The Pacific: Economy

The Pacific will see growth revive on developments in Papua New Guinea (PNG). Growth slowed substantially to 2.6% in 2016 as contraction hit PNG's oil and gas sector, slashing the growth rate in the subregion’s predominant economy by 10.0 percentage points to 2.0%. Elsewhere, growth picked up in 2016 in most Pacific economies—by more than 4 percentage points in Nauru, Samoa, and Vanuatu. Increased mining and agriculture output is forecast to spur a mild recovery in PNG, which will translate into a modest rebound for the subregion to 2.9% growth this year and 3.3% next. Steady or slower growth is expected in most other economies, with declines in public expenditure inducing relatively sharp slowdowns in Nauru, Samoa, and Timor-Leste. Although inflation eased in most economies in 2016, the aggregate inflation rate rose by 0.6 percentage points to 4.6%, driven by rising consumer prices in PNG. Rising oil and food prices will push inflation higher in most of the economies this year. Subregional inflation is expected to be 5.2% in 2017 and 5.4% in 2018. Read more from Asian Development Outlook 2017.


Economic forecasts for Pacific countries

Country 2017f 2018f
Cook Islands 5.0 5.0
Fiji 3.5 4.0
Kiribati 2.0 1.5
Marshall Islands 4.0 2.5
Micronesia, Federated States of 2.5 2.5
Nauru 4.3 –4.5
Palau 3.0 5.5
Papua New Guinea 2.5 2.8
Samoa 2.0 1.5
Solomon Islands 3.0 2.8
Timor-Leste 4.0 6.0
Tonga 2.6 2.6
Tuvalu 3.0 3.0
Vanuatu 4.3 3.8
Average 2.9 3.3
Country 2017f 2018f
Cook Islands 0.5 1.2
Fiji 2.5 2.5
Kiribati 2.0 2.0
Marshall Islands 1.5 1.5
Micronesia, Federated States of 1.5 2.0
Nauru 5.7 1.8
Palau 1.5 2.0
Papua New Guinea 7.5 7.5
Samoa 2.0 2.0
Solomon Islands 1.8 2.2
Timor-Leste 1.2 3.0
Tonga 2.5 2.5
Tuvalu 2.0 2.0
Vanuatu 2.4 2.6
Average 5.2 5.4
Country 2017f 2018f
Cook Islands 24.5 21.0
Fiji 3.5 3.0
Kiribati –2.4 –1.5
Marshall Islands 4.0 4.5
Micronesia, Federated States of 4.5 4.5
Nauru ... ...
Palau –12.5 –15.0
Papua New Guinea 7.7 6.7
Samoa –4.9 –2.8
Solomon Islands –8.3 –10.7
Timor-Leste –12.2 –40.2
Tonga –7.7 –11.9
Tuvalu –20.8 –25.4
Vanuatu –17.7 –15.0
Average 3.0 –0.5

… = no data available, f = forecast number.

Source: Asian Development Outlook 2017