The forecast for the Republic of the Marshall Islands (RMI) is unchanged, with Gross Domestic Product expected to grow by 3.5% in 2015 and 1.5% in 2016.
|Selected economic indicators (%)||2015||2016|
|ADO 2015||Update||ADO 2015||Update|
|Current Account Balance (share of GDP)||-9.9||-9.9||-11.4||-11.4|
Source: ADB estimates.
Government spending is the main driver of economic growth in the Republic of the Marshall Islands (RMI). Current government spending was up by 12.8% in the first half of FY2015 from a year earlier on higher outlays for goods and services, intergovernmental grants, and transfers to households. Capital spending was up by 86.4% year on year in the same period.
Inflation in the RMI is still expected to rise slightly in FY2015. Consumer prices, mainly for apparel and food, rose by 1.3% in the first quarter of FY2015. Prices for household utilities, transport, health care, communication services, and education were largely unchanged, while prices for alcoholic beverages and recreation declined.
The implementation of new infrastructure projects and those delayed from financial year (FY) 2014 will support strong growth in construction and related services in FY2015. However, as infrastructure projects are completed and wind down, growth is seen to drop in FY2016 as forecast in ADO 2015.
In the RMI, the cost of imports from the US declined as food and fuel prices fell. Projected current account deficits are unchanged.
Excerpted from the Asian Development Outlook 2015 Update.