Pacific economies weathering financial turmoil
Pacific economies remain relatively sheltered from global financial
turmoil, with growth projections largely unchanged at the mid-year
point, according to the latest Pacific Economic Monitor, released by the
Asian Development Bank (ADB).
Growth in the Pacific region is expected to run at 6.0 percent in
2012, but slow down to 4.2 percent in 2013. The slowdown in 2013 is
expected to be mainly due to lower growth in resource exporting
countries that weigh most heavily in regional averages.
"Pacific economies are weathering persistent troubles in the
eurozone, but they need to broaden and build resilience in their
economies," said Director General of the ADB's Pacific Department
Xianbin Yao. "To support this agenda, ADB is continuing its efforts to
assist Pacific economies in making long-term infrastructure investments
and undertaking policy reforms to achieve stronger and more inclusive
growth in coming years."
Economic troubles in the eurozone continue to have only modest and
indirect effects on Pacific economies, owing to the relatively greater
importance of economic developments in Australia, Japan, New Zealand,
and the United States in driving Pacific growth. While the eurozone
crisis drags on, relatively stronger performance in these countries
appears to be moderating the impact on Pacific economies.
Slowing growth in the People's Republic of China, however, is
expected to have greater implications for the Pacific, mainly due to its
strong ties with Australia, the main trading partner of many Pacific
economies. The slowdown forecast for the Pacific in 2013 is expected
mainly due to lower growth in resource exporting countries, such as
Papua New Guinea (PNG), Solomon Islands and Timor-Leste, which weigh
most heavily in regional averages.
The value of Pacific exports to Australia was 6.1 percent lower
during the first five months of 2012 compared to the corresponding
period in 2011. This is because PNG's main exports to Australia - gold,
mineral fuels, petroleum, and petroleum products - dropped by 10
percent, and PNG accounted for 90.8 percent of total Pacific exports to
Australia in the first quarter of 2012.
The value of Pacific exports to New Zealand in the first quarter of
2012 rose by 22.2 percent compared with the same period in 2011, due to
rising import volumes of phosphate from Nauru and coffee from PNG.
Tourist arrivals in the Pacific have maintained modest growth during
the first five months of 2012. Departures from Australia to major South
Pacific destinations increased by 1.4 percent compared with the same
period a year earlier.
Inflation in the Pacific is projected to run at 6.3 percent in 2012 -
a modestly lower level than predicted at the start of the year - due to
continued easing in international commodity prices, particularly lower
food prices.
However, recent extreme weather in the US and India is leading some
analysts to reevaluate forecasts for continued easing of food prices
into next year.
-ADB
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