Growth in gross domestic product (GDP) weakened across the North Pacific. However, growth is seen recovering in the near term, though slow growth will likely persist in the Federated States of Micronesia. Along with current fiscal adjustments, stimulating the private sector through improved trade will be crucial in the North Pacific over the longer term.

Economic performance

Economic growth in the North Pacific was subdued in Fiscal Year 2013 (ended 30 September 2013). The Federated States of Micronesia (FSM) remained on a low-growth path, with growth of 0.6% in FY2013 only slightly improving on the0.4% recorded in FY2012. Growth was largely driven by fisheries, construction, and their associated activities. However, the lack of private investment, subdued business activity, and a slowdown in major public infrastructure projects continue to weigh on the FSM economy.

Selected Economic Indicators (%) - Federated States of Micronesia 2014 2015
GDP Growth 0.5 0.5
Inflation 2.0 1.5
Current Account Balance (share of GDP) -9.6 -9.3

Source: ADB estimates.

Economic prospects

The low growth experienced by the FSM is seen to persist for lackof significant new investment or business formation, combined with a paucity of large infrastructure projects. GDP growth is projected to remain at 0.5% in FY2014 and FY2015, supported mostly by a steady fisheries performance.

Source: ADB. 2014. Asian Development Outlook 2014. Manila.