POHNPEI, FEDERATED STATES OF MICRONESIA (6 April 2022) — Border reopenings are expected to lead an economic recovery in the North Pacific, although this is contingent on further vaccination progress, according to a new report by the Asian Development Bank (ADB) released today.

The Asian Development Outlook (ADO) 2022, ADB’s flagship economic report, says economic growth of 2.2% is expected in the Federated States of Micronesia (FSM) in 2022, accelerating to 4.2% in 2023. The Marshall Islands economy is projected to return to growth of 1.2% in 2022, picking up to 2.2% in 2023. The tourism-driven economy of Palau is expected to achieve growth of 9.4% in 2022 and 18.3% in 2023, provided that effects of the pandemic dissipate, allowing for a gradual return to pre-pandemic levels of international arrivals.

The positive growth forecasts for 2022 follow 2 years of economic contraction after the coronavirus disease (COVID-19) pandemic severely limited travel, tourism, and mobility in the North Pacific.

“Strict border controls and public health measures have effectively contained COVID-19 in the North Pacific, but they have strained the economy,” said ADB Senior Country Officer Maybelline Bing. “During the recovery phase, it is vital for these countries to spearhead critical policy measures to deal with the fiscal pressures exerted by the pandemic.”

Those policy measures include tax reform and improved domestic resource mobilization to help offset the narrow economic bases of these countries, which heighten their sensitivity to shocks, says the report.

ADB’s economic outlook for the FSM and the Marshall Islands assumes that travel restrictions will persist until mid-2022, after which economic activity will begin to normalize. Accordingly, hospitality and transport industries are expected to return to growth, and construction will benefit as availability of building materials and mobility of skilled workers increase. In Palau, tourist arrivals are projected to recover to about 25,000 in 2022, subject to downside risks from uncertainties globally. A full economic recovery to pre-pandemic levels in the North Pacific is not expected until 2023.

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.

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