Editing Economy of Palau

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{{Infobox economy
| country = Palau
| image = Palau-rock-islands20071222.jpg
| image_size = 310px
| caption = [[Rock Islands]] in Palau – Such scenery has helped invite tourism and build up Palau's economy.
| currency = [[United States dollar]]
| fixed exchange = 
| year = 1 October – 30 September
| organs = 
| gdp = $257,700,000
| growth = {{plainlist|
*0.8% (2016) −3.5% (2017)
*1.7% (2018) 0.3% (2019e)<ref name="IMFWEOPW">{{cite web |url=https://www.imf.org/external/pubs/ft/weo/2019/02/weodata/weorept.aspx?pr.x=47&pr.y=11&sy=2016&ey=2021&scsm=1&ssd=1&sort=country&ds=.&br=1&c=565&s=NGDP_RPCH%2CNGDPD%2CPPPGDP%2CNGDPDPC%2CPPPPC%2CPCPIPCH&grp=0&a= |title=World Economic Outlook Database, October 2019 |publisher=[[International Monetary Fund]] |website=IMF.org |access-date=20 October 2019}}</ref>}}
| per capita = {{plainlist|
*{{increase}} $16,736 (nominal, 2019 est.)<ref name="IMFWEOPW"/>
*{{increase}} $16,235 ([[Purchasing power parity|PPP]], 2019 est.)<ref name="IMFWEOPW"/>}}
| per capita rank = 
| sectors = agriculture (3%), industry (19%), services (78%) (2016 estimate)<ref name="CIA World Factbook - Palau economy">{{cite web|url=https://www.cia.gov/the-world-factbook/countries/palau/|title=The World Factbook – Palau|publisher=Central Intelligence Agency|access-date=July 1, 2019}}</ref>
| components = 
| inflation = 1.574% (2018)<ref name="IMFWEOPW"/>
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| cianame = palau
| spelling = Oxford or US spells 'z', US '-or'; 's', '-our' spelling by default
| usebelowbox = yes or no; default value is "yes"; shows/hides bottom box
| presentUS$asdefault = yes or no; default value is "yes"; shows/hides statement about US$
}}

The '''economy of [[Palau]]''' consists primarily of [[tourism]], fishing and [[subsistence agriculture]]. The government is the major employer of the work force, relying heavily on financial assistance from the [[United States]]. The population enjoys a per capita income of more than twice that of the [[Philippines]] and much of [[Micronesia]]. Long-term prospects for the tourist sector have been greatly bolstered by the expansion of air travel in the Pacific and the rising prosperity of leading [[East Asia]]n countries.

Palau's [[per capita GDP]] of $17,000 makes it one of the wealthier Pacific Island states. [[Nominal GDP]] increased by an annual average of nearly 14% from 1983 to 1990, and by an annual rate of over 10% from 1991 to 1997. Growth turned sharply negative in 1998 and 1999 as a result of the [[1997 Asian financial crisis]].

==Industries==
[[Tourism]] is Palau's main industry. Activity focuses on [[scuba diving]] and [[snorkeling]] among the islands' rich marine environment, including the [[Floating Garden Islands]] to the west of [[Koror]]. Major scuba diving sites include [[German Channel]] and [[Blue Corner]]. The number of visitors—85% of whom come from [[Japan]], [[Republic of China|Taiwan]], and the U.S.—reached nearly 67,000 in 1997, more than quadruple the level of a decade earlier. Tourism earned $67 million in foreign exchange for Palau in 1996, (which is 1,000 dollars per person) accounting for roughly half of [[Gross domestic product|GDP]]. Arrivals from Asian countries dropped in 1998 and 1999 due to the regional economic downturn and the depreciation of many Asian currencies against the dollar, which made Palau's dollar-denominated prices more expensive.

The service sector dominates the Palauan economy, contributing more than 80% of GDP and employing three-quarters of the work force. The government alone employs nearly 30% of workers. One of the government's main responsibilities is administering external assistance. Under the terms of the [[Compact of Free Association]] with the United States, Palau will receive more than $450 million in assistance over 15 years, $30 million per year, and is eligible to participate in more than 40 federal programs. The first grant of $142 million was made in 1994. Further annual payments in lesser amounts will be made through 2009. U.S. grants in 1999 totaled $24 million.

Construction is the most important industrial activity, contributing over 9% of GDP. Several large infrastructure projects, including the rebuilding of the bridge connecting Koror and [[Babeldaob]] Islands after its collapse in 1996 and the construction of a highway around the rim of Babeldaob, boosted activity at the end of the 1990s.

Agriculture is mainly on a subsistence level, the principal crops being coconuts, root crops, and bananas. Fishing is a potential source of revenue, but the islands' tuna output dropped by over one-third during the 1990s.

