Vanuatu’s economy is projected to grow by up to 4% in 2015, according to the latest issue of the Asian Development Bank’s (ADB) Pacific Economic Monitor, launched Tuesday in Port Vila.
The report says that “amid the threat of a weakening global economy dampening growth prospects in the Pacific, Vanuatu’s growth outlook of 4% for 2015 remains strong.”
The highlights of the report were presented to an audience of government officials, and representatives from private sector, academia, and media at the ADB-World Bank Vanuatu Liaison Office in Port Vila.
“The outlook for the Pacific region’s major economic partners remains relatively robust, which will have positive spin-offs to some countries in the region, including Vanuatu,” said Christopher Edmonds, ADB Senior Economist and lead author of the ADB report at the launch.
Departures from New Zealand to South Pacific destinations rose by 15.4% from January to August 2014—outpacing growth in tourism to non-Pacific destinations. Fiji, Samoa, Tonga, and Vanuatu, all recorded double-digit growth in the number of visitors from New Zealand.
The Pacific Economic Monitor—a bi-annual economic review of ADB’s Pacific developing member countries, says inflation remains low in Vanuatu due to low international commodity prices.
On the Pacific generally, the ADB reports says the region is already benefitting from stronger links with Asia’s growing economies, and can gain more in coming years with targeted policy reforms and investments.
“By the middle of this century, Asia could account for half of global output, trade, and investment, while enjoying widespread affluence,” said Director General of ADB’s Pacific Department Xianbin Yao.
“The time is right for the Pacific to start planning on how to seize the new economic opportunities that Asia’s growth brings.”
The report says the Pacific region stands to benefit from rising demand for goods and services in Asia by developing traditional exports such as cash crops and fisheries, promoting high-value niche products like pearls and handicrafts, and more promotion of the Pacific as tourism and retirement destination. ADB is working with Pacific governments to build their capacities for long-term fiscal planning and economic management to help Pacific economies to fully harness opportunities provided by growth in Asia.
Other policy briefs in the report consider fiscal management challenges for Papua New Guinea and Timor-Leste and ongoing efforts to assist Pacific governments in improving their public financial planning and management.
The report also provides an update on macroeconomic developments in the Pacific region, focusing on fiscal outcomes and plans. Limited expenditure growth in the larger Pacific economies of Papua New Guinea and Timor-Leste is expected in 2015. While high revenues have underpinned expanding budget allocations in these economies, low implementation rates limit the development impact of these expenditures.
Revenues from fishing licenses are up in Kiribati, Marshall Islands, the Federated States of Micronesia, Nauru, and Tuvalu, which is welcome news for these small economies with narrow revenue bases. The report says tax revenue collections are up in Fiji, Palau, Tonga, and Vanuatu, reflecting increased economic activity.
The Pacific Economic Monitor is a bi-annual review of economic developments in ADB’s 14 developing member countries in the Pacific, and includes policy briefs on relevant topics. In combination with the Asian Development Outlook series, ADB provides quarterly reports on economic trends and policy developments in the Pacific. The Monitor welcomes contributions of policy briefs from external authors and institutions.
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. In 2013, ADB assistance totaled $21.0 billion, including co-financing of $6.6 billion.