Pacific Finance Sector Briefs: Tonga

Abstract

Tonga faces many of the characteristic challenges of the small Pacific island economies, including geographic remoteness, limited financial and human resources, increased costs of doing business and delivering services, and a small domestic market. Tonga’s economy is narrowly based and strongly dependent on inflows of remittances, which totaled 27.4% of the gross domestic product (GDP) in 2017 (International Monetary Fund [IMF] 2018), and external assistance to supplement domestic revenue. The services sector (public administration, trade, and tourism) is estimated to account for 62.4% of GDP; the industrial sector (manufacturing, utilities, and construction) contributes 18.2%; and the primary sector (agriculture, forestry, and fishing) adds 19.4%.