Tonga - Overview of economy

On a chain of small islands in the South Pacific, Tonga's economy relies on several basic elements, including subsistence production (making enough to survive), agricultural exports, the remittances (money sent home by former citizens working abroad) of Tongan migrants, and international aid. In the villages of Tonga, there is a great reliance on subsistence production of food and other items. There is no reliable survey of the number of people working in subsistence activities, but if it is assumed that most of the adult population not formally employed are primarily subsistence producers, then about 28,000 are in this category. In 1996, about 29,400 persons were engaged in wage and salary employment, with a further 4,500 listed as unemployed.

Agricultural products and fish have always been the mainstays of the export economy. Tourism is relatively small-scale, employing only about 1,400 people in the mid-1990s, but it showed some growth in the decade up to 1997, with the number of visitors increasing by about 5 percent per year.

The Tongan economy also remains heavily dependent on 2 types of transfers from overseas, which together account for 27 percent of GDP. The private remittances

of Tongan migrants in other countries are an important source of income for many families in Tonga. Government expenditure is supported by international aid, mainly originating from Australia, Japan, New Zealand, the Asian Development Bank, and the European Union.

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