Pacific Economic Monitor - May 2009

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Highlights

A view from neighboring economies

Major neighboring economiesAustralia, New Zealand and theUnited Stateswill experience recession in 2009. Their labormarkets are continuing to deteriorate. Unemployment has risen to8.9% in the United States, 5.4% in Australia, and 5.0% in NewZealand.

The external slowdown is reducing tourism activity in the Pacificand the flow of remittances to the region.

Tourism departures from Australia to the Pacific weakened inearly 2009. Departures for the Pacific from New Zealand had

noticeably weakened earlier. Departures from the United Statesand Asia for the Pacific were also down over 2008.

The state of the Pacific

The Pacific saw historic economic growth in 2008. Overall growthof 5.1% was led by the commodity-intensive economies of PapuaNew Guinea, Solomon Islands, and Timor-Leste. Overall growth isprojected to slow to 3.1% in 2009.

The contraction in gross domestic product (GDP) forecast for2009 in the Fiji Islands and Samoa is likely to be larger thanoriginally expected. Conditions are deteriorating rapidly inSolomon Islands. Vanuatu is now expected to perform better thanoriginally forecast.

Inflation is easing across the region, mainly because of lowerworld fuel prices. The devaluation of the Fiji Islands dollar will,however, add to inflationary pressures in the Fiji Islands.

Risks and scenarios

A key downside risk for the commodity-intensive Pacificeconomies is a larger than expected decline in world demand andcommodity prices.

The tourism-intensive economies of the Pacific are exposed to thecontinued deterioration in international tourism now forecast for2009.

Economic management

The response to the global economic crisis is best tailored to theindividual circumstances of each Pacific economy. A proactive,targeted, and coherent policy response is called for.

Poor revenue outcomes are raising the imperative to act early totrim low-priority expenditure. Increased revenue effort will alsobe required. Additional fiscal resources may also be needed.Options include external grants, where made available, andborrowing, where it is affordable.

Pacific Economic Monitor

The Pacific EconomicMonitor provides an updateof developments and policyissues in the Pacificeconomies.

ContentsHighlights 1

A view from neighboringeconomies 3The state of the Pacific 9

Risks and scenarios 24Economic management 29Data 32

How to reach usE-mail

[email protected]

Asian Development BankPacific Department

DiliADB-World Bank Bldg., Avenida dosDireitos Humanos, Dili, Timor-LesteTelephone: +670 3324 801 HoniaraMud AlleyHoniaria, Solomon IslandsTelephone: +677 21444Manila6 ADB Avenue, Mandaluyong City1550 Metro Manila, PhilippinesTelephone: +632 6324444Nuku'alofaFatafehi StreetTonga Development Bank BuildingNukualofa, TongaTelephone: +676 28290Port MoresbyLevel 13 Deloitte TowerPort Moresby, Papua New GuineaTelephone: +675 321 0400/0408Suva5 th Floor Ra Marama Building91 Gordon Street, Suva, Fiji IslandsTelephone: +679 3318101SydneyLevel 18, One Margaret StreetSydney, NSW 2000, AustraliaTelephone: +612 8270 9444

May 2009 www.adb.org/pacmonitor


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HIGHLIGHTS

2

Latest Asian Development Bank forecasts for 2009

Real GDP growth

-4 -2 0 2 4 6 8 10

Tonga

Palau

Samoa

Fiji Islands

Marshall Islands

Tuvalu

Kiribati

Cook Islands

Nauru

Solomon Islands

VanuatuPNG

Timor-Leste

Change in real GDP (%)

= ADO 2009forecast

= illustrativeupdate

FSM

Inflation

0 2 4 6 8 10

Marshall Islands

Solomon Islands

Timor-Leste

Samoa

PNG

Kiribati

Palau

Tonga

Cook Islands

Fiji Islands

Vanuatu

Tuvalu

Nauru

FSM

Change in consumer price index (%)

= ADO 2009 forecast

= illustrative update

ADO=Asian Development Outlook, FSM=Federated States of Micronesia,GDP=gross domestic product, PNG=Papua New GuineaNote: Forecasts for the Cook Islands, Marshall Islands, FSM, Nauru, Palau,Samoa, and Tonga are for their fiscal years.Source: ADB. 2009. Asian Development Outlook 2009 . Manila (March) andADB staff estimates.

2009 Asian Development Bank

All rights reserved. Published 2009.Printed in the Philippines.Publication Stock No.: RPS090535

Cataloging-In-Publication DataAsian Development Bank.Pacific Economic Monitor, May2009. Mandaluyong City,Philippines: Asian DevelopmentBank, 2009.

This edition of the Pacific EconomicMonitor was prepared by CecilCaparas, Vivian Francisco, JoelHernandez, Milovan Lucich,Dominic Mellor, Moises Nicolas,Rommel Rabanal, Craig Sugden,and Laisiasa Tora of the PacificDepartment.

The views expressed in thispublication are those of theauthors and do not necessarilyreflect the views and policies of theAsian Development Bank (ADB) orits Board of Governors or thegovernments they represent.

ADB does not guarantee theaccuracy of the data included inthis publication and accepts noresponsibility for any consequenceof their use.

Use of the term "country" does notimply any judgment by the authorsor ADB as to the legal or otherstatus of any territorial entity.

ADB encourages printing orcopying information exclusively forpersonal and noncommercial usewith proper acknowledgement ofADB. Users are restricted fromreselling, re-distributing, orcreating derivative works forcommercial purposes without theexpress, written consent of ADB.

6 ADB Avenue, Mandaluyong City1550 Metro Manila, PhilippinesTel.: +63 2 632 4444Fax: +63 2 636 4444www.adb.org

AbbreviationsADB Asian Development BankADO Asia Development OutlookABS Australian Bureau of

Statisticscpi consumer price indexfas free along sidefob free on boardFSM Federated States of

MicronesiaFY fiscal yearGDP gross domestic productlhs left hand sidem.a. moving averageNZ New ZealandPNG Papua New Guinearhs right hand sideUS United Statesy-o-y year on year


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3

A VIEW FROM NEIGHBORINGECONOMIES

Developments overseasGross domestic product

Major neighboring economies will be inrecession in 2009: a 2.8% contraction isforecast for the United States (US), 1.4% forAustralia, and 2.0% for New Zealand.

