Vanuatu: Country and Foreign Investment
Economy and Currency
Vanuatu has a developing free market economy, which is based primarily on fishing and subsistence or small-scale agriculture. Warmth, rainfall and good soil offer good growing conditions, and crops include coconuts (copra), bananas, coffee and yams. Cattle are raised on coconut plantations and large cattle ranches.
Tourism has become important to Vanuatu. Good international hotels and restaurants are available in Port Vila and Santo, which can both accommodate large cruise liners.
Vanuatu began its development as an offshore financial centre in the 1970s, and has developed regimes for banking, insurance, trust management and shipping.
GDP per head at purchasing power parity is approximately USD4,900 (2011), but growth has lately been disappointing, not helped by earthquakes and tsunamis. The currency is the Vatu (VT), divided into 100 centimes. It is tied to a basket of other currencies, the dollar being predominant. In recent years USD1 has tended to be equal to about VT100. Since two-thirds of the population is engaged in subsistence agriculture, there is no useful measure of unemployment.
The Government derives a high proportion of its revenue from customs duties, which bump up the cost of living for expatriates, and value added tax which, in 2005, raised approximately 37% of the Government’s revenue. There is a considerable contrast between the developed international business areas of Vanuatu, particularly Port Vila, and the remainder of the country.
Vanuatu's economy bounced back following economic contraction in the early part of the decade, growing by 3.5% in 2009, 2.2% (est) in 2010 and 3.8% (est) in 2011. There were about 56,000 tourist visitors in the last quarter of 2011, compared to 67,200 at the same time in 2010. Inflation in 2011 was estimated to be 3.4% (est), having risen from 2.8% (est) in 2010.