WHILE economic growth in the Pacific is now forecasted at a lower 1.1 per cent to disaster-related challenges, Fiji’s growth for the year remains unchanged pegged at 3.6 per cent, the Asian Development Bank says.
The unchanged growth forecast for Fiji is backed by its strong tourism and agriculture sectors which ADB says would continue to lift growth in the Fijian economy.
In its new forecast, published in the Asian Development Outlook (ADO) 2018 Update, economic growth has lowered by half to 1.1 per cent in the Pacific subregion in 2018.
This is down from earlier forecasts of 2.2 per cent earlier projected in April due to disaster-related challenges and declines in public spending.
The reduction in growth forecast is due to a weaker outlook for Papua New Guinea (PNG) and Timor-Leste, the Pacific’s largest and third-largest economies, pulled the forecast lower.
In PNG, the economic impact of an earthquake in Hela Province in February has proved worse than initial estimates. Production of liquefied natural gas, which accounts for 14 per cent of PNG’s gross domestic product, is expected to be at least 10 per cent below 2017 levels. Production of gold, oil, and condensate will also be lower.
The PNG economy is expected to grow by 0.5 per cent in 2018, down from a projection of 1.8 per cent in April.
“Disaster resilience and public sector management are cornerstones of ADB’s work in the Pacific,” said ADB Director General for the Pacific Ms. Carmela Locsin.
“ADB will continue to work with countries in the region to build disaster readiness and support policy reforms to maximize the value of public investments.”
The outlook in Solomon Islands, Tuvalu, and Nauru has also improved, the ADB states while slower than anticipated recovery in visitor arrivals in Palau, an economy driven by tourism, has pushed down the 2018 growth forecast to 1.0 per cent from 3.0 per cent projected in April.
Forecasts for 2018 also growth remain unchanged for Vanuatu at 3.2 per cent, the Cook Islands at 3.5 per cent, Samoa at 0.5 per cent, Tonga at – 0.3 per cent, Kiribati at 2.3 per cent, the Federated States of Micronesia at 2.0 per cent, and the Marshall Islands at 2.5 per cent.
The ADB also forecasts tourism to drive economic expansion in the Cook Islands and Samoa, while Tonga’s economic recovery from the impact of Tropical Cyclone Gita remains on track.
Economic growth in Kiribati is being supported by the implementation of infrastructure projects financed by development partners.
Inflation is now projected to be marginally higher in 2018 with several economies expecting higher food and fuel prices and Fiji raising taxes on alcohol and tobacco.
Inflation in the Pacific is expected to moderate slightly to 3.9 per cent in 2019 while it remains steady at 4.2 per cent in 2018.
Growth across the subregion is expected to accelerate to 3.1 per cent in 2019.
