Nauru: Economy

Economic growth in Nauru is estimated to have been slower than forecast in financial year 2015, but is projected to exceed the forecast in financial year 2016.

Selected economic indicators (%) 2015 2016
  ADO 2015 Update ADO 2015 Update
GDP Growth 8.0 6.8 5.0 5.4
Inflation 8.0 11.4 3.0 10.0
Current Account Balance (share of GDP) ... ... ... ...

... = data not available.
Source: Asian Development Outlook 2015; Asian Development Outlook 2015 Update

Economic performance

The lower estimate for Nauru's economic growth in the financial year (FY) 2015 reflects underspending of the budget and problems at the country’s port that disrupted fuel and other imports as well as phosphate exports. Despite these problems, the economy continues to be buoyed by the presence of the Australian Regional Processing Centre for asylum seekers, large increases in public spending, and higher consumer spending as households benefit from government debt repayments and the liquidation of the Nauru Phosphate Royalties Trust.

The government has adopted a number of measures intended to strengthen fiscal sustainability. It raised electricity tariffs, privatized fuel procurement and distribution, and introduced an employment and services tax for nonresidents. It plans to impose a new business profits tax in January 2016.

The recent signing of a 5-year plan with the Government of Australia should bring greater stability to revenues from the processing center. The government is also aiming to establish a trust fund to save for future generations windfall revenues from the processing center, phosphate exports, and fishing licenses. The FY2016 budget allocated A$10.4 million for this purpose, bringing appropriations for the proposed fund to A$20.4 million.

Economic prospects

Growth will slow in FY2016 as budgeted expenditures stabilize around current levels, matching the expected plateau in government revenues. Activity at the processing center is thought to have peaked in FY2015.

Continued progress in budget implementation, coupled with an expected recovery in phosphate exports, should deliver continued Gross Domestic Product growth into FY2016, albeit at a slower pace.

The Nauru Disaster Risk Management Unit is preparing a tsunami support plan to improve tsunami preparedness, as well as response and recovery processes.

Excerpted from the Asian Development Outlook 2015 Update.


This page was generated from on 28 November 2015