Unemployment

The US labor market has been deterioratingsince early 2008. The unemployment ratereached 8.9% in April 2009.

The US lost 149,000 jobs in manufacturingand 110,000 construction jobs in April 2009.Manufacturing overtime hours, a leadingindicator of labor demand, fell to an averageof around 2.7 hours per week from about 4hours in January 2008.

New Zealands unemployment rate reached a6-year high of 5.0% in the first quarter of2009. Unemployment began to rise sharply inAustralia in late 2008. Australiasunemployment rate reached 5.7% in March2009 before falling slightly to 5.4% in April.

Inflation

Inflation is easing internationally as demandpressures decrease and prices of oil andcommodities retreat from their historic highsof 2008.

Inflation (year-on-year) in Australia and NewZealand both peaked at around 5.0%. Bothhave since declined to 2.5% and 3.0%,respectively, as of March quarter 2009. USinflation was -0.4% by March 2009, downfrom the high of 5.6% in July 2008.

Latest forecasts from the InternationalMonetary Fund for 2009 are for a slightdeflation of -0.9% for the US, and lowinflation of 1.6% in Australia and 1.3% in NewZealand ( World Economic Outlook , April2009).

Stock markets

Stock markets in key neighboring economiescontinued their decline in 2009, reachingrecord lows in March 2009 but posting modestgains thereafter. Stock indices in the US andAustralia are still down by a third and NewZealands by a fifth compared to a year ago.

GDP growth(%, annual)

-4

-2

0

2

4

2007 2008 2009f 2010f

Australia

New Zealand

United States

f=forecastSource: International Monetary Fund. 2009. World Economic

Outlook, April.

Unemployment in key economies(% of labor force, monthly/quarterly)

0

3

6

9

Jan-08 Jun-08 Nov-08 Apr-09

Australia

NewZealand

UnitedStates

Sources: Australian Bureau of Statistics (ABS), Reserve Bankof New Zealand, and US Bureau of Labor Statistics.

Inflation(y-o-y % change in CPI, quarterly)

0

2

4

6

Mar-07 Sep-07 Mar-08 Sep-08 Mar-09

Australia

New Zealand

CPI=consumer price indexSources: ABS and Reserve Bank of New Zealand.


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4


Tourism and trade Tourist departures to the PacificOceania

The sustained growth in tourism fromAustralia and New Zealand that has helpedexpand the regions economies this decade isover. Arrivals from these primary sourcecountries are now declining. This willcontribute to a slowdown of growth in thePacific region in 2009. Tourism-dependenteconomies face the prospect of an economiccontraction.

The decline in departures from Australia hasaffected the Fiji Islands the most. Floodingand political developments have added to theweak demand from a slowing Australianeconomy.

The apparent diversion of tourists from theFiji Islands to other major Pacific destinationsis providing some economic relief for theseother economies. Vanuatu in particular isappearing to benefit from a switch indestinations by Australian tourists. However,this relief is likely to be temporary, as the FijiIslands is expected to win back tourists laterin 2009.

New Zealand tourism to the Pacific started toweaken in late 2008. Departures to Fiji,Tonga, and Vanuatu are down compared tolast year. This decline has been partiallyoffset by higher tourism numbers for the

Cook Islands and Samoa. Tourism from Asia and the US to Oceania was

generally weak throughout 2008. Thisdownturn is expected to continue into 2009given the international slowdown. Japanesedepartures for Australia and New Zealanddeclined by around 20% in 2008, and werestill down by about 16%, year-on-year, as ofMarch 2009. Departures from the US toOceania also declined by about 7% last year,and early numbers for 2009 confirm acontinuing decline of around 10%.

Exports of goods to (imports by) the Pacific

The value of imports (nominal) is declining inmost of the larger Pacific economies. Whilepartly due to the effect of lower fuel prices,the decline also points to lower domesticdemand. Notably, the value of imports fromeach country's major trading partner (fuel isnormally from a minor trading partner forthese countries) is now trending down in thetourism- and remittance-dependenteconomies.

Departures for the Pacific('000 persons, March quarter totals)

0

35

70

1999 2001 2003 2005 2007 2009

From Australia

From New Zealand

Sources: ABS and New Zealand Ministry of Tourism.

Japanese departures for Oceania(monthly)

-70

-35

0

35

70

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-35

0

35

persons ('000)y-o-y % change (rhs)

y-on-y=year-on-yearSources: Japan Tourism Marketing Co.

US departures for Oceania(monthly)

-80

-40

0

40

80

120

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

-20

-10

0

10

20

30persons ('000)

y-o-y % change (rhs)

y-on-y=year-on-yearSources: US Office of Travel and Tourism Industries.


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5


Departures from Australia to the Pacific(monthly)

Cook Islands

-0.6

0

0.6

1.2

1.8

2.4

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-60

0

60

120

180

240persons ('000)


Fiji Islands

-20

-10

0

10

20

30

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-40

-20

0

20

40

60

persons ('000)


Samoa

-2

0

2

4

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-25

0

25

50persons ('000)y-o-y % change (rhs)

Tonga

-1

0

1

2

3

4

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-50

0

50

100

150


Vanuatu

-2

0

2

4

6

8

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-20

0

20

40

60


Total

-20

0

20

40

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

persons ('000)y-o-y % change

Total

-20

0

20

40

Mar-93 Mar-95 Mar-97 Mar-99 Mar-01 Mar-03 Mar-05 Mar-07 Mar-09-60

0

60


rhs=right hand side, y-on-y=year-on-yearSource: ABS.


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7


Merchandise exports from Australia(A$ million, fob; 3-month moving average)

0

10

20

30

40

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

Fiji Islands

0

40

80

120

160

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

Papua New Guinea

0

3

6

9

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

Solomon Islands

Vanuatu

0

1

2

3

4

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

Kiribati

Nauru

fob=free on board

Source: ABS.

Merchandise exports from New Zealand and the United States(3-month moving average)

From New Zealand(NZ$ million, fob)

0

4

8

12

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

Cook Islands

SamoaTonga

From US(US$ million, fas)

0

1

2

3

4

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

0

5

10

15

20Marshall Islands

Palau

FSM (rhs)

fas=free along side, fob=free on board, rhs=right hand sideSources: Statistics New Zealand, and US Census Bureau.


