Pacific Economic Monitor: March 2013 - Growth Outlook

This edition of the Pacific Economic Monitor discusses 2013 and 2014 GDP growth and inflation projections for ADB's Pacific developing member countries. The theme of the policy briefs included in this issue is energy in the Pacific.

Findings

Economic growth in the Pacific moderated to 7.3% in 2012, from a post-crisis high of 8.3% recorded in the previous year. This regional trend was driven primarily by the performance of the region's larger, natural resource-extracting, economies. Growth is seen to moderate further in 2013, before picking up in 2014.

Inflation moderated to 5.3% in 2012 from 8.5% in 2011 as international food and fuel prices stabilized, albeit at high levels. The appreciation of the PNG kina and other currencies used in the region helped lower price pressures. However, inflation rates varied sharply across the region due to country-specific factors.

National overviews

Growth slowed slightly, but remained high in Papua New Guinea (PNG) and Timor-Leste.

Economic growth in the Pacific islands also moderated to 2.5% in 2012, from 2.8% a year ago. Growth in Solomon Islands moderated from double-digit rates as log revenues leveled off. Economic stimulus from infrastructure projects was lower in Kiribati, the Federated States of Micronesia, Samoa, and Tonga.

Against this trend, increased tourist arrivals supported economic growth in the Cook Islands and Vanuatu. Nauru grew due to high phosphate production, while infrastructure spending and fishing revenues prompted growth in the Republic of the Marshall Islands and Tuvalu.