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Economy
North Pacific economies continued to expand in fiscal year 2012 (ended 30 September 2012 for all), but growth was generally more moderate than in previous years. In the Federated States of Micronesia (FSM), growth was determined largely by movements in government spending, particularly on infrastructure projects. Economic growth in the FSM declined to 1.4% from 2.1% in FY2011 as infrastructure projects neared completion.
Another important contributor to growth in these economies has been earnings from fisheries. These rose as El Niño drove fish into colder, deeper waters such as those found in the exclusive economic zones of the FSM.
| Selected Economic Indicators (%) - Federated States of Micronesia | 2013 | 2014 |
|---|---|---|
| Gross domestic product (GDP) growth | 1.0 | 1.5 |
| Inflation | 4.5 | 3.5 |
|
Current account balance (share of GDP) |
-14.3 | -14.0 |
Source: ADB estimates.
Economic prospects
Infrastructure development will remain a key driver of economic growth in the North Pacific, with construction providing short-term stimulus and the resulting capacity upgrades boosting longer-term prospects. Growth in the FSM is expected to moderate to 1.0% in FY2013 as most airport improvement projects are completed.
The start in FY2014 of ADB-supported projects to upgrade ports in the FSM is expected to accelerate growth to 1.5%. Longer-term growth prospects are weighed down by outmigration, the lack of growth drivers from the private sector, and annual decrements in compact grants.
Source: ADB. 2013. Asian Development Outlook 2013. Manila.