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8


Motor vehicle imports from Japan(number with trend, monthly)

Cook Islands

0

10

20

30

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Fiji Islands

0

50

100

150

200

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Papua New Guinea

0

100

200

300

400

500

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Kiribati

0

20

40

60

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Nauru

0

5

10

15

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

FSM

0

25

50

75

100

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Samoa

0

10

20

30

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Vanuatu

0

10

20

30

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Palau

0

25

50

75

100

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Solomon Islands

0

20

40

60

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Tonga

0

200

400

600

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Timor-Leste

0

40

80

120

Mar-

07

Jul-

07

Nov-

07

Mar-

08

Jul-

08

Nov-

08

Mar-

09

Source: Japan e-Stats website.


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9

THE STATE OF THE P ACIFIC

Cook IslandsKey developments

Economic growth was weak in 2008,continuing the poor performance of recentyears. Real GDP grew by an estimated 1.1%in 2008, following growth of 1.4% in 2007and only 0.7% in 2006.

Visitor arrivals were down by 3.1% in 2008,with a large decline from high-spendingsegments of the market such as the US,Canada, and Europe. High fuel prices and theloss of one of two international freight-shipping services also contributed to a weakeconomy.

Key imports have slowed in early 2009, anoutcome consistent with a weak economy.Motor vehicle imports from Japan and NewZealand are falling, as are cement imports.Imports of basic food items are mixed; wheatflour and poultry are on the decline, whileimports of rice and soft drinks are holdingsteady.

Growth is projected to remain low at 1.0% in2009. The positive, albeit low, growth forecastin the face of external deterioration isattributable to special events and publicconstruction projects planned for 2009.Increasing visitor arrivals in early 2009 givesome hope of a better outcome than originallyforecast. Another positive development is the

issuance of building approval in December2008 for a major commercial project.

Higher government expenditures and astagnation in revenue will lift the budgetdeficit in FY200809. A deficit of 8.1% of GDPis expected compared to 0.8% in FY200708.

Inflation had eased to 8.8% by March quarter2009 largely due to lower fuel prices. Inflationis forecast to decline to 5.1% in 2009.

Key issues

The economy is highly exposed to the globaleconomic crisis given its dependence ontourism. The government has acted early toavoid an economic contraction. While theresultant budget deficit is affordable given lowdebt levels, the fiscal stimulus is large byinternational standards. Extra care is neededto ensure value-for-money from newexpenditures, particularly subsidies providedto the private sector and major new capitalprojects. Alongside the fiscal stimulus, thegovernment should continue efforts tostrengthen budget processes and create aleaner, more efficient public sector.

Key indicators(NZ$m, quarterly)

100

125

150

175

200

Jun Q-06

Dec Q-06

Jun Q-07

Dec Q-07

Jun Q-08

Dec Q-08

0

5

10

Loans to businessNet VAT revenue

rhs

lhs

lhs=left hand side, Q=quarter, rhs=right hand side,

VAT=value added tax

Source: Cook Island Statistics Office.

Motor vehicles(number, monthly)

0

10

20

30

40

50

60

70

Mar-06

Sep-06

Mar-07

Sep-07

Mar-08

Sep-08

Mar-09

Imports from NZand Japan

Newly registeredvehicles

Note: Registrations are the monthly average per quarter.NZ=New ZealandSources: Cook Island Statistics Office, Japan e-Statswebsite, and Statistics New Zealand.

Building activity(monthly)

0

50

100

150

200

Mar-06

Sep-06

Mar-07

Sep-07

Mar-08

Sep-08

Mar-09

0

5

10

15

20Cement imports from NZ(3 month m.a., NZ$'000)Residential buildingapprovals (number)

rhslhs

lhs=left hand side, m.a..=moving average, NZ=NewZealand, rhs=right hand sideNote: Approvals are the monthly average per quarter.Sources: Cook Island Statistics Office and Statistics NewZealand.


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10


Fiji IslandsKey developments

The economic decline of 2007 was halted in2008 by improved performances of keysectors such as copra production, goldmining, mineral water production, electricity,and building and construction. Pricediscounting helped to recover visitor arrivalsover the year.

Global economic conditions and the Januaryfloods have led to a substantial downgrade inthe official growth outlook. Forecasts made bythe Reserve Bank of Fiji in late 2008 projectedgrowth of about 2.4% for 2009. In April theforecast was revised to about 0.3%. The ADBforecast released in March projected acontraction of 0.5% in 2009.

Subsequent political events, including theabrogation of the Constitution, have added tothe downside risks for the economy in 2009.

Economic data confirm a significant economicdecline in early 2009. In March 2009, residentdepartures from Australia and New Zealand toFiji were lower by about 28% and 35%,respectively, compared with the same monthin 2008. Copra production and electricitygeneration also fell (on an annual basis)during the first two months of 2009, althoughpositive results were noted by the end ofApril. Cement imports have been flat because

it is also produced locally. Imports of keystaples such as frozen chicken from NewZealand have been trending down since latelast year, although this has picked up again asof March 2009. Automobile imports fromAustralia and Japan have also been subduedrecently, and total new car sales have fallenby 9.9% in 2009, cumulative to April.

The 2009 budget adopted an expansionaryfiscal stance. The deficit is budgeted to doubleto about 3% of GDP, with planned additionalspending on agriculture development andrural infrastructure improvements. With the

dual objectives of increasing economic growthwhile also favoring the poor, the 2009 budgetwill provide a stimulus to the economy. Taxrevenues in the March Quarter of 2009 havefallen below budget estimates, with lowerincome tax and custom duty collections due todecreased economic activity. This may pushthe actual fiscal deficit beyond 5% of GDP in2009.

GDP growth(%, annual)

5.5

0.6

3.4

-6.6

0.2

-0.5

-8

-4

0

4

8

2004 2005 2006 2007 2008 2009f f=forecastSources: Reserve Bank of Fiji and ADB. 2009. Asian

Development Outlook 2009.

Private sector credit growth(%, year-on-year, monthly)

0

5

10

15

20

25

30

35

Jan-06 Dec-06 Nov-07 Oct-08

Source: Reserve Bank of Fiji.

