The economy of East Timor is a low-income economy as ranked by the World Bank. It is placed 133rd on the Human Development Index, indicating a medium level of human development. 20% of the population is unemployed, and 52.9% live on less than $1.25 a day. About half of the population is illiterate. At 27%, East Timor's urbanisation rate is one of the lowest in the world.
In 2007, a bad harvest caused a "major food crisis" in East Timor. By November, eleven sub-districts still needed food supplied by international aid.
According to data gathered in the 2010 census, 87.7% of urban and 18.9% of rural households have electricity, for an overall average of 36.7%.
History
Prior to and during colonisation, the island of Timor was best known for its sandalwood. The Portuguese colonial administration also granted concessions to Oceanic Exploration Corporation to develop oil and gas deposits. However, this was curtailed by the Indonesian invasion in 1976.
Petrochemical resources were divided between Indonesia and Australia with the Timor Gap Treaty in 1989. The treaty established guidelines for joint exploitation of seabed resources in the area of the "gap" left by then-Portuguese Timor in the maritime boundary agreed between the two countries in 1972. Revenues from the "joint" area were to be divided 50-50. Woodside Petroleum and ConocoPhillips began development of some resources in the Timor Gap on behalf of the two governments in 1992.
In late 1999, about 70% of the economic infrastructure of East Timor was destroyed by Indonesian troops and anti-independence militias, and 260,000 people fled westward. From 2002 to 2005, an international program led by the United Nations, manned by civilian advisers, 5,000 peacekeepers (8,000 at peak) and 1,300 police officers, substantially reconstructed the infrastructure. By mid-2002, all but about 50,000 of the refugees had returned.
The economy grew by about 10% in 2011 and at a similar rate in 2012.
While East Timor gained revenue from offshore oil and gas reserves, little of it has been spent on the development of villages, which still rely on subsistence farming. , nearly half the East Timorese population was living in extreme poverty.
Data
Industries
In the Doing Business 2013 report by the World Bank, East Timor was ranked 169th overall and last in the East Asia and Pacific region. The country fared particularly poorly in the "registering property", "enforcing contracts", and "resolving insolvency" categories, ranking last worldwide in all three. In 2020 it ranked 181st. There are no patent laws in East Timor.
Regarding telecommunications infrastructure, East Timor is the second to last ranked Asian country in the World Economic Forum's Network Readiness Index (NRI), with only Myanmar falling behind it in Southeast Asia. In the 2014 NRI ranking, East Timor ranked number 141 overall, down from 134 in 2013.
East Timor is part of the Timor Leste–Indonesia–Australia Growth Triangle (TIA-GT).
Agriculture
The agriculture sector employs 80% of East Timor's active population. In 2009, about 67,000 households grew coffee in East Timor, with a large proportion of those households being poor. Currently, the gross margins are about $120 per hectare, with returns per labour-day of about $3.70. There were 11,000 households growing mungbeans as of 2009, most of them by subsistence farming. 94% of domestic fish catch comes from the ocean, especially coastal fisheries. 66% of families are in part supported by these subsistence activities, however the country as a whole does not produce enough food to be self-sustaining, and thus relies on imports. Coffee, rice, maize, coconuts, cassava, soybeans, bananas, mango, and sweet potatoes are cultivated here.
After petroleum, the second largest export is coffee, which generates about $10 million a year. 9,000 tonnes of coffee, 108 tonnes of cinnamon, and 161 tonnes of cocoa were harvested in 2012 making the country the 40th ranked producer of coffee, the 6th ranked producer of cinnamon and the 50th ranked producer of cocoa worldwide.