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The city is situated on the shores of the South Pacific Ocean, and is only a short distance from Fraser Island, the world's largest sand island. The local economy thrives on tourism, with whale watching and Fraser Island itself being the major drawcards. Recent figures (2004) suggest in excess of 600,000 people visit the city each year.
Until recent years, Hervey Bay was a string of small townships stretching along the coast. Rapid population growth can, in a large part, be attributed to the sea change phenomena, with large numbers of retirees seeking a relaxed coastal lifestyle.