After a pandemic-induced contraction of 5.8% in 2020, the economies of ADB’s 14 Pacific developing member countries (DMCs) are forecast to grow by 0.3% in 2021 and 4.0% in 2022. The growth is expected on the back of the outlook for Papua New Guinea (PNG), the subregion’s largest economy, where a modest recovery is projected this year before strengthening in 2022.
The forecast for 2021 represents a slight weakening from the Asian Development Outlook (ADO) 2021 in April, largely due to impacts of the ongoing coronavirus disease (COVID-19) outbreak in Fiji, as well as delays in Vanuatu’s planned partial reopening of its borders. Future growth will be influenced by the spread of the virus, the rollout of COVID-19 vaccines, and the ability to sustain fiscal stimulus international coordination.
“Safe travel bubbles are expected to contribute to a gradual recovery in the Pacific and bring hope to some of the region’s smaller, tourism-dependent economies,” said ADB Director General for the Pacific Leah Gutierrez. “Widespread vaccination, both within Pacific economies and in their major economic partners, will play a major role in boosting growth in 2022.”
Tourism to the Pacific remains largely closed, with arrivals during January–April 2021 plunging by 100% compared with the same period in 2020. Some Pacific destinations are looking to travel bubbles as a means of reviving their ailing tourism sectors.
The PEM examines a broad range of issues affecting Pacific economies including:
“Travel bubbles of hope” in the Cook Islands, Niue, and Palau; Fiji’s economic recovery efforts amid a new pandemic wave; Navigating the recovery, strategic fiscal policy, and development support in Kiribati and Tuvalu; Cautious steps toward reopening borders in the Federated; States of Micronesia and the Marshall Islands; The role of strong public financial management in PNG in supporting economic recovery; How Nauru achieved full adult vaccination; The role of the private sector in Vanuatu’s economic recovery from COVID-19; How concessional finance helped Samoa and Tonga avoid potential debt sustainability issues; Labor market landscape and challenges in Solomon Islands."
The PEM includes two policy briefs: an overview of COVID-19 vaccine coverage in the Pacific and the factors affecting country rollouts; and an examination of the impact of pandemic-related school closures on losses in learning and potential earnings in the subregion and options for improving education resilience in the face of disruptions./.