Cook Islands

Key trends and development challenges

Cook Islands is a self-governing territory in free association with New Zealand, located in the Pacific sub-region of Polynesia. In 2023, the GDP of Cook Islands was $366 million, making it one of the smallest economies in the Pacific. The country has a population of 14,300, resulting in a GDP per capita of $25,651 — the highest in the Pacific. While its economy is small, Cook Islands has an extensive ocean territory and rich marine resources.

In 2020, Cook Islands graduated from the Organisation for Economic Co-operation and Development’s list of official aid recipients and was reclassified as a high-income country. In 2023, it was the lowest per capita aid recipient in the region, yet Cook Islands still faces significant growth challenges and remains highly exposed to climatic shocks.

Cook Islands’ economy relies heavily on tourism, with the leisure economy accounting for around 85% of GDP. The Covid-19 pandemic significantly disrupted the country’s economy, as border closures and slow global tourism rebound hampered growth. Encouragingly, 2023 visitor arrival estimates were close to parity with pre-pandemic levels.

Between 2008 and 2023, annual official development finance (ODF) disbursements to Cook Islands — including grants, loans, and other forms of assistance — averaged $34 million. During this period, loans made up 23% of total ODF flows to the country, the fourth-highest share in the Pacific. As a result of its graduation from aid, grant financing to Cook Islands in 2021–22 was 98% lower than the pre-pandemic average. Consequently, the role of aid to the Cook Islands economy is the lowest across all the countries covered in the Pacific Aid Map. ODF makes up just 0.5% of the country’s GDP, a sharp fall from a peak of 16% in 2015.

Development partners and sector trends

Between 2008 and 2023, the vast majority (85%) of ODF support to Cook Islands has come from four development partners, led by New Zealand (42%), China (22%), the Asian Development Bank (12%), and Australia (9%). Donor concentration in Cook Islands is among the highest in the Pacific.

New Zealand’s aid to Cook Islands has historically focused on education and governance. Conversely, China’s support has focused on infrastructure. The last major financing package received by Cook Islands was a $20 million loan from the Asian Infrastructure Investment Bank, through its Covid-19 Crisis Recovery Facility. Despite the addition of this loan, the Asian Development Bank continues to rank Cook Islands’ risk of debt distress as low.

ODF to Cook Islands largely conforms with regional trends. The largest sector for incoming ODF is government and civil society, which accounts for 32%, below the regional average of 38%. Donors have also focused funds on education (14%), water and sanitation (11%), and energy (8%), all of which see allocations above the regional average.

Since 2008, Cook Islands has received $50 million in development finance primarily targeting climate goals, and $82 million with climate as a significant objective. Unlike regional trends, climate finance rose sharply in the early 2010s but has shown little growth over the past decade. As a share of total ODF received by Cook Islands, “principal” climate projects have made up 11% of total spending, above the Pacific regional average. Similarly, spending on “significant” climate projects in Cook Islands made up 17% of incoming funds, well above the regional average of 11%.

Between 2008 and 2023, Cook Islands received $3 million in development financing with a “principal” focus on gender equality, and $101 million in development financing with a “significant” focus on gender equality. “Principal” gender equality financing constituted less than 1% of ODF received by the country, below the regional average of 2%. Similarly, “significant” marked gender equality financing made up 19% of incoming ODF, slightly below the regional average.