The Asian Development Bank says Vanautu has become one of the fastest growing economies in the Pacific primarily driven by tourism, construction, and aid inflows.
In conjunction with the Australian Government, the Bank has produced the Vanuatu Economic Report, which presents ways to address key development challenges.
The ADB says Vanuatu grew by nearly four percent last year for an unprecedented 7th consecutive year of growth.
In 2010 it is expecting even growth, at about 4.5 percent, due to gains in construction and tourism.
But the ADB's Regional Director, Eugene Zhukov, says while Vanuatu's strong economic growth, and improvements to the environment for private sector growth have been impressive, more needs to be done to sustain growth.
The Report says the development of a long-term agriculture policy, improved governance, and the management of the natural nvironment remain key development priorities.