Growth in the Federated States of Micronesia (FSM) is estimated at 1.0% in Fiscal Year 2013 (ended 30 September 2013), also unchanged from ADO 2013. The execution of airport improvement projects across the FSM’s four states is wrapping up, with associated declines in economic stimulus. Growth is still expected to pick up to 1.5% in FY2014 with the start of new public infrastructure projects.
|Selected Economic Indicators (%) - Federated States of Micronesia||2013||2014|
|ADO 2013||Update||ADO 2013||Update|
|Current Account Balance (share of GDP)||-14.3||-14.3||-14.0||-14.0|
Source: Asian Development Outlook (ADO) 2013 Update; ADB estimates.
Inflation in the FSM is still projected to trend downward, slowing to 4.5% in FY2013, compared with the FY2012 rate of 5.6%. In FY2014, inflation is expected to slow to 3.5% in line with projected declines in international food and fuel prices.
In the first 3 quarters of FY2013, FSM imports from the United States grew by 9.8% year on year, led by purchases of machinery, transport equipment, and manufactured goods in the early months of the fiscal year. However, the FSM’s food imports from the US fell by 5.7%, possibly indicating either weakness in consumer spending or substitution with imports from other markets.
Gradual reductions in the FSM’s current account deficit to 14.3% of gross domestic product (GDP) in FY2013 and 14.0% in FY2014 are also unchanged. As in previous years, the FSM 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.