There are no [[Patent]] Laws in Palau. [http://www.billanderson.com.au/Gazetteer-Patents.htm Gazetteer – Patents] {{Webarchive|url=https://web.archive.org/web/20180926141115/http://www.billanderson.com.au/Gazetteer-Patents.htm |date=2018-09-26 }}

==Economic challenges==
The main economic challenge confronting Palau is to ensure the long-term viability of its economy by reducing its reliance on foreign assistance.<ref name=":0">{{Cite journal |last=Shuster |first=Donald R. |date=2009 |title=The Republic of Palau and its Compact, 1995–2009 |url=https://www.jstor.org/stable/25701188 |journal=The Journal of Pacific History |volume=44 |issue=3 |pages=325–332 |issn=0022-3344}}</ref> Palau has created a trust fund to be drawn upon after the cessation of Compact grants, the value of which had grown to $140 million by the beginning of 2009. Also, in the late 1990s, Palau was affected by the [[1997 Asian Financial Crisis]], and their economy suffered. The island took a huge hit during the [[COVID-19 pandemic]] with global travel restrictions putting tourism to a halt. The [[Asian Development Bank]] projects that the GDP of Palau contracted by 9.5% in 2020.<ref>{{cite web |title=Palau Economy |url=https://www.adb.org/countries/palau/economy |publisher=Asian Development Bank |access-date=26 April 2021}}</ref>

Historically, the United States has provided substantial assistance to Palau.<ref name=":0" /> Japan and Taiwan have provided funding for infrastructure projects in Palau.<ref name=":0" />

== Tourism challenges ==
In order to tackle mass tourism, the Palau Legacy Project, a [[sustainable tourism]] body, created a visa policy for the island of Palau to protect the nation from environmental damage. The "Palau Pledge<ref>{{Citation|last=Stuart Alexander|title=Palau Pledge – Case Study|date=2018-04-29|url=https://www.youtube.com/watch?v=0tnXDgOr068 |archive-url=https://ghostarchive.org/varchive/youtube/20211211/0tnXDgOr068| archive-date=2021-12-11 |url-status=live|access-date=2019-03-01}}{{cbignore}}</ref>" was the most awarded campaign of 2018 according to the WARC Creative 100 index.<ref>{{Cite web|url=https://www.mediapost.com/publications/article/332588/2018s-most-awarded-campaign-havas-palau-pledge.html|title=2018's Most Awarded Campaign: Havas' Palau Pledge|website=www.mediapost.com|language=en|access-date=2019-03-01}}</ref>

==Economic statistics==

===Income===
'''Gross Domestic Product (GDP)''':
[[purchasing power parity]] – $132 million (2009 est.)
(GDP estimate includes U.S. subsidy)

'''GDP – real growth rate''':
1% (2009 est.)

'''GDP – per capita''':
purchasing power parity – $8 500 (2009 est.)

'''GDP – composition by sector'''
* ''agriculture'': N/A
* ''industry'': N/A
* ''services'': N/A

'''Population below poverty line''':
N/A

'''Household income or consumption by percentage share'''
* ''lowest 10%'': N/A
* ''highest 10%'': N/A

===Inflation===
'''Inflation rate (consumer prices)''':
3.4% (2000 est.)

===Workforce===
'''Labor force''':
10 200 (2000)

'''Labor force – by occupation'''
* ''Agriculture'': 20%
* ''Industry'': N/A
* ''Services'': N/A
(1990)

'''Unemployment rate''':
4.2% (2000 est.)

===Budget===
* ''Revenues'': $57.81 million
* ''Expenditures'': $80.8 million, including capital expenditures of $17.1 million (FY 98/99 est.)

===Industries===
Dominant industries include tourism, craft items (from shell, wood, pearls), construction, and garment making.

'''Industrial production growth rate''':
N/A

===Electricity===
'''Electricity – production''':
200 MWh (1996)

'''Electricity – production by source'''
* ''Fossil fuels'': 85%
* ''Hydro'': 15%
* ''Nuclear'': 0%
* ''Other'': 0%
(1996)

'''Electricity – consumption''':
200 MWh (1996)

'''Electricity – exports''':
0 kWh (1996)

'''Electricity – imports''':
0 kWh (1996)

===Trade===
'''Agriculture – products''':
coconuts, [[copra]], [[cassava]] (tapioca), sweet potatoes

'''Exports''':
$18 million (f.o.b., 2001)

'''Exports – commodities''':
[[trochus]] (type of shellfish), tuna, copra, handicrafts

'''Exports – partners''':
Japan 70.1%, South Korea 15.1% United States 7.1% (2019)<ref>{{Cite web|url=https://oec.world/en/profile/country/plw|title=Palau (PLW) Exports, Imports, and Trade Partners &#124; OEC|website=OEC – The Observatory of Economic Complexity}}</ref>

'''Imports''':
$99 million (f.o.b., 2001 est.)

'''Imports – commodities''':
machinery and equipment, fuels, metals, foodstuffs

'''Imports – partners''':
South Korea 18.7%, China 18.2%, Taiwan 16.9%, United States 16.5%, Japan 16%, (2019)

===Debt and aid===
'''Debt – external''':
$18.4 Billion (2014 estimate).<ref>{{cite web |title=Palau |url=https://www.cia.gov/the-world-factbook/countries/palau/ |website=CIA World Factbook |access-date=31 May 2022}}</ref> Palau ranks as one of the countries with the [[List of countries by external debt|highest external debt]] as a share of GDP.

'''Economic aid – recipient''':
$155.8 million. Note: the Compact of Free Association with the U.S., entered into after the end of the UN [[trusteeship]] on 1 October 1994, provides Palau with up to $700 million in U.S. aid over 15 years in return for furnishing military facilities.

== References ==
{{Reflist}}

{{Oceania in topic|Economy of}}

[[Category:Economy of Palau| ]]