flag Marshall Islands Marshall Islands: Economic Outline

Economic Indicators

For the latest updates on the key economic responses from governments to adress the economic impact of the COVID-19 pandemic, please consult the IMF's policy tracking platform Policy Responses to COVID-19.

The economy of the Marshall Islands is closely linked to that of the United States, and the U.S. also controls the security and defence of the islands. After growing at a steady pace in recent years, the country’s economy was impacted by the COVID-19 global crisis, with GDP dropping an estimated 2.4% in 2020 and 1.5% in 2021 (IMF). According to the latest forecast from the International Monetary Fund, growth is projected at 3.5% this year and 2.5% in 2023, still below the pre-pandemic average. The country’s economic geography represents a binding constraint to achieving sustainable long-term growth, being characterized by extreme remoteness, small size, geographic dispersion, environmental fragility and limited natural resources.

The country’s debt-to-GDP ratio increased to 14.4% in 2021, from 19% one year earlier, and is expected to float around 15% in the coming years, thanks to grant assistance from development partners (international aid contributes 70% of the state budget), along with government’s own funds from domestic resource mobilization and reprioritization of expenditures. The Marshall Islands also received temporary unemployment assistance from the U.S. under the 2020 Coronavirus Aid, Relief, and Economic Security Act. Nevertheless, sizable budgetary grants under the Compact Agreement of the Republic of Marshall Islands with the United States will be lost with the expiration of the agreement in 2023. The loss would be only partially compensated by disbursements from a Compact Trust Fund (CTF) set up for this purpose. The country’s current account is expected to remain positive by 6% in 2022, marking a significant contraction from the 2020 level of 13.4% (Asian Development Bank). Inflation stood at 0.6% in 2021 and is projected to gradually increase to 1.6% this year and 2% in 2023 (IMF). The government is attempting to develop the country's marine resources (fishing and aquaculture) as well as tourism and agriculture. However, the tourism sector is hard to develop due to the high cost of access to the islands. Lastly, the services and banking sectors are relatively well developed and represents about half of the country's real GDP, while industry contributes around 12.8%. The Marshallese government made cryptocurrency legal tender in May 2018 alongside the U.S. dollar: with this new currency, called sovereign or SOV, the Marshall Islands became the first country in the world to fully embrace digital economy.

The government of the archipelago does not provide official figures on unemployment, which is estimated to affect 6.4% of the population and 26% of the youth according to the World Bank’s latest figures from 2019. The Marshall Islands are classified as an upper-middle-income country by the World Bank, although the GDP per capita (PPP) was estimated at only USD 3,767 as of 2021.

 
Main Indicators 20202021 (e)2022 (e)2023 (e)2024 (e)
GDP (billions USD) 0.240.260.270.290.30
GDP (Constant Prices, Annual % Change) -1.61.71.53.22.0
GDP per Capita (USD) 44455
General Government Gross Debt (in % of GDP) 21.619.820.821.624.3
Inflation Rate (%) -0.72.66.42.22.1
Current Account (billions USD) 0.040.01-0.01-0.01-0.01
Current Account (in % of GDP) 16.23.2-4.0-2.7-2.3

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data


 
Monetary Indicators 20162017201820192020
American Dollar (USD) - Average Annual Exchange Rate For 1 GBP 1.351.291.331.251.28

Source: World Bank - Latest available data.

 

Main Sectors of Industry

 
Breakdown of Economic Activity By Sector Agriculture Industry Services
Value Added (in % of GDP) 20.2 14.1 68.0
Value Added (Annual % Change) 31.7 15.2 1.0

Source: World Bank - Latest available data.

 
 

Country Risk

See the country risk analysis provided by Coface.

 

Indicator of Political Freedom

Definition:

The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Ranking:
Free
Political Freedom:
1/7

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House

 

Sources of General Economic Information

Main Online Newspapers and Portals
BBC Country, Marshall Islands
Marshall Islands News Sites, Newspapers and Guides
Marshall Islands News
Useful Resources
Government of the Republic of the Marshall Islands
Bank of Marshall Islands
 
 

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Latest Update: October 2022

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