By Linny Folau

Growth in Tonga’s economy is projected to reach 2.5% in 2023 expanding further to 3.2% in 2024, according to the latest edition of the Asian Development Bank's economic report presented in Nuku'alofa today, 13 April.

ADB Public Sector Economist, James Webb said, like its South Pacific neighbours, Tonga has faced an immensely difficult past three-years, not just because of the global pandemic but also from the impact of hurricanes and last year’s tsunami.

The Asian Development Outlook (ADO) April 2023 noted that eased mobility restrictions and revived public investment will likely drive gross domestic product growth this year and next.

“Tonga’s positive growth outlook is being aided by the stimulus provided by public expenditure, but the country’s fiscal position will be mixed into the medium term.

“Inflation is forecast to accelerate to 9.4% in FY2023, with remittances providing some potential relief to households. Inflation is projected to drop sharply to 1.5% in FY2024."

Tonga

The Minister of Finance, Hon. Tiofilusi Tiueti in his opening address at the National Reserve Bank said they unite to discuss Tonga’s economic analysis and developing issues, as well as performance with forecasts of the inflation and Gross Domestic Production (GDP) rates for the next two-years from the ADB’s 2023 Asian Development Outlook.

"We meet at a very important inflection point of Tonga’s economic and social development path. Our location in the Pacific places us far from the areas of geopolitical tensions, but the events in Europe and in Asia cast a dark shadow over our long-term prospects; events that we ignore at our peril.

“The recent IPCC report on climate change has repeated yet again that time is running out on reversing the impact of climate change on our planet and especially our islands, and yet it seems that the major contributors to climate change have developed a sense of indifference to such warnings."

He said it is of the utmost importance to transition quickly and decisively, as this would be economically beneficial and promote sustainable progress as well as stimulate economic growth and job creation.

“The implication is that within 20-years, our main islands will most probably be affected as sea-level rise steadily reduces our coastal boundaries. Such events, together with high intensity tropical cyclones, and events such as earthquakes, are bound to have a serious impact on our economic prospects. These are the seismic changes which we must assess from now on to ensure that the future of our people is secure.

“So, it is only appropriate that the launching of the ADO Report is an addition to strengthening how the government and the people of Tonga must plan a future for our younger generation,” he said.

He said Tonga appreciated ADB's continued help and generous backing.

“Last month, we signed the agreement for disaster financing of US$10 million for Tonga. It is essential to introduce emerging problems concerning our economy, finance and to advocate for key reforms that will shape the direction and goals that will require backing from our development partners,” he said.

The Minister also said given the magnitude of the climate change challenge in the Pacific, the Asian Development Outlook is a knowledge platform and a powerful publication for good decision making.

“It demonstrates ADB’s responsibility towards this and future generations, as we need to put money into development projects that consider the inevitable impacts of climate change. As we all know, the Hunga-Tonga and Hunga-Ha’apai volcanic eruption caused extensive damage to property, infrastructure, and agriculture, with the World Bank estimating total economic losses equal to 36.4% of GDP, a significant adverse impact on our economy,” he said.

"Transformation is already occurring rapidly, and we must act swiftly in response."

The presentation was attended by representatives from business/private sector, government officials, financial institutions and media.