Tonga and ADB

The Pacific Approach, 2021-2025 guides ADB’s operations in Tonga, with a focus on building resilience against economic shocks, delivering sustainable services, and promoting inclusive and sustainable growth.

Economic forecasts for Tonga

Figures are based on the latest edition of ADB's Asian Development Outlook, which analyzes economic and development issues in Asia and the Pacific. This includes forecasting the inflation and gross domestic product growth rates of economies throughout the region.


Comparative economic forecasts

The latest available economic data for Tonga compared to countries in the Pacific.


Policy Challenge—Charting Conducive Labor Market Conditions

South Pacific labor migration has increased. Attracted by higher wages and seasonal work opportunities in Australia and New Zealand, increasing numbers of South Pacific islanders are seeking overseas employment. This is on top of liberal migration policies accorded to South Pacific citizens, such as those under the Cook Islands’ and Niue’s free association arrangements with New Zealand.

Although the rise in overseas workers has boosted remittances, it has also depleted local labor supply. Remittances are a significant income source for many households in Samoa and Tonga, and strong inflows helped them weather the economic downturn during the pandemic. However, the Tongan government is having difficulties in filling vacancies in its civil service. The acute labor shortage in the Cook Islands is constraining output across many economic sectors.

Remittance dynamics may change dramatically if labor mobility policies expand, and without appropriate measures to shore up labor supply. Migration flows would likely increase as it becomes more possible for migrant workers to become permanent residents and have their families join them. Entire families living abroad reduces the social issues associated with families living apart for long periods, but it also reduces the propensity to remit funds to the source country. With many residents abroad, governments and local businesses in the Cook Islands and Niue have turned to migrant labor to fill the gap. Niue is also piloting an intra-Pacific labor mobility program in its health sector to address labor shortages. The pilot is anticipated to help design a broader and longer-term labor mobility scheme with other Pacific islands. Remittance flows in these countries have also reversed, with local families supporting relatives living abroad (e.g., for school expenses) and migrant workers sending money to their home countries.

Policymakers need to balance the need to address domestic labor shortages with the economic benefits of overseas worker remittances. Remittances support economic resilience in the worker’s home country. Maintaining remittance inflows requires the continued deployment of new workers overseas to help preserve home-country ties and thus a worker’s desire to send money home. To achieve this while ensuring an adequate supply of quality local labor, South Pacific economies should continue to invest in health and education to build a higher quality, skilled workforce. Aligning skills training with national development plans, meeting local business needs, and establishing clear employment pathways could encourage graduates to work in their home country. In addition, improving the business climate would encourage migrants and remittance recipients to develop and invest in local enterprises. It may still be necessary to maintain the flow of new migrant workers into South Pacific economies to help augment limited capacity—particularly in the Cook Islands and Niue where the workforce is small—and this may provide opportunities for knowledge transfer.

More resources

Asian Development Bank and Tonga: Fact Sheet

Asian Development Bank and Tonga: Fact Sheet

The Fact Sheets summarize ADB's partnerships with member economies, providing key facts and figures and an overview of activities and future directions.

Asian Development Outlook (ADO) April 2024

Asian Development Outlook

The Asian Development Outlook analyzes economic and development issues in developing countries in Asia.

Key Indicators for Asia and the Pacific 2023

Key Indicators

The Key Indicators for Asia and the Pacific publication presents data regarding the economic, financial, social, and environmental situations in a broad range of countries across the region.

Basic Statistics 2024

Basic Statistics

The Basic Statistics brochure presents data on selected social, economic, and SDG indicators such as population, poverty, annual growth rate of gross domestic product, inflation, and government finance for economies in Asia and the Pacific.