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Economic Overview

The economy of the Marshall Islands is closely linked to that of the United States, and the U.S. also controls the security and defense of the islands. The country is in the midst of a post-pandemic recovery. Real GDP declined by 4.5% in the fiscal year ending September 2022 due to lower fisheries production arising from the sale of a fishing vessel by a domestic operator. According to the IMF, growth is expected to strengthen to 3% in FY2023 and FY2024 on the back of improvements in copra production, fishing revenues, and transshipment activities. 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 decreased to 18.1% in 2023 from 19.2% one year earlier, and is expected to remain relatively stable in coming years thanks to grant assistance from development partners (international aid contributes 70% of the state budget), along with domestic resource mobilization and reprioritization of expenditures by the government. Sizable budgetary grants are expected under the Compact Agreement of the Republic of Marshall Islands with the United States: the new COFA agreement was approved by the U.S. on March 9, 2024, and will deliver a total of USD 6.5 billion in assistance to the three North Pacific countries (Marshall Islands, Palau, and Micronesia) over the next 20 years starting in FY24. In FY2022, despite falling taxes and receding COVID-related grants, RMI recorded a fiscal surplus of 0.7% of GDP due to a contraction in expenditure of 4.5% of GDP as spending on goods and services, and investments fell. A balanced budget was achieved as COVID-19-related grants were withdrawn in FY 2023; while a fiscal surplus of 1.7% of GDP is projected for FY24, with modest surpluses expected from FY25 onwards due to new Compact funding (World Bank). Inflation moderated to 3% in FY23 from 5% in FY22 as supply chain disruptions eased, leading to a reduction in food and fuel prices. In line with easing global food and energy prices, inflation in FY24 is expected to subside to 2.5%, before further declining to 2% from FY25 onwards. The services and banking sectors are relatively well developed and represent about two-thirds of the country's real GDP, while industry contributes around 10.3%. 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 the digital economy.

The government of the archipelago does not provide official figures on unemployment, which is estimated to be relatively high (especially for young people). The RMI government is the country’s largest employer, employing roughly 46% of the salaried workforce. The Marshall Islands are classified as a lower-middle-income country by the World Bank, with a GDP per capita (PPP) estimated at only USD 7,092 as of 2022.

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD)
GDP (Constant Prices, Annual % Change) -
GDP per Capita (USD) 5,7866,3076,7116,9437,150
General Government Gross Debt (in % of GDP) 19.417.717.317.818.3
Inflation Rate (%)
Current Account (billions USD)
Current Account (in % of GDP) 17.511.56.21.7-1.5

Source: IMF – World Economic Outlook Database , October 2021

Country Risk

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Main Sectors of Industry

Breakdown of Economic Activity By Sector Agriculture Industry Services
Value Added (in % of GDP) 25.3 10.3 65.3
Value Added (Annual % Change) 8.8 -3.7 -0.4

Source: World Bank - Latest available data.

Monetary Indicators 20162017201820192020
Euro (EUR) - Average Annual Exchange Rate For 1 USD 0.940.890.850.890.88

Source: World Bank - Latest available data.



Foreign Trade

 The Marshall Islands is very open to foreign trade, which accounts for 116% of its GDP (World Bank, latest data available). Custom duties are relatively low, and the country has very few trade barriers. However, the Marshall Islands has very limited natural resources and consequently little base for exports. In 2022, the country mainly exported (including re-exports) passenger and cargo ships (USD 642 million), special-purpose ships (USD 156 million), refined petroleum (USD 95.3 million), recreational boats (USD 91.1 million), and non-fillet frozen fish (USD 55.6 million), whereas imports were led by passenger and cargo ships (USD 6.8 billion), refined petroleum (USD 2.76 billion), recreational boats (USD 207 million), additive manufacturing machines (USD 181 million), and centrifuges (USD 97.9 million – data OEC).

According to the latest data by OEC, in 2022, the main destinations for the country’s exports were Germany (29.8%), Denmark (14.6%), United Kingdom (14.5%), Malta (6%), and Indonesia (5.3%); while the main countries for imports were China (32.6%), South Korea (30.6%), Japan (11.6%), Taipei (4.1%), and Brazil (4%). Overall, the country lacks adequate infrastructure and airline transportation and is fairly far from the developed economies of the region (e.g., Japan, Australia, etc.). Trade policy is conducted by the COFA Agreement under which the country has duty-free access to the U.S. market and is also a member of the Pacific Island Countries Trade Agreement (PICTA) and the South Pacific Regional Trade and Economic Cooperation Agreement (SPARTECA).

The country imports in high volumes, while its exports are very weak, resulting in an enormous trade deficit. According to figures from OEC, in 2022, the Marshall Islands exported USD 1.1 billion worth of goods (down by 21.4% year-on-year), whereas imports were stable (to USD 10.6 billion). Data from the World Bank show that the country's external trade deficit stood at 23.1% of GDP in 2022, down from 37.4% one year earlier.

Foreign Trade Values 20192020202120222023
Imports of Goods (million USD) 68748194103
Exports of Goods (million USD) 5544909659
Imports of Services (million USD) 67474043n/a

Source: World Trade Organisation (WTO) ; Latest available data

Foreign Trade Indicators 20172018201920202021
Foreign Trade (in % of GDP) 125.9129.0152.3108.4116.2
Trade Balance (million USD) -58-331410-12
Trade Balance (Including Service) (million USD) -83-46-38-45-76
Imports of Goods and Services (Annual % Change) 10.92.336.3-29.3-8.3
Exports of Goods and Services (Annual % Change) -
Imports of Goods and Services (in % of GDP) 86.689.2115.172.969.6
Exports of Goods and Services (in % of GDP) 39.339.837.235.546.6

Source: World Bank ; Latest available data

Foreign Trade Forecasts 20232024 (e)2025 (e)2026 (e)2027 (e)
Volume of exports of goods and services (Annual % change)
Volume of imports of goods and services (Annual % change)

Source: IMF, World Economic Outlook ; Latest available data

Note: (e) Estimated Data

International Economic Cooperation
Member of Pacific Islands Forum (PIF)