Resident departures to Fiji('000 persons, monthly)

0

10

20

30

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

From Australia

From New Zealand

Sources: ABS and New Zealand Ministry of Tourism.


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11


Fiji Islands Monetary policy has also become more

expansionary. The reserve bank reduced itslending rates to commercial banks in January

2009 to ease tightness in liquidity. Newregulations announced in April contain theunusual step of fixing commercial bank lendingrates and interest rate margins. Commercialbank lending rates were fixed at the levels as ofthe end of December 2008 and a 4% ceiling oninterest spreads was set, effectively raisingdeposit rates. Commercial banks are alsorequired to establish microfinance units.

The Fiji dollar was devalued by 20% in April.This was undertaken in part to adjust for arecent appreciation against the Australian andNew Zealand dollars. This has the potential tolift the performance of the tourism and exportsectors over time, if complementary policies arein place. However, these positives will takesome time to be realized. The immediate effectwill be a rise in inflation. As of April inflation was-0.3% (year-on-year), but is now projected toreach as high as 10% over 2009.

External accounts remain under pressure asimport payments outstrip export revenues. Asof early 2009, import volumes of petroleumproducts from Singapore were rising, partiallyoffsetting the benefits of the recent fall in prices.Domestic exports fell by 26.5% in the first 2months of the year, compared to a 3.6% growth

rate in the same period in 2008, underpinned bylower receipts from sugar, mineral water,garments, and fish.

Key issues Foreign exchange reserves are under

considerable pressure, falling to a low levelequivalent to only 2.7 months of merchandiseimports by February 2009. Weak externaldemand remains a concern and will put pressureon the balance of payments and foreignreserves.

Offsetting fiscal measures have beenimplemented to make funds available for floodrelief and rehabilitation efforts, as well as tocontrol overall spending. Such measures mustbe developed within a strategic framework toensure that key public services are notdisrupted. Fast-tracking of state-ownedenterprise reform offers good prospects to helpimprove the government's fiscal position and, atthe same time, encourage private enterprise toprovide a broader basis for recovery.

Cement imports from Australia(tonnes with trend, monthly)

0

200

400

600

800

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Petroleum imports from Singapore(3-month moving average)

-80

-40

0

40

80

Mar-08 Jun-08 Sep-08 Dec-08 Mar-09

y-o-y % change,3-month m.a.'000 tonnes

m.a.=moving average, y-on-y=year-on-yearSource: International Enterprise Singapore.

Foreign exchange reserves(months of imports, monthly)

0

1

2

3

4

5

Jan-07 Jun-07 Nov-07 Apr-08 Sep-08 Feb-09

Source: Reserve Bank of Fiji.


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12


FSM (Federated States of Micronesia)

Kiribati

The FSM economy contracted by an estimated1.0% in FY2008 and a contraction of around0.1% was originally projected for FY2009.

Using food imports from the US as a gauge ofeconomic activity, domestic demand may bepicking up slightly early this year.

The fiscal position is unsustainable. While thefiscal deficit was reduced to 3% of GDP inFY2008 (through additional grants from thePeoples Republic of China (PRC) and severepublic sector spending cuts in Chuuk andKosrae), budget management is still a majorconcern. An increased revenue effort is apriority. Overcoming delays in public worksfunded by the US is central to correcting along-standing problem: at least $100 million,the equivalent of 40% of GDP, in grantsallocated over FY20042008 remain

Food imports from the US(US$'000 fas with trend, monthly)

0

500

1,000

1,500

2,000

2,500

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

fas=free along sideSource: US Census Bureau.

Key developments

The economy grew by 0.6% in 2008, drivenby high levels of government spending. Thefiscal deficit reached 13% of GDP in 2008,partly due to subsidies for imported fuel.

Demand for imports from Australia grew toA$7 million in the March quarter of 2009compared to A$5 million in the same period in2008. Whether this upward trend istemporary remains to be seen. Imports ofsome consumer staples such as wheat flourand poultry meat are holding up, while beefimports are falling. Import of cement islikewise falling after a surge in 2008 linked tomajor public works projects.

Key issues

Kiribati has substantial public savings investedin offshore equity markets. As world stockmarkets plunged, so did the value of thestocks held in the Revenue Equalization

Reserve Fund (the RERF). Kiribati is yet tomake the reductions in public spendingneeded to compensate for the decline in themarket value and expected income from theRERF. While the absence of adjustment hasthe positive effect of helping support demandand economic activity for now, it will come ata price. The RERF was accumulated with mucheffort to secure economic sustainability.Without corrective action, it will be set on apath to depletion.

Cement imports from Australia (tonnes with trend, monthly)

0.0

0.5

1.0

1.5

2.0

2.5

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Beef imports from Australia(tonnes with trend, monthly)

0

10

20

30

40

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.


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13


Marshall Islands, Republic of

Nauru Australian imports from Nauru(% of 2007 GDP, quarterly)

0

5

10

15

20

Jun-07

Sep-07

Dec-07

Mar-08

Jun-08

Sep-08

Dec-08

Mar-09

Note: Mostly consists of phosphate.Source: ABS.

Australian exports to Nauru(A$ million with trend, monthly)

0

3

6

9

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Key developments

The economy expanded by an estimated 1.0%in FY2008. Phosphate exports were the maindriver of growth, with both higher exportvolumes and phosphate prices achieved. Thegains on phosphate helped offset the impactof the closing of the refugee processing centrein early 2008.

Australian exports to Nauru have trended upin recent years as phosphate mining hasresumed and the economy has returned topositive growth. Import demand has beenfirm in recent months. GDP growth for 2009 isforecast at 1.5%.

However, Nauru faces considerable downsiderisk. The March 2009 quarter was the firstquarter since the resumption of phosphatemining where Australia did not record anyphosphate exports from Nauru. This was theresult of damage to mooring buoys. Themooring buoys are still to be fully repaired,and international demand for phosphate isnow in decline.

Key issues

Naurus long-term economic future dependson making good use of phosphate income,principally by reducing the indebtedness thatwill hinder the emergence of a normaleconomy.


