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| [PHOTO: 401(K) 2012/Flickr/CC BY-SA 2.0] |
Manila: Pacific growth softened in 2012 and is expected to moderate
further in 2013, as gains from major investment and public infrastructure
projects fade, according to the latest Pacific Economic Monitor, released recently by the Asian Development
Bank (ADB).
Regional
growth eased to 7.3% in 2012―down from a post global financial crisis high of
8.3% in 2011. The report 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 leveled off. Reduced gains from public construction projects weighed
down growth in Kiribati, the Federated States of Micronesia, Samoa, and Tonga.
However,
growth actually increased in 2012 for some countries in the region. 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.
"While
regional growth is moderating under the weight of slow-downs in some
resource-rich countries, it is encouraging to note that the tourism sector is
leading the growth in a number of small Pacific countries," said Xianbin
Yao, Director General of ADB’s Pacific Department.
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.
Inflation
eased to 5.3% in 2012 on more stable food and fuel prices, but is set to
accelerate to 6.1% in 2013 and 6.3% in 2014 as the muting effect of strong
regional currencies on import prices dissipates in some countries, and public
spending quickens.
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.
Published
three times each year, the Pacific Economic Monitor reviews economic
developments and issues in the Pacific Islands, PNG, and Timor-Leste.