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Concept
Economy of Nauru
Summary
The economy of Nauru is tiny, based on a population in 2019 of only 11,550 people. The economy has historically been based on phosphate mining. With primary phosphate reserves exhausted by the end of the 2010s, Nauru has sought to diversify its sources of income. In 2020, Nauru's main sources of income were the sale of fishing rights in Nauru's territorial waters, and revenue from the Regional Processing Centre (an offshore Australian immigration detention facility).
Nauru is dependent on foreign aid, chiefly from Australia, Taiwan and New Zealand.
In the years after independence in 1968, Nauru possessed the highest GDP per capita in the world due to its rich phosphate deposits. In anticipation of the exhaustion of its phosphate deposits, substantial amounts of the income from phosphates were invested in trust funds aimed to help cushion the transition and provide for Nauru's economic future. However, because of heavy spending from the trust funds, including some wasteful foreign investment activities, the government is now facing virtual bankruptcy. To cut costs the government called for a freeze on wages, a reduction of overstaffed public service departments, privatization of numerous government agencies, and closure of some of Nauru's overseas consulates. Economic uncertainty caused by financial mismanagement and corruption, combined with shortages of basic goods, resulted in some domestic unrest. In 2004 Nauru was faced with chaos amid political strife and the collapse of the island's telecommunications system. Moreover, the deterioration of housing and hospitals has continued.
Few comprehensive statistics on the Nauru economy exist, with estimates of Nauru's GDP varying widely. According to the U.S. State Department, Nauru's GDP volume was US20 million foreign aid a year from Australia.
The nations economy has grown significantly since 2012, with help from the reopening of the Nauru Regional Processing Centre, funded by Australia.
Official source
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