0

300

600

900

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09


A grant-financed increase in publicexpenditures supported GDP growth of around1.5% in FY2008. Increased copra productionalso supported economic activity; productionresponded to high international prices toexceed 7,000 tons for only the third time in50 years. Food imports from the US are nowexhibiting a slight upward trend, suggestingsome improvement in domestic demand. Aslight expansion is forecast for 2009.

Inflation has subsided considerably. Afterposting the highest inflation rate in the Pacificlast year (a high of 29.4% in the Septemberquarter), inflation was only 5.6% in the Marchquarter of 2009 (year-on-year).

Achieving fiscal sustainability must beaddressed. Strong measures are required tocut spending and to develop local revenuesources.


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14


PalauTotal Visitor arrivals('000 persons, monthly)

0

2

4

6

8

10

Jan Mar May Jul Sep Nov

2007 2008 2009

Source: Palau Visitors Authority.

Visitor arrivals from Taipei,China('000 persons, monthly)

0

1

2

3

4

5

Jan Mar May Jul Sep Nov

2007 2008 2009

Source: Palau Visitors Authority.


0

200

400

600

800

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09


Key developments

The economy contracted by about 1% in2008, driven by a 10.1% drop in touristarrivals. An operator of chartered flights fromTaipei, China, the second-largest source ofvisitors, closed down in May 2008 resulting ina marked reduction in tourist arrivals (relativeto prior-year levels) in succeeding months.

The economy is forecast to contract further in2009 and 2010. Slowdowns in nearby Asianeconomies will further deepen problems in thetourism sector. As of April 2009, total arrivalswere down 19.5%, with arrivals from Taipei,China, dropping by 56.5% over the samemonth of 2008. Lower infrastructure spending(from recent highs) and delays in planned

private investment in tourism facilities areexpected to contribute to the slowdown.

The slowdown is evident in imports. Foodimports from the US leveled off in early 2009,indicative of slowing demand. Japanese carimports have been on a clear downward trendover 2008 (partly due to a strong yen),although some recovery was recorded inMarch 2009.

Inflation is easing after peaking in theSeptember quarter of 2008. Year-on-yearinflation declined to 8.6% in the Marchquarter of 2009 from a high of 16.8% in

2008. The easing in inflation was driven by afall in fuel and transportation costs.

Key issues

Current arrangements for US financialassistance under the Compact of FreeAssociation were to end in the fiscal yearending 30 September 2009. However, thesearrangements have been extended by another12 months, providing temporary relief for abudget position that has become increasinglytight.

Fiscal sustainability is threatened by high

expenditure levels, the uncertainty of futurefinancial support from the US, and the declinein the market value of the Compact of FreeAssociation Trust Fund. The market value ofthe trust fund's value fell by about 28% in2008 due to global stock market turmoil.There is a pressing need for reductions inpublic spending to stabilize the long-termfiscal position and lessen the drawdowns onthe diminished trust fund assets.


15/32

15


Papua New GuineaKey developments

Growth is easing as export earnings are erodedby the collapse in international commodityprices. Buoyed by a prolonged period offavorable terms of trade, real GDP growthreached 7.0% in 2008. Growth of only 4.0% isforecast for 2009 and 3.5% for 2010. Thedecline in export revenues and domesticgrowth is leading to a rapid erosion of thegovernment's revenue position. Weakcommodity prices resulted in a revenueshortfall of 3.2% of GDP in the last quarter of2008.

The quantity of imported diesel products, anindicator of economic activity, has continued totrend upwards. The rate of increase has

slowed, however, since the latter part of 2008.Cement imports are at high levels but appearto be easing following the 2008 peak inconstruction activity (cement is also producedlocally). Imports of commercial freightvehicles, an indicator of transport activity,have been trending down since late 2008.

The import of electricity generator sets hadbeen on a sustained upward trajectorythroughout the commodity boom period butstarted to level off in mid-2008. The purchaseof imported motor vehicles has also started todecline since mid-2008. As a luxury good, it is

more sensitive to adverse income shocks. Thestrength of the yen would also have increasedthe cost of Japanese imports and added to asoftening in demand. Demand for staple goodssuch as meat products has shown little signs ofslowing down.

An expansive fiscal policy is partially offsettingthe decline in international commodity prices.The fiscal balance is expected to deterioratefrom a surplus of 3.4% of GDP in 2008 to adeficit of -2.9% in 2009, which represents afiscal impulse of 6.3% of GDP. The non-mineralbudget deficit (the budget balance excludingmining and oil revenue) remains high.

During the commodity boom years, mineralrevenues had largely been saved in trust fundaccounts and public debt was reduced. Thegovernment has already begun to draw downrapidly on these savings due to the weaker-than-anticipated revenue performance.

Diesel imports from Singapore('000 tonnes with trend, monthly)

0

5

10

15

20

25

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: International Enterprise Singapore.

Cement imports from Australia('000 tonnes with trend, monthly)

0

2

4

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Fiscal impulse(% of GDP, annual)

-6

-4

-2

0

2

4

6

8

2005 2006 2007 2008 2009f C

o n

t r a c

t i o n a r y

E x p a n s

i o n a r y

f=forecastSource: ADB staff estimates derived from Papua NewGuinea Ministry of Finance data.


16/32

16


Papua New GuineaSteel imports from Australia(tonnes with trend, monthly)

0

10

20

30

40

50

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Electricity generator set importsfrom Australia(tonnes with trend, monthly)

0

20

40

60

80

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Chicken imports from Australia(tonnes with trend, monthly)

0

100

200

300

400

500

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

The Bank of Papua New Guinea (PNG) hasadopted an accommodative monetary policystance. Declining commodity prices will reduce

imported inflation but the large fiscal stimulusmay fuel domestic inflation. The magnitude andpace of government expenditures and theirimpact on banking system liquidity is ofparticular concern. Credit growth has remainedstrong, growing by 33.9% in the 12 months tofrom February 2009 compared to 34.9% in theprevious corresponding period. The Bank ofPNG has recognized the need for improvedpolicy coordination and quicker response to thelarge fiscal expansion.

