DILI, TIMOR-LESTE (11 April 2024) — Timor-Leste’s growth outlook is improving, with the economy forecast to expand by 3.4% in 2024. This is driven by expansionary fiscal policy coupled with increased capital investment and steady consumption, according to a new report by the Asian Development Bank (ADB) released today.

In its flagship economic report, Asian Development Outlook (ADO) April 2024, ADB notes the improved growth outlook for the country compared to the 1.9% estimate in 2023. Growth is expected to further improve to 4.1% in 2025, supported mainly by capital investments, services, and agriculture.

“After experiencing severe economic stress in 2017–2021 due to domestic political uncertainties and external shocks including COVID-19, cyclone Seroja, and severe floods, the economy of Timor-Leste has been on a recovery path since 2022, driven by improved domestic demand,” said ADB Country Director for Timor-Leste Stefania Dina. “Increasing long-term investments in human capital, essential infrastructure, and basic public services is imperative to sustain economic growth and enhance private sector development.” 

In a lower inflationary environment, Timor-Leste has an excellent opportunity to invest more in non-petroleum sectors, which will be critical to retaining and prolonging economic growth momentum. Timor-Leste’s prioritization on increasing capital investments is a welcoming policy commitment. To translate this commitment into practice, it will be necessary to ensure the smooth implementation of investment projects, strengthen institutional capacity, and foster public financial management reforms.

Average inflation will moderate to 3.5% in 2024 and 2.9% in 2025 as price pressure on imported goods and services eases and global commodity price risks wane. The current account deficit is projected to widen, mainly as primary income decreases and imports increase in line with higher domestic demand.

Risks to Timor-Leste’s growth outlook stem from climate-related disasters and extreme weather conditions associated with El Niño; terms-of-trade shocks; rising food and energy prices caused by geopolitical tensions; trade and supply chain disruptions; and risks associated with public service delivery and lower investments.

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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