Niue is totally dependent on official aid from New Zealand, which supplies three-quarters of the local budget. Overseas aid totals about NZ$14 million a year or NZ$10,000 per capita, one of the highest levels in the South Pacific.
Most of the money is used to support the infrastructure, which maintains an artificial, consumer-oriented standard of living. Many government services are provided free and virtually every household on the island has at least one and usually two government workers. The private section depends on their spending and government spending.
Imports are 45 times higher than exports, one of the largest such imbalances in the world. Transportation difficulties have always hampered exports. Tourism, the sale of postage stamps to philatelists, and limited royalties from overseas fishing companies help balance the island's cash flow. Top level domain names bearing Niue's internet ending .nu are marketed worldwide through www.nunames.nu. Such domains are especially popular in Sweden as "nu" means "now" in Swedish.
In 1993, Niue set up a "financial center" similar to those of Vanuatu and the Cook Islands to support overseas firms trying to avoid taxation in their real places of business. Since then, a Panama City law firm has registered over 6,000 "international business companies" in Niue, and the fees they pay account for 10 percent of government revenue.
In 2001, rumors began circulating that the South American cocaine cartels were laundering money through Niue and several large American banks started blocking transfers to the island. After the Financial Action Task Force representing the world's largest economies threatened the country with sanctions in 2002, Niue announced that it was shutting down its offshore banking facilities but not the company register. Since then, the Task Force has taken Niue off its blacklist of "non-cooperative jurisdictions."
In 1996, the New Zealand government spent NZ$10 million extending the airport runway and building the Matavai Resort in the hope of promoting tourism to Niue. Even so, Niue's hotels stand empty most of the time. Of the 3,000 "tourists" who arrive each year, half are generally overseas Niueans visiting relatives. Seventy percent of visitors are New Zealanders.
Although attempts have been made to stimulate agriculture, the economy is continually undermined by the emigration of working-age Niueans to New Zealand (to which Niueans have unhindered entry).
In the past, small quantities of passion fruit, lime juice, canned coconut cream, and honey have been exported. The coconut cream factory closed in 1989 after a hurricane wiped out the island's coconut plantations; in 1990, Hurricane Ofa destroyed the lime and passion fruit crops. Periodic droughts have also taken a heavy toll.
Noni is the current agricultural boom crop with a processing plant opened in 2004. Taro, yams, cassava, sweet potatoes, papaya, and bananas are actively cultivated in bush gardens for personal consumption by the growers. Local farmers also grow vanilla, and a few pigs, poultry, and beef cattle are kept.
Saturday is bush day, when people go inland to clear, plant, and weed their gardens. Now farmers are turning to organic produce to serve the lucrative natural foods market in New Zealand. Efforts are being made to make Niue the first pesticide-free, entirely organic country in the world.