Economic growth in the Republic of the Marshall Islands was subdued last year amid problems implementing capital projects under its compact of free association with the United States. The outlook in the near term is bright because of favorable external conditions and progress expected in infrastructure development.
|Selected economic indicators (%) - Marshall Islands||2015||2016|
|Current Account Balance (share of GDP)||-9.9||-11.4|
Source: ADB estimates.
In the Republic of the Marshall Islands (RMI), the release of Fiscal Year 2014 sector grants was delayed because the country had failed to update its plans to accommodate anticipated decreases in compact funding. After growing by 3.0% in FY2013, the RMI economy grew by a mere 0.5% in FY2014 (ended 30 September 2014) for lack of new infrastructure projects. This followed the completion in FY2013 of airport road realignment funded by the US Federal Aviation Authority and reflected unforeseen delays affecting other scheduled capital projects. Growth in FY2014 was driven mainly by strong fishery performance as domestic purse seiners landed larger catches. Weak construction and lower compact grant disbursements for education and health care suppressed demand for associated services such as transport, storage, and communications.
Progress in infrastructure project implementation is expected to stimulate the RMI economy. Accelerated work on delayed projects and the commencement of new initiatives are
projected to push growth in the gross domestic product to 3.5% in FY2015. Growth is then seen to slow again to 1.5% in FY2016 as projects near completion and construction winds down.
Excerpted from the Asian Development Outlook 2015.