MANILA, PHILIPPINES (15 July 2015) –– Pacific economies are expected to achieve average growth of 9.9% in 2015, as positive external flows outweigh the impacts of recent disasters, according to the Asian Development Bank (ADB)’s latest Pacific Economic Monitor Midyear Review, launched in Suva today.
“Cyclone Pam and Typhoon Maysak again highlight the vulnerability of Pacific economies to disaster risks, which are the highest in the world,” said Xianbin Yao, Director General of ADB’s Pacific Department. “At the same time, the first full-year of natural gas exports from Papua New Guinea (PNG), along with strong tourism activity in Fiji and Palau, are seen to sustain growth across the Pacific at close to a double-digit rate in 2015.”
Moving forward, however, weak global energy prices have increased the downside risk to the Pacific’s outlook, the report notes. While growth forecasts for PNG and Timor-Leste—the region’s largest energy exporters—are unchanged for now, downward adjustments are likely if low prices persist.
In Palau, a rapid rise in tourist arrivals has brightened near-term economic prospects, but also raises concerns about environmental sustainability and the carrying capacity of key tourist attractions.
In Vanuatu, the impacts of Cyclone Pam are expected to see the economy contract in 2015, due to lost agricultural output and an expected decline in tourist arrivals. Typhoon Maysak destroyed houses and food crops in the states of Chuuk and Yap in the Federated States of Micronesia, but lower agricultural output is expected to be offset by greater construction activity.
Growth in the Pacific is expected to fall to about 5% in 2016, as the one-off boost from the first full-year of PNG’s natural gas exports dissipates. The outlook for some economies, nonetheless, remains upbeat. Growth in Fiji is projected to accelerate in 2016 with the expected commencement of development projects stemming from the country’s recent re-engagement with development partners.
Reconstruction after recent disasters is helping to support economic recovery in Samoa, Solomon Islands, and Tonga, while growth is also seen to accelerate in the Cook Islands and the Marshall Islands on the back of stimulus from development partner-funded infrastructure projects.
The report takes an in-depth look at the development impacts of disasters in the Pacific and examines options for long-term enhancement of resilience and adaptation. It notes that measures to reduce the impacts of storms, including early warning and evacuation systems and climate proofing of infrastructure, have delivered benefits but these must be complemented by good governance and sound macroeconomic management to ensure development gains are maintained after disasters.
The Pacific Economic Monitor is a bi-annual review of economic developments in ADB’s 14 developing member countries in the Pacific, and includes policy briefs on relevant topics. In combination with the Asian Development Outlook series, ADB provides quarterly reports on economic trends and policy developments in the Pacific. The Monitor welcomes contributions of policy briefs from external authors and institutions.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.