The economies of most South Pacific islands are expected to contract this year due to weak tourism and remittances, the Asian Development Bank said Monday. The global economy is showing signs of stabilizing, but the full impact from the downturn in the US, Australia and New Zealand has yet to hit 14 island nations in the region monitored by the Manila-based lender.
Excluding the resource-rich Papua New Guinea and East Timor, economic growth in the Pacific is forecast to contract by 0.4 per cent this year after posting 5.1 per cent growth last year, the ADB said in a report.
Including those two nations, where the discovery of oil and other commodities are lifting growth prospects, regional economic growth will expand 2.8 per cent, it said.
Five other major economies — the Cook Islands, Fiji, Palau, Samoa and Tonga — are all expected to contract. No growth is projected in the Solomon Islands because of falling log prices. Australian tourists have begun returning to Fiji, but growth in tourism was seen to be slowing elsewhere until next year.
Inflation has eased across the region except in Fiji, although the recent rise in crude prices may push up inflation for the rest of year. Low or negative economic growth in most of the Pacific states in the past decade has held back development, with only six of the 14 countries recording a slight improvement in gross domestic output per person over the 10 years.
The 14 nations include East Timor, Marshall Islands, Fiji, the Solomon Islands, Papua New Guinea, Kiribati, the Cook Islands, Tonga, Samoa, Palau, Vanuatu, Tuvalu, the Federated States of Micronesia and Nauru.