In Palau, growth in gross domestic product (GDP) for Fiscal Year 2013 (ended 30 September 2013) is estimated at 3.0% - unchanged from the Asian Development Outlook (ADO) 2013 - but uncertainty regarding growth in tourism arrivals from East Asia clouds the outlook for FY2014. Estimated growth for FY2012 was raised to 6.3% following revisions to national accounts. The revised numbers show that the impact of the 2008-2009 global financial and economic crisis on Palau's economy was deeper and longer lasting than previously thought, and that the recovery was stronger.
|Selected Economic Indicators (%) - Palau||2013||2014|
|ADO 2013||Update||ADO 2013||Update|
|Current Account Balance (share of GDP)||7.5||7.5||7.5||7.5|
Source: Asian Development Outlook (ADO) 2013 Update; ADB estimates.
In the first half of FY2013, visitor arrivals grew by only 3.6%, a marked slowdown from last year but consistent with expectations of market saturation discussed in ADO 2013. Growth in arrivals was particularly weak in the second quarter, with arrivals from Taipei,China falling by 28.1% year on year. This was caused, at least in part, by the temporary suspension of Palau Airways operations in late April related to aircraft leasing issues. Continued slower growth in tourist arrivals from Palau’s main markets in East Asia, in line with economic prospects in these source countries, prompts a downward revision of the growth projection for FY2014, from 3.5% to 3.0%.
Inflation is still projected to moderate to 5.5% in FY2013 and FY2014 as tourism-led growth slows.
Palau has enjoyed current account surpluses from relatively large tourism earnings. In FY2013 and FY2014, its current account surplus is projected to expand to 7.5% of GDP, up from 5.9% in FY2012.
Source: ADB. 2013. Asian Development Outlook 2013 Update. Manila.