Pacific outlook remains poor, says new ADB report [1]
Monday, June 1, 2009 - 15:56. Updated on Friday, September 12, 2014 - 10:54.
Most Pacific economies are continuing to weaken as they suffer the impacts of the Global Financial Crisis, says a new Asian Development Bank (ADB) publication released today.
The inaugural issue of the Pacific Economic Monitor is a quarterly review of the developments in the Pacific Island economies. Rapidly deteriorating economic conditions in Solomon Islands and expected contractions over 2009 in the Fiji Islands, Samoa, Palau and Tonga are highlighted in the first issue.
The Monitor uses data from Australia, New Zealand, the United States, and Asia to supplement data from the region and provide more up-to-date assessments and broader coverage of the Pacific economies.
The report shows a decline in overall tourism departures for the Pacific and the inflation-adjusted value of remittances. The lower commodity prices have reduced export revenues and export volumes of some key commodities have also fallen. A decline or leveling off in domestic demand in most Pacific economies is also evident.
"The region faces considerable downside risk as major neighboring economies are now in recession," says S.Hafeez Rahman, Director General of ADB's Pacific Department. "This threatens the region's tourism industry and remittance flows to the Pacific."
The Monitor reports the Fiji Islands and Solomon Islands remain the economies most at risk. The official foreign reserves are below comfort level, and their balance of payments and budgets are under pressure.
Vanuatu is the only Pacific economy showing signs of strengthening, most likely boosted by the diversion of tourists from the Fiji Islands. A general easing in inflation as world fuel prices decline is also some positive news for the region.
"Responding to the global economic crisis should remain a priority for the Pacific," says Mr Rahman. "A number of Pacific economies have moved towards a short-lived fiscal stimulus to support domestic demand. Any stimulus should be monitored and kept to sustainable levels. It is also imperative that Government's enhance fiscal space through reprioritization and reform."
ADB, based in Manila, is dedicated to reducing poverty in the Asia and Pacific region through inclusive economic growth, environmentally sustainable growth, and regional integration. Established in 1966, it is owned by 67 members ... 48 from the region. In 2008, it approved $10.5 billion of loans, $811.4 million of grant projects, and technical assistance amounting to $274.5 million. ADB, 01/06/09.