Economic Outline

flag East-Timor East-Timor: Economic Outline

Economic Indicators

East Timor is a young nation which became independent in 2002. Despite impressive progress since independence, East Timor is still one of the poorest countries in Asia and its economy is heavily dependent on foreign aid and oil. However, oil and gas production ended in 2023, leaving coffee as the main commodity export. After experiencing an 8.3% decline in 2020 due to the pandemic, the non-oil economy rebounded with growth rates of 2.9% in 2021 and 4.0% in 2022. However, despite these improvements, economic output has yet to reach pre-pandemic levels. Challenges in budget implementation, exacerbated by electoral processes, led to a deceleration of growth in the non-oil economy, estimated at 2.1% in 2023. Economic growth is anticipated to average 4.1% in both 2024 and 2025. The government's emphasis on capital expenditure and infrastructure investment, reflected in the budget increase from 18.4% of GDP in 2023 to 24.5% of GDP in 2024, is expected to stimulate growth. However, export expansion might encounter limitations, primarily due to reliance on coffee as the primary export commodity (data World Bank).

The fiscal deficit is projected to have decreased to 44.4% of GDP from nearly 60% in 2022. It is anticipated to remain at approximately 45% of GDP over the medium term. Government spending in 2023 amounted to 87% of GDP, ranking among the highest globally, while non-oil-related revenue accounted for just 14.1% of GDP. To address the significant budget deficit, Timor-Leste is tapping into its diminishing Petroleum Fund. The Fund's balance stood at 18.2 billion by the end of 2023, equivalent to 10.6 times GDP. However, with the cessation of oil and gas production, the Fund's revenues are outweighed by the annual withdrawals required to fund the budget. Official estimates project that the Petroleum Fund will be depleted by 2034. Consumer price inflation stayed elevated, averaging 8.4% throughout 2023, propelled by rising prices of food, non-alcoholic beverages, alcohol, and tobacco. However, price pressures were mitigated by the appreciation of the US Dollar, the official currency in Timor-Leste. Inflation is expected to decrease in 2024, driven by a slowdown in global commodity prices. Several downside risks could impact the outlook. Sluggish global growth may reduce returns from the Petroleum Fund. Extreme weather events, particularly linked to El Niño, could disrupt rice availability and imports. Moreover, elevated energy prices are expected to raise domestic transportation and electricity expenses. The IMF recommends that Timor-Leste pursue an ambitious reform agenda to foster a robust private sector. This includes reducing public expenditure to match the economy's capacity for absorption and enhancing its quality, particularly by prioritizing investment in human and physical capital. Gradual mobilization of domestic revenue is advised. To provide a strategic framework, a medium-term fiscal plan should ensure fiscal sustainability. Additionally, to stimulate growth and broaden the economic base, structural reforms are necessary. These reforms should address barriers in agriculture and tourism, promote digitalization to enhance productivity, and tackle legal obstacles hindering business operations and financial growth.

With 60% of the population under 25 years of age, East Timor is one of the youngest countries in the world. The country has achieved lower middle-income status and aspires to become an upper middle-income country by 2030. Unemployment was estimated at only 1.8% in 2023 by the World Bank; however, labor force participation has remained stagnant at around 30.6% over the past decade. There has been a decline in labor productivity, and employment is increasingly clustered in sectors with the lowest labor productivity. When measured at the international level (USD 2.15 in 2017 PPP), the poverty rate was estimated at 27.5% of the population in 2023 (it was 40.9% in 2007).

Main Indicators 20222023 (E)2024 (E)2025 (E)2026 (E)
GDP (billions USD) 3.212.341.992.142.29
GDP (Constant Prices, Annual % Change)
GDP per Capita (USD) 2,4071,7311,4541,5401,627
General Government Gross Debt (in % of GDP) 7.911.814.214.514.2
Inflation Rate (%)
Current Account (billions USD) 0.27-0.37-0.84-0.94-1.03
Current Account (in % of GDP) 8.5-16.0-42.0-43.7-45.0

Source: IMF – World Economic Outlook Database - October 2021.

Note: (e) Estimated Data

Monetary Indicators 20162017201820192020
American Dollar (USD) - Average Annual Exchange Rate For 1 MUR

Source: World Bank - Latest available data.


Main Sectors of Industry

Breakdown of Economic Activity By Sector Agriculture Industry Services
Employment By Sector (in % of Total Employment) 41.6 14.4 44.0
Value Added (in % of GDP) 8.6 62.3 30.5
Value Added (Annual % Change) 5.5 5.7 6.2

Source: World Bank - Latest available data.


The Active Population in Figures

Labour Force 530,711545,809560,164

Source: International Labour Organization, ILOSTAT database

Total activity rate 67.21%67.45%67.49%
Men activity rate 72.47%72.70%72.73%
Women activity rate 61.82%62.07%62.11%

Source: International Labour Organization, ILOSTAT database


Return to top

Indicator of Economic Freedom


The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.

World Rank:
Regional Rank:

Economic freedom in the world (interactive map)
Source: Index of Economic Freedom, Heritage Foundation


Country Risk

See the country risk analysis provided by Coface.


Indicator of Political Freedom


The Indicator of Political Freedom provides an annual evaluation of the state of freedom in a country as experienced by individuals. The survey measures freedom according to two broad categories: political rights and civil liberties. The ratings process is based on a checklist of 10 political rights questions (on Electoral Process, Political Pluralism and Participation, Functioning of Government) and 15 civil liberties questions (on Freedom of Expression, Belief, Associational and Organizational Rights, Rule of Law, Personal Autonomy and Individual Rights). Scores are awarded to each of these questions on a scale of 0 to 4, where a score of 0 represents the smallest degree and 4 the greatest degree of rights or liberties present. The total score awarded to the political rights and civil liberties checklist determines the political rights and civil liberties rating. Each rating of 1 through 7, with 1 representing the highest and 7 the lowest level of freedom, corresponds to a range of total scores.

Partly Free
Political Freedom:

Political freedom in the world (interactive map)
Source: Freedom in the World Report, Freedom House


Indicator of Freedom of the Press


The world rankings, published annually, measures violations of press freedom worldwide. It reflects the degree of freedom enjoyed by journalists, the media and digital citizens of each country and the means used by states to respect and uphold this freedom. Finally, a note and a position are assigned to each country. To compile this index, Reporters Without Borders (RWB) prepared a questionnaire incorporating the main criteria (44 in total) to assess the situation of press freedom in a given country. This questionnaire was sent to partner organisations,150 RWB correspondents, journalists, researchers, jurists and human rights activists. It includes every kind of direct attacks against journalists and digital citizens (murders, imprisonment, assault, threats, etc.) or against the media (censorship, confiscation, searches and harassment etc.).

World Rank:

Return to top

Sources of General Economic Information

Useful Resources
Ministry of Finance
Government of Timor Leste
Central Bank of Timor-Leste

Return to top

Any Comment About This Content? Report It to Us.


© eexpand, All Rights Reserved.
Latest Update: May 2024