Timor-Leste is the eastern part of Timor Island in the Indonesian Archipelago. A former Portuguese colony, it achieved independence in 2002 after an extended war with neighboring Indonesia. A recent economic collapse has led to a contraction in real gross domestic product (GDP). As a result of this political and economic instability in the past decades, the population is beset with developmental hurdles.
The economy of Timor-Leste is tied closely to the oil price, the fall of which led to the recent recession. This has caused a sharp drop in the fiscal balance in relation to GDP, indicating that the government has been struggling to bolster the economy using classic Keynesian stimulus. The unemployment rate has remained low through the crisis. While this could indicate that the government stimulus is effective, it more likely indicates that most of the workforce is engaged in subsistence agriculture and thus less exposed to the business cycle. The low rate of urbanization would point to the latter.
In addition to being predominantly rural, the Timorese people face a variety of obstacles: Famine persists, and roughly one in 4 Timorese are undernourished. Preventable diseases remain an issue. Deaths from tuberculosis have increased in recent years, though deaths from malaria are approaching zero. The infant mortality rate, a good indicator for the overall efficacy of the healthcare system, is also decreasing, though it is still high.
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