The external position is starting to weaken. Thefavorable terms of trade had generatedsustained current account surpluses. Thecurrent account position is however changingbecause of the fall in international commodityprices. The current account is expected to moveinto deficit as the trade deficit widens due tolower export revenue in the face of continuinghigh import demand. Official reserve levels hadpeaked at US$2.7 billion in early August 2008but declined to just over $2.0 billion by the endof January 2009 as depreciation pressures onthe kina were resisted. The Bank of PNG hassince allowed the kina to depreciate against theUS dollar, which will help offset the impact oflower commodity prices on export incomes.

Key issues

Papua New Guinea is still in a relativelyfavorable position, but there is less room tomaneuver because revenue shortfalls have ledto rapid drawdowns in trust fund savings andthe strong kina policy has reduced holdings ofinternational reserves.

Loosening the fiscal policy stance in 2009 is anappropriate response but there are concernsover the pace and quality of public spending.Fiscal discipline is needed to ensure thataccumulated mineral windfalls will be

safeguarded and directed toward improvinginfrastructure and basic service delivery, asoutlined in its medium-term development strategy.

Coordinating the monetary and fiscal responsesand exchange rate policy, is critical to ensuringan internally consistent and effective counter-cyclical policy mix.


17/32

17


SamoaKey economic indicators(tala million in real terms, quarterly)

0

35

70

Jul-08 Sep-08 Nov-08 Jan-09 Mar-090

2

4

6

ImportsTourism receiptsRemittancesImport cover (months; rhs)

rhs=right hand sideNote: Real values derived using consumer price index.

Source: Central Bank of Samoa. Food imports from the US(US$'000 fas with trend, monthly)

0

500

1,000

1,500

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

fas=free-along-sideSource: US Census Bureau.

Petroleum imports from Singapore('000 tonnes with trend, monthly)

0

5

10

15

20

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09


Key developments

Driven partly by large job cuts at its largestprivate sector employer, Yazaki, the Samoaneconomy contracted by 3.4% in FY2008. Thedownturn became even more pronouncedover the first half of FY2009, with economicactivity falling by an estimated 7.6%. Theclosure of a large fish cannery in neighboringAmerican Samoa, which had employed around1,500 Samoans, is adding to the economicstress.

Key economic aggregates (deflated by theconsumer price index) reflect thedeteriorating economy. Merchandise importshave been falling sharply over the first threequarters of FY2009, while tourism receipts

and private remittance inflows were relativelyflat. These trends imply falling local demand.

Trends in commodity imports from majortrading partners also show softening demand.Imports of cement from New Zealand andfood, machinery, and transport equipmentfrom the US, are declining. Imports ofpetroleum products from Singapore appear tohave leveled off.

The economic data for March provide somepositive news. Tourism earnings were 27%higher compared to the same month lastyear, and early estimates suggest an increase

in remittances. However, import values werestill down by 22% for the month, and by 17%over the March quarter in nominalterms(relative to last year).

Inflation eased to 12.4% in March 2009 (frommore than 18% in late 2008) due to fallingfood and fuel prices. The coverage of foreignreserves has improved slightly to 4.8 monthsof imports. The lower inflation and adequatereserves allowed the Central Bank of Samoato ease monetary policy slightly by cutting itslending rate to commercial banks from 7.8%to 5.0% in February 2009.

Key issues The government has signaled its intention to

respond to the economic downturn with asubstantial fiscal expansion. With thegovernment's revenue position weakening,the affordable increase in governmentexpenditure is unclear. Protecting essentialgovernment expenditures will be critical.


18/32

18


Solomon IslandsLogging volumes(y-o-y % change, 3-month m.a.)

-50

0

50

100

Aug-07 Jan-08 Jun-08 Nov-08 Apr-09 m.a.=moving average, y-on-y=year-on-yearSource: Central Bank of Solomon Islands.

Current account balance(% of GDP, annual)

-15

-10

-5

0

2006 2007 2008 2009f 2010f

Possibleoutcomes witha 30% fall inlogging rates

Source: ADB. 2009. Draft Solomon Islands Economic Report.

Domestic credit and CPI(y-o-y % change, monthly)

0

30

60

90

Feb-07 Aug-07 Feb-08 Aug-08 Feb-090

5

10

15

20

25

CPI (rhs)

Domestic credit (lhs)

CPI=consumer prices index, lhs=left hand side, rhs=righthand sideSource: Central Bank of Solomon Islands.

Key developments

Economic growth remained relatively high at6.4% in 2008, supported by momentum builtup by logging revenues from the globalcommodity boom and expansionary fiscalpolicy. The Asian Development Outlook (ADO)growth forecast was 2.2% for 2009 andfurther moderation to 1.7% in 2010, mainlydue to weaker logging exports. However, dataon logging from early 2009 indicate thatlogging exports may be weakening morerapidly than previously expected. FromNovember 2008 to February 2009, loggingvolumes fell by 22.5% compared with thesame period in 20072008.

A 30% decline in logging in 2009 has been

projected to reduce GDP growth to zero,decrease per capita income, and result in thecurrent account deficit ballooning to around10% of GDP in 2009.

The Central Banks governor recently warnedthat the country must be prepared for theworst if the global financial crisis continuesand predicted drops in the levels of exports,foreign reserves, government revenue,employment, and incomes.

The fiscal deficit is expected to widen asrevenues fall. The deficit reached 5.6% ofGDP in 2008, due to high development and

recurrent spending. A deficit equivalent to3.6% of GDP is expected in 2009 as the wageand salary bill balloons. This would exceedavailable cash reserves.

There are early indications that 2009revenues will be less than forecast, resultingin an even larger deficit. Actual revenue forthe first quarter of 2009 (around SI$316million) was down by about 11% compared toa forecast of SI$357 million. The governmenthas implemented administrative measures toreduce government spending.

Import demand is still strong but may beslowing. High government expenditures arehelping to sustain import demand. Althoughoverall import demand remains robust, thereare signs of a softening of demand in certaindiscretionary items such as motor vehiclesfrom Japan. Oil imports have recoveredrecently as the prices have trended down.


19/32

19


Solomon IslandsCement imports from Australia(tonnes with trend, monthly)

0

250

500

750

1,000

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Source: ABS.

Petroleum imports from Singapore('000 tonnes with trend, monthly)

0

6

12

18

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09



0

40

80

120

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

International reserves are under considerablepressure. As of April 2009, reserves had fallento around 2.5 months of import cover as

logging exports declined, which is well belowCentral Bank's target of at least four months.The outlook is for further declines in the levelof reserves during 2009 and 2010.

