13 January 2015

Asian Development Outlook Supplement: Pacific highlights for 2015

ADB has released its latest supplement to Asian Development Outlook 2014 Here are the highlights relevant to the Pacific regional economy:
Economic growth in the Pacific is seen to spike at 13.4% in 2015—multiples above 4.5% in 2013 and 5.4% in 2014—as Papua New Guinea enjoys a burst of growth in its first full year of liquefied natural gas exports. This forecast is modestly higher than in the Update, as prospects in some economies have improved. Indicators suggest Fiji’s economy is continuing to build on gains in tourism and export earnings—particularly from shipments of sugar and mineral water—and business confidence appears to be growing in the aftermath of elections in September 2014. Development partners’ reengagement with Fiji in response to the elections is also seen to boost growth prospects, and stronger economic integration is expected to generate positive spillover for the rest of the Pacific subregion. Log exports from Solomon Islands have recovered strongly since the April 2014 floods, while gold production looks likely to remain suspended for an extended period. In Palau, a rebound in tourism and construction in late 2014 pushed actual GDP growth in FY2014 (ended 30 September) slightly higher than forecast in the Update—in part a base effect as revised FY2013 data showed a deeper contraction than earlier estimated. Growth in Palau is expected to accelerate further in FY2015 as tourist arrivals pick up.
Inflation in the Pacific subregion is projected to ease from 4.5% in 2013 to 4.2% in 2014 as global commodity prices decline and inflationary pressures in Fiji moderate. Increased consumption and higher tobacco taxes and medical and educational fees in Palau have brought higher inflation, which is expected to continue through next year. Subregional inflation is projected to return to 4.5% in 2015.