Pacific growth slow in 2012, to be slower this year
The Asian Development Bank’s latest Pacific Economic Monitor – which reviews economic developments and issues in the Pacific Islands, PNG, and Timor-Leste – says the region’s growth softened in 2012 and is expected to moderate further in 2013, as gains from major investment and public infrastructure projects fade.<!--more-->
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The report released in late March says, regional growth eased to 7.3% in 2012 – down from a post global financial crisis high of 8.3% in 2011. The report, which is published three times a year, forecasts a further slowdown to 5.2% in 2013, before a mild pick up to 5.5% emerges in 2014.
The 2012 performance was affected by a slightly softer pace of expansion in the larger, resource exporting economies of Papua New Guinea (PNG) and Timor-Leste, although these economies are still expanding at rates that lead the region.
The Solomon Islands saw a sharp pullback from double-digit growth rates, as log revenues levelled off. Reduced gains from public construction projects weighed down growth in Kiribati, the Federated States of Micronesia, Samoa, and Tonga.
Growth, however, increased in 2012 for some countries. Growing tourist arrivals gave growth a boost in the Cook Islands and Vanuatu, and supported solid growth in Palau. The tourism outlook for the region remains bright, with visitor numbers in 2012 building on historic highs set the previous year.
Strong arrivals from the main markets of Australia and New Zealand, as well as a rise in numbers from East Asia, are driving the gains. This uptrend is likely to continue as the economies of the key source markets are expected to remain steady, as long as emerging concerns about the availability of tourism facilities at peak tourism periods are addressed.
Pacific countries that have developed strong tourism sectors can build on their success by strengthening their transport and communication linkages to make it easier for visitors to travel and stay, and for tourism businesses that host them to operate profitably. Maintenance and improved provision of public goods also need to be prioritized since successful tourist sectors are underpinned by host countries’ basic infrastructure and public service delivery.
For 2014, the region is likely to benefit from a rebound in the PNG economy, along with the rollout of new public infrastructure projects in smaller islands including post-cyclone reconstruction work. Growth however is expected to remain sluggish in the Solomon Islands due to log production declines, even as agricultural and gold output is projected to rise.