ADB Forecasts Positive Growth For Pacific Countries In 2015

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‘Up’ year with robust tourism and fisheries revenue

By Jemima Garrett

MELBOURNE, Australia (Radio Australia, March 24, 2015) – Most Pacific Island economies are expected to perform strongly this year, according to the latest figures from the Asian Development Bank (ADB).

Fiji will experience its fifth consecutive year of growth, the bank said in its Asian Development Outlook report released on Tuesday.

Cook Islands, Tonga and Samoa can expect stronger growth in 2015, with a slight slowing in 2016.

Papua New Guinea, which will see the full impact of its new liquid natural gas exports this year, will experience economic growth of 15 per cent.

ADB Pacific economist Chris Edmonds said most other Pacific countries also have a good year ahead.

"In general, 2015 is looking to be an 'up' year for most of these countries," Mr Edmonds said.

"Tourism is robust, fisheries revenues are robust, and that is very important for some of the smaller atoll states.

"We also have the usual cycles of public infrastructure investment which tend to be very important in driving growth fluctuations in many of these economies."

The bank's annual report also looks at long-term policies that will help Pacific Islanders build wealth and protect themselves from economic shocks.

Economic costs of cyclone damage in Vanuatu

The report said Vanuatu's economy would be the hardest hit this year as a result of Cyclone Pam, which has also had an impact in Kiribati, Nauru, Solomon Islands and Tuvalu.

Mr Edmonds said the economic impact of the disaster would take longer to assess.

"The assessment on damage in Vanuatu are ongoing, so they are coming in somewhat slowly," he said.

"So far I haven't heard of any large infrastructure that has been damaged and that seems like good news. Hopefully, that will continue to be the case.

"That is one thing that would be very costly and would delay the recovery.

"The other thing is tourism because Vanuatu is a tourism-oriented country, that is going to be very important in terms of how quickly Vanuatu is able to host tourists.

"There has been a fair amount of agricultural production for this year that has been wiped out, so it is going to be a question of how quickly that can be re-established."

Xianbin Yao, the director-general of the ADB's Pacific department, said recent natural disasters highlight the need for policies that increase resilience such as investment in climate-proofing infrastructure.

However, he said it was also important for Pacific countries to invest in developing people's skills and ability to work, through increased spending on education and health.

The Asian Development Outlook report said Solomon Islands, which was hit by floods last year, would see a return to growth this year due to foreign investment.

Meanwhile, new private investment in Fiji is expected to fuel the country's robust economic growth.

"Fiji is a very good news story for the Pacific region; they successfully got through their elections, there is increasing engagement of the parliament and policymaking ... and it has embraced a package of reforms that look very promising," Mr Edmonds said.

 

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