Palau - Overview of economy

Given its small population, its inaccessible location, poor infrastructure , lack of skilled labor, and the absence

of any significant minerals, it is remarkable that the economy generates as much income for its citizens as it does. Gross domestic product (GDP) per capita , at $6,696 in 1998, places Palau in the upper-middle income group of countries in the world economy. This is increased by significant receipts from the United States, which add around 16 percent to the income generated domestically.

Most employment, 89 percent in 1995, was in the services sector. The agriculture sector is very small in terms of both its contribution to total output and employment, while the industry sector is also small and is mainly made up of construction. Fish is the main export, and tourism is the main foreign exchange earner. Almost all commodities, apart from some food, are imported.

Economic growth can vary yearly, affected by fashions in tourism and by the economic conditions in the countries of origin of tourists. Since 1992, the level of GDP has remained almost unchanged, with a zero growth rate over the period. However, the volatility is observed in a fall in GDP of 12.3 percent in 1993 and an expansion of 14.3 percent in 1995.