tropical cyclones (January to April); volcanic eruption on Aoba (Ambae) island began on 27 November 2005, volcanism also causes minor earthquakes; tsunamis

volcanism: significant volcanic activity with multiple eruptions in recent years; Yasur (361 m), one of the world's most active volcanoes, has experienced continuous activity in recent centuries; other historically active volcanoes include Aoba, Ambrym, Epi, Gaua, Kuwae, Lopevi, Suretamatai, and Traitor's Head

This South Pacific island economy is based primarily on small-scale agriculture, which provides a living for about two thirds of the population. Fishing, offshore financial services, and tourism, with more than 330,000 visitors in 2017, are other mainstays of the economy. Tourism has struggled after Efate, the most populous and most popular island for tourists, was damaged by Tropical Cyclone Pam in 2015. Ongoing infrastructure difficulties at Port Vila’s Bauerfield Airport have caused air travel disruptions, further hampering tourism numbers. Australia and New Zealand are the main source of tourists and foreign aid. A small light industry sector caters to the local market. Tax revenues come mainly from import duties. Mineral deposits are negligible; the country has no known petroleum deposits.

Economic development is hindered by dependence on relatively few commodity exports, vulnerability to natural disasters, and long distances from main markets and between constituent islands. In response to foreign concerns, the government has promised to tighten regulation of its offshore financial center.

Since 2002, the government has stepped up efforts to boost tourism through improved air connections, resort development, and cruise ship facilities. Agriculture, especially livestock farming, is a second target for growth.