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The Kingdom of Tonga is an archipelago of more than 170 islands scattered over the central southern area of the South Pacific, comprising four major island groups. The islands cover a total land area of 750 km² and are characterized by tropical rainforests, active volcanoes and coral beaches. About 36 of the islands are uninhabited. The population of 102,000 is almost entirely made up of indigenous Polynesians, and is currently growing at an annual rate of 0.3 per cent.

Like other Pacific islands, Tonga is vulnerable to natural calamities such as cyclones, earthquakes, floods, drought and volcanic eruptions.

Agriculture

Agriculture is the mainstay of Tonga's economy, contributing about 29 per cent of gross domestic product (GDP). The soils of the islands are suitable for growing a wide range of fruits and vegetables, provided that crops are rotated and fertility levels are controlled through use of fertilizers. The main crops grown for home consumption are yam, taro, sweet potato and cassava.

Agriculture is expected to play an increasingly important role in export earnings. In 2002 the economy was boosted by rising international prices for cash crops. Tonga is developing production of high-value crops, including banana, watermelon, squash and vanilla, to serve specialized markets abroad. There is also good potential for developing the fisheries sector.

The ecosystems of the islands are fragile. As more land is cleared for agriculture and settlement, deforestation has resulted in soil degradation, erosion and damage to marine resources. The islands are highly dependent on natural resources for their livelihoods, and good management of the land is essential to economic development.

Economy

Tonga is considered a lower-middle income country. Like other Pacific island countries, it is small in size, remote and comprised of widely scattered islands. All of these factors are obstacles to economic growth and entail high production, transport and communication costs.

Growth rates throughout the Pacific Islands declined over the 1990s, and have continued to fall. Tonga's GDP is now growing at a rate of about 1.6 per cent. The country is largely dependent on natural resources for income. Agriculture, fishing and tourism are the main sources of revenue, and future economic growth will depend on their development. Although traditional exports such as coconut products are in decline, there is growing demand for non-traditional crops such as vanilla and squash. The tourist industry is still in development and could become an important source of revenue. Remittances sent back to the country by Tongans working abroad provide a steady source of foreign exchange.