Inflation should ease, albeit slowly, aseconomic activity slows. High excess liquidityin the banking sector and strong growth indomestic credit have contributed to the highinflation and import outcomes in SolomonIslands in recent years. Recently, however,growth in domestic credit has slowedmarkedly, falling to around 20% in February2009, the slowest growth in more than 2years.

Key issues

The impact of the global economic crisis ondemand for timber exports in 2009, theprobable indefinite postponement of goldmining, and the approaching depletion ofcommercially viable forests will cause lowergrowth in 20092013, place pressure on thegovernment budget, and seriously diminishforeign reserves.

A potential balance of payments crisis in20092010 will demand a coordinatedmacroeconomic policy response. In the shortterm, the government will have tocontemplate: (i) the removal of waste and lowpriority expenditures; (ii) tight restraint onthe remaining recurrent expenditures; (iii)more effort to raise revenue; (iv) tightermonetary policy; and (v) securing externalgrants.

Resolution of such a crisis is likely to requireshort-term external assistance whileintensifying efforts to lay stronger foundationsfor medium- to long-term economic growth.Grant-funded infrastructure can play a key

role in supporting growth and employmentgiven the decline in exports and the need toreduce government spending. Infrastructureprojects should be brought forward wherepossible, especially those that are labor-intensive.


20/32

20


Timor-LesteReal GDP growth(Non-oil, excluding UN; % annual change)

6.2

-5.8

8.010.0 10 .0

-8

-4

0

4

8

12

2005 2006 2007 2008e 2009f

UN=United NationsSource: Asian Development Outlook database.

Merchandise imports from Australia(A$ million with trend, monthly)

0

2

4

6

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Inflation(y-o-y % change in CPI, monthly)

0

5

10

15

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Timor-LesteIndonesia

CPI=consumer price indexSources: Timor-Leste National Statistics Directorate andBank Indonesia.

Key developments

A substantial expansion in public spendingcombined with a rebound in agriculturalproduction lifted economic growth to anestimated 10% in 2008. The agriculturalsector, which accounts for about 85% of totalemployment, recovered from a weather-related slump during the previous year.Growth is expected to remain high in themedium term, as revenues from offshorepetroleum production are funding largeincreases in government expenditure.

Buoyant domestic demand is evident in asignificant increase in imports. Merchandiseimports rose from $68.6 million in the firsthalf of 2007 to $89.9 million in the first half of

2008. Import flows from neighboring Australiahave been on an upward swing since thesecond half of 2008, and this has continuedinto early 2009.

Inflation is easing after peaking in mid-2008amid soaring oil and commodity prices. Afterreaching 10.6% in June 2008 (year-on-year),inflation had eased to 2.7% by March 2009.Higher food prices accounted for around halfof inflation in 2008 (food accounts for 58% ofthe CPI) even after increased subsidies forimported rice. The decline in prices mirrorstrends in Indonesia, Timor-Leste's primarytrading partner.

Key issues

Timor-Leste is successfully offsetting theimpacts of the global economic crisis bydrawing on the revenue bonanza thatpreceded the crisis. Timor-Leste now has oneof the most expansionary fiscal stancesinternationally. The resultant fiscal stimulus isaffordable provided it is short-lived andexpenditure is then quickly reined in.

The quality of expenditures is central. Part ofthe fiscal expansion has been allocated topotentially low-priority expenditures.

Moreover, long-standing capacity constraintsremain and will make it difficult to achieveimplementation timetables. These factorssuggest that a lower rate of fiscal expansion iscalled for. It also remains important forgovernment spending to target developmentpriorities, notably basic services delivery andrural development, to arrest further increasesin poverty.


21/32

21


TongaRemittances(Pa'anga, previous 12 months, monthly)

0

50

100

150

200

250

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Nominal value

Real value

Note: Real values derived using consumer price index.Source: National Reserve Bank of Tonga.

Private sector credit(y-o-y % change, monthly)

-20

0

20

40

60

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

To householdsTo business

Source: National Reserve Bank of Tonga.

Value of imports(y-o-y % change, monthly)

-20

-10

0

10

20

30

40

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Nominal value

Real value

Note: Real values derived using consumer price index.Source: National Reserve Bank of Tonga.

Key developments

Remittances, the major source of foreignexchange receipts, remain on a downwardtrend. Credit to the business sector is nowgrowing at a much lower rate and credit tohouseholds is in decline. This primarily reflectsa tightening of credit standards by the banks.

Tourism arrivals were higher than expected inearly 2009. However, tourism receipts are indecline, with the nominal value down 3.9% ona year-on-year basis in March.

The overall weakening in the economyexpected during 2009 is reflected in slowergrowth in the value of imports. The need topay for higher-cost fuel deferred theturnaround in the value of imports, but theunderlying decline in aggregate demand isapparent.

Foreign reserves were rebuilt in late 2008 asthe cost of fuel declined and the banking sectorbrought funds onshore. At 4.7 months ofimport cover, they are on the low side, butthey remain above the target level set by theNational Reserve Bank of Tonga.

Inflation is easing rapidly. From its peak of12.6% in May 2008, inflation had dropped to2.5% by March 2009 (year-on-year). Furtherfalls are expected from the weaker NewZealand dollar.

The economy was originally forecast tocontract by 2% in 2009. Prospects appear tobe improving, with reconstruction workfinanced with the help of China Eximbankmoving closer to fruition. The extent to which itcontributes to domestic economic activity willdepend on the domestic content of theconstruction work. However, a positivestimulus is assured, one that will have minimalpressure on foreign reserves given the externalfinancial backing. Prospects are alsostrengthened by ongoing demand in Australiaand New Zealand for seasonal workers.

Key issues

Relatively low reserve levels and public debtlevels that are already too high will limit theoptions available for countering the effects ofthe global economic crisis. The immediatepriority is to safeguard expenditures foressential services. This is under pressure froma weaker outlook for government revenue andthe cost of pay increases for public servants,which have now increased by around 80% onaverage, in nominal terms, since 2005).


