MANILA, March 24 (BERNAMA-NNN- ADB) — A ramping up of natural gas exports in Papua New Guinea (PNG) is expected to push the Pacific region’s average GDP growth to 10.7% this year, a new Asian Development Bank (ADB) report says.
ADB’s flagship annual economic publication, Asian Development Outlook 2015 (ADO) notes that most economies across the Pacific are expected to perform better in 2015 due to favorable domestic and external conditions.
Vanuatu will be a notable exception, with recent Tropical Cyclone Pam causing widespread damage which is expected to disrupt economic activity and hinder growth this year.
Early assessments indicate the cyclone will have potentially large impacts on tourism and agriculture output, after tourism grew strongly last year, on an increase in cruise ship arrivals. Kiribati, Nauru, Solomon Islands, and Tuvalu were also adversely affected by Cyclone Pam.
“While most Pacific economies enjoy positive near term outlooks, recent disasters brought on by climatic events highlight the importance of increasing resilience to shocks across the Pacific,” said Xianbin Yao, Director General of ADB’s Pacific Department.
“Delivering inclusive growth while faced with such volatilities requires the Pacific to focus on maintaining basic public services by investing in climate-proofed essential infrastructure, as well as human capital through education and health spending.”
In PNG, the sub-region’s largest economy, the first full year of liquefied natural gas exports is expected to drive GDP growth to 15% in 2015, but that is seen to subside to 5% in 2016. Policymakers need to ensure that the benefits of growth are shared widely to reduce poverty and reduce inequality.
Large increases in public spending saw economic growth in Timor-Leste accelerate to 7.1% in 2014. Growth is expected to slow to 6.2% in 2015 but recover to 6.6% in 2016 if major investments proceed as planned.
However, encouraging private investment is key to diversifying the economy and maintaining positive growth in the face of declining petroleum production.
Fiji recorded broad-based growth in 2014-it’s fifth consecutive year of expansion-as expansionary fiscal and monetary policy continued to boost consumption and investment, and tourism and agriculture performed well.
Growth is seen to moderate slightly as the economy shifts from growth driven by public spending, toward private investment-fueled growth. Structural and financial management reforms can facilitate this transition and help sustain the country’s economic expansion.
ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region. — BERNAMA-NNN-ADB