Senior Economist Christopher Edmonds discusses the latest issue of the Pacific Economic Monitor, which talks about the challenges that Pacific economies face in creating more jobs for their rapidly growing working-age populations.
Title: Pacific Economic Monitor July 2014
Description: Senior Economist Christopher Edmonds discusses the latest issue of the Pacific Economic Monitor, which talks about the challenges that Pacific economies face in creating more jobs for their rapidly growing working-age populations.
Asian Development Bank
Q1: How has the growth outlook for the Pacific region economies changed since the start of the year?
A: We are making a modest downgrade revision in our growth forecast for ADB’s fourteen developing member countries in the Pacific region. And growth forecast in 2014 is now forecast at 5.2% growth, down from the 5.4% growth that was forecast last April in the Asian Development Outlook. The main factors behind the downgrade are changes in the forecast for Solomon Islands and Timor Leste.
In Solomon Islands, it’s really the effect of the tropical cyclone Aida on the economy. The cyclone caused severe flooding in Honiara and surrounding provinces, led to a lot of damage to public infrastructure, also in private property and even loss of life and particularly damaged agricultural production and gold production in the country. While in Timor Leste, its early indicators are credit growth and consumer demand have been disappointing leading to a half of a percentage point decrease in that country’s growth forecast for 2014.
Q2: What are some of the main findings in the policy briefs on labor market challenges in the Pacific?
A: The Pacific is a very diverse region in terms of the labor-market challenges different countries face. In general, a lot of the countries have struggled to attain rates of growth that are even adequate to keep up with the rate of population growth. And even in countries that have achieved high growth, the resource-exporting countries, generating jobs has been a real challenge.
The population of the region is forecast to increase by more than three million or about 32% between now and 2030. So it’s going to be a real challenge for the region to generate those jobs, especially if recent employment growth trends persist. It’s expected to about one million new additional formal sector jobs would be needed just to maintain current rates of unemployment. And if the region is going to make progress, in terms of getting its people out of the risky and low-income subsistence and informal sector activities, it is estimated to about another million jobs would be required.
Q3: What policy recommendations does the ADB report have for Pacific countries to address these challenges?
A: Measures that can achieve this are investments in infrastructure to improve the connectivity of the region and reforms to improve the business operating environment in the region. Together these measures can reduce transaction cost and allow the region to join the growth that we’re seeing around the larger economies of the world.
Lastly, of course, education and training and upscaling the workers of the region will be very important especially in terms of enabling them to access employment opportunities overseas where they can get the capital, as well as human capital and physical capital. They need to come back to their home countries and invest and grow the economies there.