Forecasts for economic growth in 2018 for Tonga remain negative at -0.3% a report by the Asian Development Bank (ADB) shows.

For the whole Pacific subregion the ADB announced a revised forecast growth of 1.1%, down from 2.2% projected in April, due to disaster-related challenges and declines in public spending, and a weaker outlook for the Pacific's largest economy Papua New Guinea and third largest economy Timor-Leste.

The forecasts for 2018 growth remained unchanged for Fiji at 3.6%, Vanuatu at 3.2%, the Cook Islands at 3.5%, Samoa at 0.5%, Tonga at -0.3%, Kiribati at 2.3%, the Federated States of Micronesia at 2.0%, and the Marshall Islands at 2.5%.

Economic growth for Papau New Guinea for 2018 is down from 1.8% to 0.5% due to impacts from an earthquake in Hela Province in February. And Timor-Leste is projected to experience slow growth from 3.0% to 0.5% in 2018 due to political uncertainty affecting government spending and private investment.

“Disaster resilience and public sector management are cornerstones of ADB’s work in the Pacific,” said ADB Director General for the Pacific Ms. Carmela Locsin. “ADB will continue to work with countries in the region to build disaster readiness and support policy reforms to maximize the value of public investments.”

The 2018 outlook is not so bad for the Solomon Islands, Tuvalu, and Nauru, where economic growth has improved by 3.2%, 3.8%, and 3.0% respectively.

In Palau, where the economy is driven by tourism, a decrease in visitor arrivals has pushed down the 2018 growth forecast to 1.0% from 3.0% projected in April.

Growth predicted in 2019

However, things are expected to get better in 2019 with growth predicted to increase across the subregion to 3.1%.

Tonga’s economic recovery is on track from the impact of Tropical Cyclone Gita while in Fiji, tourism and agriculture will continue to lift growth. In the Cook Islands and Samoa, tourism will also drive economic expansion, and in Kiribati, economic growth is supported by the implementation of infrastructure projects financed by development partners.

In the region, inflation is now seen to remain steady at 4.2% in 2018 due to higher taxes and international commodity price movements causing costs to rise higher than expected in many Pacific economies. In 2019, inflation in the subregion is expected to moderate slightly to 3.9%.