculture, tourism and construction. It is also noted that Vanuatu has a small manufacturing sector centered around processing agricultural products. There is potential for growth by adding value to local crops. However—high costs and geographic isolation pose challenges.

As a stepping stone in Vanuatu Economic Growth – agriculture plays a vital role in Vanuatu’s economy and is accounting for around 15% of GDP and providing livelihoods for over 70% of the population. The main agricultural products are- copra, beef, cocoa and kava. Copra production employs around one-third of the workforce. Beef and cocoa exports have been growing steadily over the past decade.

There are opportunities to increase productivity and exports in these sectors through better farming techniques, access to finance, infrastructure development and overseas market access. If productivity can be improved, agriculture has the potential to drive more inclusive economic growth. This is deemed to have a positive impact upon Vanuatu Economic Growth segment.

Vanuatu’s GDP has grown at an average annual rate of 4% over the past 5 years. This steady growth path has been fueled not just by agriculture, but also by fishing, forestry, tourism, construction and services. The growth demonstrates Vanuatu’s economic potential and resources, if key constraints around remoteness, small scale, and disaster vulnerability can be addressed.

Foreign direct investment (FDI) flows into Vanuatu have been increasing over the past five years, reaching $85 million in 2021. The growth in FDI shows investor confidence in the economy. Key areas of investment are- tourism real estate, infrastructure, telecoms and financial services. The government aims to attract more foreign investment to drive economic diversification. By facilitating FDI— Vanuatu can tap global capital and expertise to grow new sectors.

Ongoing investments in roads, ports, airports and electricity are crucial to support economic activity across Vanuatu’s dispersed islands. The Asian Development Bank and Australia are the main funders of infrastructure projects.

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Featured Reports

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