We look at how soaring food and fuel prices are affecting the tiny island nation in the western Pacific Ocean.
Like much of the world, the Covid-19 pandemic and the war in Ukraine have led to supply chain issues, and rising costs.
And with limited opportunities, young people are facing the question, should they stay or leave and chase careers elsewhere?
Produced and presented by Frey Lindsay
(Image: People gathered under the Japan-Palau Friendship bridge in Koror, Palau. Credit: Frey Lindsay/BBC)