MANILA, PHILIPPINES (29 April 2021) — The economic recovery from the coronavirus disease (COVID-19) pandemic in tourism-dependent Polynesian countries will be slow, with continued support needed to allow the private sector to drive future economic growth, says a new Asian Development Bank (ADB) report.
The Asian Development Outlook (ADO) 2021, ADB’s flagship annual economic analysis, projects the economies of the Cook Islands, Niue, Samoa, and Tonga will continue to decline in 2021 with economic contraction and fiscal deficits deepening. The report predicts the resumption of international travel will see gross domestic product (GDP) return to positive growth in each country in 2022, but their economies will still be smaller than before the outbreak of the pandemic.
“Despite no local cases, the COVID-19 pandemic is the worst economic crisis in the history of these countries,” said Public Management Economist and ADO report author James Webb of ADB’s Pacific Subregional Office in Fiji. “While lives have been saved, livelihoods have been lost. To preserve future jobs and maximize the eventual economic recovery, it is imperative that private sector capacity is retained.”
The ADB report is based on data from FY2020 (July 2019–June 2020), FY2021 (July 2020–June 2021), and FY2022 (July 2021–June 2022).
In the Cook Islands, the economy contracted by 5.9% in FY2020, on account of income from tourism—which accounted for 61% of GDP in 2019—falling to zero since April last year. After a full fiscal year of almost no tourism, the ADO projects a further contraction of 26% in FY2021. The ADO projects economic growth to rebound in FY2022 by 6% after the opening of a proposed travel bubble with New Zealand.
Dramatically reduced tourist arrivals in Niue likely caused an economic contraction in FY2020, ending a 7-year uninterrupted stretch of 4.6% average growth since 2013. On top of the decline in tourism, travel restrictions stalled capital projects financed by development partners. A more severe contraction is forecast for FY2021 as tourism remains suspended perhaps for the entire year. Economic recovery is projected in FY2022, assuming the establishment of a travel bubble with New Zealand and vaccination drives in both countries.
In Samoa, GDP contracted 3.2% in FY2020, with the onset of COVID-19 coming after a measles outbreak in late-2019. The ADO says Samoa’s economy will contract a further 9.2% in FY2021 before recovering to 3.1% growth in FY2022.
In Tonga, the twin shocks of Tropical Cyclone Harold and COVID-19 restrictions saw the economy contract by 0.5% in FY2020. The ADO says continued decline in the construction and tourism sectors will contribute to a 5.3% contraction in FY2021, before a return to positive growth of 1.8% in FY2022.
ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.