For a third consecutive year, high fishing license revenues have spurred economic growth and improved fiscal balances in Tuvalu and the other small Pacific island economies. Externally funded infrastructure projects have contributed to higher growth. Inflation has risen with currency depreciation. With higher revenues, these economies have approved expansionary budgets for 2015. Access to finance remains a key challenge.
|Selected Economic Indicators (%) - Tuvalu||2015||2016|
|Current Account Balance (share of GDP)||-37.2||-21.4|
Source: ADB estimates.
The economy of Tuvalu grew by 2.0% in 2014. Growth was sustained by construction projects funded by development partners and continuing high revenue from fishing license fees. As a party to the Nauru Agreement, the country has benefitted from rising rates under the vessel day scheme. Revenue collections have been boosted as well by higher dividends paid out by a joint venture of the National Fishing Corporation of Tuvalu and overseas investors.
Growth is expected to remain the same in Tuvalu. Tropical Cyclone Pam caused tidal surges that damaged infrastructure and private property in mid-March. About 45% of Tuvalu’s population was reportedly displaced. The airport upgrade funded by development partners and continued retail expansion are expected to maintain economic growth at around 2.0% in 2015 and 2016.
Excerpted from the Asian Development Outlook 2015.