Its economy is predominantly subsistence in nature, with agriculture and fishing accounting for 80 per cent of national income. Tuvalu depends heavily on external assistance, remittances from workers overseas and returns on the Tuvalu Trust Fund. The majority of Tuvaluans are engaged in semi-subsistence agriculture and fishing and government employment accounts for more than 60 per cent of formal employment. Economic growth prospects in Tuvalu are limited and are dominaed by the service industry. Present living standards may be difficult to sustain given slower growth in Government employment and probable reduction of foreign aid to Tuvalu.
Exports are low relative to imports, contributing to high government deficits in recent years.
The Government of Tuvalu aims to restructure the economy in order to encourage economic activity, in particular business investment, employment, and productivity. Thee are relatively good living conditions, most people have adequate shelter and the country is free of serious diseases. Tuvaluans benefit from political stability and strong cultural and community ties. The strength of community organisation, good access to subsistence resources, and fairly equitable distribution of national income guard against poverty. Yet there are large differences in living standards between funafuti and the outer islands, a situation which reflects uneven development and the concentration of economic activity on Funafuti.