Regions and Countries

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p. 35 of 47 BACK | NEXT Developing Asia and the Pacific The global economy Newly industrialized economies Central Asian republics, Azerbaijan and Mongolia People’s Republic of China Southeast Asia South Asia The Pacific Cook Islands Fiji Islands Kiribati Marshall Islands Federated States of Micronesia Nauru Papua New Guinea Samoa Solomon Islands Tonga Tuvalu Vanuatu

The Pacific

The economic recovery momentum achieved in the Pacific in 1999 could not be sustained in 2000 because of political instability and social unrest in the Fiji Islands and Solomon Islands, and subdued economic growth in Papua New Guinea. Aggregate real GDP for the 12 Pacific DMCs declined by a weighted average of about 2 percent in 2000. The weighted average inflation rate in the Pacific increased to about 11.5 percent in 2000 from 10.0 percent in 1999, because of generally weak currencies and rising fuel prices. However, macroeconomic stability was maintained during the extremely difficult periods in 2000 as a result of generally prudent fiscal and monetary policies.

Many Pacific DMCs, particularly Papua New Guinea, Solomon Islands, and Vanuatu have low human development and high human poverty indexes. The cost of living in the Pacific DMCs is high by international standards because of the narrow production base and consequent dependence on international trade, which implies high transport costs. Through regional- and country-level technical assistance, ADB embarked in 2000 on systematically documenting poverty in the Pacific DMCs by preparing an interim poverty assessment. The need for strengthening public service delivery was increasingly recognized as a means of extending the benefits of reforms to the poor and vulnerable.

ADB prepared “A Pacific Strategy for the New Millennium” in 2000, which focuses on poverty reduction; continuing support for economic management, governance, and public sector reforms; private sector development; a more active role for women; and sustainable environmental management. Supporting objectives of the strategy (when approved) will include building capacity for governance, strengthening physical and financial infrastructure, supporting the role of civil societies, and developing information and communication technology in the Pacific. The strategy proposes a subregional approach, which takes into account differences among the various Pacific DMCs. For example, in the resource-rich but relatively poor countries (Papua New Guinea, Solomon Islands, and Vanuatu), ADB will support governance, public sector reform, and poverty reduction by investing in social and physical infrastructure. The role of women will be particularly supported. In the more economically advanced Pacific DMCs (Cook Islands, Fiji Islands, Federated States of Micronesia, Samoa, and Tonga) with more advanced skills bases but moderate resource potential, ADB will focus on private sector growth through policy reform, physical infrastructure strengthening, and financial sector reform. In the island atoll DMCs (Kiribati, Marshall Islands, Nauru, and Tuvalu) that are severely disadvantaged by their size, isolation, and limited resource bases, ADB will support trust funds, develop niche markets for tourism, and enhance skills for labor export. ADB will continue to emphasize regional cooperation.

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