Nauru: Economy

For a third consecutive year, high fishing license revenues have spurred economic growth and improved fiscal balances in Nauru and other small Pacific island economies. Externally funded infrastructure projects have contributed to higher growth. Inflation has risen with currency depreciation. With higher revenues, all three economies have approved expansionary budgets for 2015. Access to finance remains a key challenge.

Selected economic indicators (%) - Nauru 2015 2016
GDP Growth 8.0 5.0
Inflation 8.0 3.0
Current Account Balance (share of GDP) ... ...

... = data not available.
Source: ADB estimates.

Economic performance

The economy of Nauru grew by 10.0% in 2014. Growth was driven by construction following the recommencement of operations at the Regional Processing Centre for those seeking asylum in Australia and by the liquidation and payout of the Nauru Phosphate Royalties Trust, which boosted private consumption of goods and services - both local and imported. With the Nauru Agreement, its economy has benefitted from rising rates under the vessel day scheme. Revenues from fishing licenses outperformed budget expectations for the third year running as they soared by 110% over the previous year’s actual earnings.

Nauru experienced higher price inflation at 5.0% in Fiscal Year 2014 (ended 30 June 2014) driven by a large increase in household income.

Economic prospects

Growth in Nauru will come off its high, falling to 8.0% as household consumption is boosted by government debt repayments and the liquidation of the Nauru Phosphate Royalties Trust. Growth is seen to moderate further in FY2016 to around 5.0% as the boost to household incomes wanes.

Inflation in Nauru is expected to accelerate in FY2015 to 8.0% on strong underlying demand and to moderate to 3.0% in FY2016 as economic growth slows.

Excerpted from the Asian Development Outlook 2015.