Federated States of Micronesia: Economy
The economic growth outlook for the Federated States of Micronesia (FSM) is now lower in the wake of Typhoon Maysak, which devastated the country in March 2015.
|Selected economic indicators (%)||2015||2016|
|ADO 2015||Update||ADO 2015||Update|
|Current Account Balance (share of GDP)||11.2||-1.3||6.4||-2.5|
The Federated States of Micronesia (FSM) is now projected to see no Gross Domestic Product (GDP) growth in financial year (FY) 2015 following a series of devastating typhoons that affected all four states. In March 2015, Typhoon Maysak destroyed an estimated 90% of food crops and hundreds of homes in the state of Chuuk and on outlying islands in the state of Yap. In May, Typhoon Noul struck the main islands of Yap, and Typhoon Dolphin caused severe flooding and damage in the states of Pohnpei and Kosrae. Lost agricultural output and construction delays affecting infrastructure projects are expected to be offset by renewed reconstruction in the second half of FY2015.
The value of FSM imports from the US between October 2014 and July 2015 increased by 6.7% over the same period a year earlier. Although the value of food imports was 6.3% lower, the value of other imports— mostly machinery and transport equipment—increased by 22.3%.
The economic outlook for FY2016 is brighter, as recovery in agriculture and the scaling up of infrastructure projects are projected to support higher growth. However, growth is expected to be less than projected in ADO 2015 as capacity constraints may hinder reconstruction.
Minimal inflation is forecast in FY2015 and FY2016 as low prices for imported food and oil persist.
The forecast for the FSM current account in FY2015 is now a small deficit instead of the surplus projected in Asian Development Outlook 2015 because merchandise exports and remittances have fallen while imports of services grew.
Excerpted from the Asian Development Outlook 2015 Update.