Page 31 - IB January 2023

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COUNTRY OVERVIEWS

Continued from page 13 something about the availability of foreign exchange as it
is hampering business. Air Niugini had to suspend flights
revenue—by far the nation’s most important economic recently because its fuel supplier and the central bank
driver— to AU$150 million in 2020. The ANZ says “real GDP were at loggerheads over foreign exchange payments. Key
is estimated to have declined by only 0.5% in 2020, before to growth will be resumption of mining at Porgera and
recovering to 1.5% in 2021 and 1% in 2022. According to the progression of other minerals and resource projects.
2023 National Budget, fishing revenue is expected to rise
to AU$205m over the next three years. Hence, we estimate Samoa
GDP to edge higher over the next two years.” The Kiribati ANZ says total remittances to Samoa lifted sharply last
government’s COVID-19 response package equated to 4.9% year by 19.5% (year on year) to represent the equivalent of
of GDP and the ADB warns the sustainability of such social 36.2% of GDP. Some tourism infrastructure in the country is
protection programs is under threat. tired, and needs refurbishment and upgrading to capitalise
on the opening of tourism. ANZ says Australian arrivals
Nauru should see Samoa’s economy grow by 15.9% in 2023.
The ADB says ensuring adequate financial space to fund
social protection will be a challenge for Nauru, particularly Solomon Islands
given its revenue sources such as the Regional Processing In 2020, Solomon Islands experienced its first recession
Centre (RPC-Australia’s offshore centre for asylum seekers) since 2004 and growth and employment contracted again
and fishing license fees is volatile, and in the case of the last year, driven by civil unrest and widespread COVID
RPC, is likely to decline significantly in the longer term. transmission. However this year’s Pacific Games, the Tina
The ADB says, “options such as expanding contributory River Hydro project, and other infrastructure projects
schemes, broadening the tax base, and reallocating public should drive economic recovery and expansion. The ANZ
expenditures could help ensure that reliable financing is says diversifying the economic base beyond logging is
available.” critical, and coffee, cocoa, sustainable palm oil, fishing,
tourism and manufacturing all have enormous potential.
Niue It says improving governance is also important to attract
Niue’s government reported fiscal deficits equivalent to more private investment.
13.3% of GDP in FY2022. The deficit is expected to widen
to 21.4% in 2023. The ADB predicts sustained demand for Tonga
social protection support through the old age pension, child The 2022 eruption and tsunami led to economic
support measures etc., but says more work should be done contraction last year, despite the impact of remittances,
on data collection and analysis to understand the impact of which approached 40% of GDP. Government has been
social protection payments. It also suggests incentives to supported by both grants and loans from multilateral
attract and retain workers in Niue, to mitigate against the sources. Tonga’s government passed a TOP764.7m budget
flight of workers to New Zealand. for 2022-23, up 22.3% on 2021-22. The additional stimulus
should support economic recovery.
Palau
Palau has been ready to welcome tourists since mid-2021 Vanuatu
but as of September last year, they were still only at 14% of Vanuatu’s important tourism industry is slowly picking
pre-pandemic levels, as its main source markets in Asia have up, cruise ships have returned, and private remittances
taken a conservative approach to travel post-pandemic. The from citizens working overseas continue to be important.
ADB says Palau will need “innovative marketing and recovery Demand is growing for Vanuatu’s ethically and sustainably
strategies to reclaim lost ground, particularly considering produced agricultural products, including kava, cocoa,
likely intense competition from neighbouring destinations in coffee, copra, pepper and vanilla. The ANZ recommends
Asia in coming months and years.” more support for smallholders, to lift production and
take advantage of global demand, but says in the short
Papua New Guinea term, tourism is central to immediate economic recovery.
PNG’s government expects the economy to grow 4% this It suggests Vanuatu look to opportunities in the business
year. The 2023 budget announced in November outlines processing outsourcing (BPO) sector in the longer term,
a 10% increase in government spending, and a deficit of particularly given its bi-lingual population.
5.4% of GDP. As in other Pacific Islands, higher inflation
(5.7% is projected) is being felt, particularly amongst low Visit www.islandsbusiness.com to see overviews from
income earners. The government urgently needs to do Micronesia and all Pacific States and Territories.

Islands Business, January 2023 31