As Vanuatu’s economy continues to recover from Cyclone Pam in 2015, growth is expected to pick up to 4.3% in 2017, and then slightly moderate to 3.8% in 2018, says a new Asian Development Bank (ADB) report that expects growth to pick up in the Pacific countries in 2017.
Growth in Vanuatu will be driven by ongoing recovery in the tourism and agriculture sectors, with an increase in infrastructure investment and construction activities as part of the cyclone recovery providing a needed boost, the report says.
“But the report warns that rising public debt creates risks for the country’s improved outlook. Reform is needed to improve infrastructure management and enhance productivity to sustain faster growth.”
The report shows that growth rate of GDP in Vanuatu in 2014 was 2.1 and then it fell to -1.0 the following year in 2015 due to the effects of the Cat 5 super tropical cyclone Pam. It made a substantial recovery in 2016 to 3.8 and is expected to rise to 4.3 below making a moderate fall to 3.8 in 2018.
The ADB report recorded inflate in 2014 was 1.0%, rising 2.5% still due to the effects of Tropical Cyclone Pam. The annual inflation dropped significantly to 0.9% in 2016 and is expected to reach rise to 2.4% this year and then record the highest rate for the four years since 2014 in 2018 with an expected inflation rate of 2.6%.
The Pacific economies face gradually improving growth prospects in the next 12 months on the back of stronger economic fundamentals, says the new Asian Development Bank (ADB) report launched Monday.
The Asian Development Outlook (ADO) 2017, ADB’s flagship annual economic publication, projects Pacific economies will, on average, grow 2.9% in 2017 and further 3.3% in 2018, as the region’s larger economies recover from recent slowdowns and shocks.
“Increased mining and agriculture output is seen to spur a mild recovery in PNG, which will contribute to a modest rebound for the Pacific region as a whole,” said Xianbin Yao, Director General of ADB’s Pacific Department. “While growth in most of the ADB Pacific member countries for the near term is positive, there is no room for complacency and vigorous policies to sustain economic activity still need to be implemented.”
The ADB report covers the economic performances of Papua New Guinea, Fiji, Timor-Leste, Solomon Islands, Vanuatu, Palau, Cook Islands, Samoa, Tonga and the smaller island economies of Kiribati, Nauru and Tuvalu.
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, ADB is celebrating 50 years of development partnership in the region. It is owned by 67 members—48 from the region.