Date: March 09, 2011
An Asian Development Bank (ADB) report released on Wednesday shows that the world economy’s recovery from 2010 will boost the standing of the 14 Pacific economies in 2011.
The ADB’s Pacific Economic Monitor projects a 6.3-percent expansion in 2011, up from the previous year’s 5.3 percent, for the Pacific economies – those of Timor-Leste, Papua New Guinea, Solomon Islands, Vanuatu, Nauru, Samoa, Palau, Cook Islands, Kiribati, Marshall Islands, the Federal States of Micronesia, Tonga, Fiji Islands, and Tuvalu.
The report predicts an 8.5-percent and 10-percent growth for Papua New Guinea and Timor-Leste, respectively, owing to the benefits of liquefied natural gas and petroleum developments.
The economy of Solomon Islands, the report adds, will expand by 7.5 percent in 2011 as gold exports resume and the forestry sector gains strength. Nauru will meanwhile return to moderate economic growth due to phosphate exports.
Robert Wihtol, director general of the ADB’s Pacific Department, however noted that the Pacific economies’ positive performance “masks sharply different performances across the region."
“The resource-rich economies are well placed to record high rates of economic growth but the smaller and more remote economies are exposed to the costs from rising world fuel and food prices," Wihtol said.
Excluding Papua New Guinea and Timor-Leste, the Pacific Economic Monitor projects a 4-percent inflation in the Pacific Islands economies for 2011, and 6.5 percent in the Pacific as a whole. If commodity prices remain at recent highs, the report warned that inflation may further shoot up.
"Learning from the 2008 experience of high commodity prices, the Federated States of Micronesia, Kiribati, Marshall Islands, Palau, and Tuvalu are at most risk from the inflationary effect of higher world commodity prices," Wihtol explained.
The report also projects a stronger tourism sector and some recovery in wage remittances for the region this year on the back of a better outlook for the economies of Australia and New Zealand, where most of the visitors and remittances to the Pacific come from.
Standing ready to gain the most from these improvements are the Cook Islands, Fiji Islands, Samoa, Tonga, and Vanuatu.