The economy of the Republic of the Marshall Islands is estimated to have grown by 2.3% in Fiscal Year 2013 (ended 30 September 2013), as projected in the Asian Development Outlook (ADO) 2013 in April, on the back of recommenced public spending on airport rehabilitation. Growth is still expected to moderate to 1.5% in FY2014 as work on the project winds down. Downside risks to this economic projection include delays in implementing infrastructure projects and impacts from severe drought in northern Marshall Islands. Despite mitigation measures undertaken by the government and development partners, the ongoing drought has caused severe shortages of freshwater, affecting over 10,000 people on several islands, and sharply reduced the production of food and copra.
|Selected Economic Indicators (%) - Marshall Islands||2013||2014|
|ADO 2013||Update||ADO 2013||Update|
|Current Account Balance (share of GDP)||-2.5||-2.5||-2.5||-2.5|
Source: Asian Development Outlook (ADO) 2013 Update; ADB estimates.
Inflation in the Marshall Islands is still projected to trend downward, slowing to 4.5% in FY2013, compared with the FY2012 rate of 5.7%. In FY2014, inflation is expected to slow to 3.5% in line with projected declines in international food and fuel prices.
Imports from the United States, its primary trading partner, increased by 22.2% year on year over the first 3 quarters of FY2013. This was driven mainly by the resumption of fuel imports from the US.
As projected in ADO 2013, the current account deficit is still expected to fall to 2.5% of gross domestic product (GDP) in FY2013 and FY2014. As in previous years, the Marshall Islands is expected to finance its current account deficit through capital and trust fund grants, in particular from funds received under the compact of free association with the US.
Source: ADB. 2013. Asian Development Outlook 2013 Update. Manila.