22/32

22


Tuvalu

Vanuatu Visitor arrivals('000 persons, monthly)

0

2

4

6

8

10

Jan-07 Oct-07 Jul-08 Apr-09

Source: Vanuatu Statistics Office, Tourism and Migration.

Visitor Arrivals(y-o-y % change, monthly)

-10

0

10

20

30

40

Jan-08 Jun-08 Nov-08 Apr-09

Source: Vanuatu Statistics Office, Tourism and Migration.

Key developments

Economic conditions remain robust, principallybecause the tourism sector is holding updespite the global recession. Tourism andproperty development drove GDP growth of6.3% in 2008. Visitor arrivals over the first 4months of 2009 were 19.0% above the levelof the same period of 2008. This is despite anoverall decline in tourist departures to thePacific. The entry of new international airservices and increased foreign investment arekey factors behind Vanuatu's growth. Vanuatualso appears to be benefiting from theproblems in the Fiji Islands.

Growth in private sector credit has started tolevel off as banks have become more cautiousin their lending activities. However, creditgrowth remains very strong, rising by 44.4%in the 12 months to April 2009. The entry of anew commercial bank has contributed to the

high growth in credit. There was a subsequentliquidity shortage in the second half of 2008,resulting in the reserve bank reducing thestatutory reserve deposit level twice: from10% to 8%, and then to 5%. The VanuatuNational Provident Fund also has a substantialimpact on liquidity, contributing around 40%of the liquidity in the market. The significanceof the fund and the high rates it demands(10% for 2 years) reduces the effectiveness ofmonetary policy.

The economy grew by 1.5% in 2008 on theback of a 9.8% increase in governmentspending. Growth is expected to remain

subdued at 1% in 2009. Imports of chicken,beef, and wheat flour are on a downwardtrend, suggesting economic activity may beweaker than originally expected.

Tuvalu contained its fiscal deficit to 5.4% ofGDP in 2008, down from 14.3% in 2007.Larger-than-expected revenue from fishinglicense fees in the December quarter of 2008were important in raising overall governmentrevenue.

The budget priority is to encourage a moreeffective and efficient use of its resources,including allocating more of its budget toward

capital spending and away from high-costrecurrent items, such as overseas medicalexpenses.


0

20

40

60

80

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.


23/32

23


VanuatuCredit to the private sector(y-o-y % change, monthly)

0

10

20

30

40

50

Jan-08 Apr-08 Jul-08 Oct-08 Jan-09

Source: Reserve Bank of Vanuatu

Australian exports to Vanuatu(A$ million with trend, monthly)

0

4

8

12

Mar-07

Jul-07

Nov-07

Mar-08

Jul-08

Nov-08

Mar-09

Source: ABS.

Budget balance(% of GDP, annual)

3.2

0.4 0.3

2.2

0.9

0

1

2

3

4

2005 2006 2007 2008 2009 Source: Vanuatu Government Budget Papers 2009.

While inflation in Vanuatu was the lowest inthe region in 2008, it exceeded the reservebank's 0%4% target band. Inflation peakedat 6.0% on a year-on-year basis in theSeptember quarter before falling slightly to5.8% in the December quarter.

Robust import demand is putting pressure onreserves. During 2008 the trade deficitwidened as strong growth in imports morethan offset modest gains in exports. Reservesare declining, and new estimates havebrought down earlier projected numbers. Themonthly import cover was the equivalent of5.4 months in February, down from 5.8months in December. However, this is stillwell above the banks minimum target level of

4 months. Import growth may have slowed in early

2009, with data on exports from Australiashowing a flattening trend. A key issue for2009 is whether the tourism sector will remainbuoyant or be weighed down by the slowingAustralian and New Zealand economies andthe eventual recovery of tourism in Fiji.

Steady progress has been made instrengthening the governments fiscal positionin recent years. Since 2003, the fiscal deficithas never exceeded 1.5% of GDP, and smallfiscal surpluses were recorded in 20042008.

Another small fiscal surplus of 0.9% of GDPhas been budgeted for 2009, down slightlyfrom 2.2% in 2008. Improvements in taxadministration have made an importantcontribution to the improved fiscal position,leading to a rise in domestic revenues from18.7% of GDP in 2003 to 29.2% in 2008.

Key issues

Amendments to the Employment Act werepassed in late 2008, resulting in extremelygenerous employment provisions for thosewith formal employment. These amendmentshave not yet been gazetted but, if introduced,

will substantially increase employment costsand is likely to curb the creation of muchneeded formal sector jobs.

The Vanuatu Agricultural Development Bankbecame operational in September 2008. It isrecommended that the bank be placed underthe jurisdiction of the reserve bank so that itoperates on commercial principles andremains free of political interference.


24/32

R ISKS AND SCENARIOS

24

Commodity exportsCommodity prices(Index: January 2005=100)

0

100

200

300

400

Jan-05

Nov-05

Sep-06

Jul-07

May-08

Mar-09

LogsCrude oil

0

100

200

300

400

Jan-05

Nov-05

Sep-06

Jul-07

May-08

Mar-09

Palm oilCopraCoconut oil

Source: International Monetary Fund International FinancialStatistics online database.

PNG Export Price Index(Index: March 2005 Quarter = 100)

0

100

200

300

Mar-05

Dec-05

Sep-06

Jun-07

Mar-08

Dec-08

Source: Bank of Papua New Guinea December 2009Quarterly Economic Bulletin. Index rebased by ADB staff.

Key risks

Countries exporting natural resources andagricultural products have benefited from thecommodity price boom in 2007 and 2008.Now these countries are confronted withdeterioration of their terms of trade asinternational commodity prices plummet andglobal demand weakens. Export earnings willdecline, affecting government revenue andthe incomes of producers of thesecommodities. The fiscal and current accountpositions will deteriorate over time. Foreignexchange reserves will decline.

Countries exporting oil and minerals havebeen hardest hit, with oil prices falling morethan 60% from a peak in mid-2008. Global

demand slump is also adversely affecting theprices of key Pacific exports such as coffee,cocoa, palm oil, coconut oil, and copra. Theability of these countries to combat the effectsof the global economic crisis throughcountercyclical macroeconomic policies willdepend on the extent to which they were ableto consolidate gains generated during thecommodity price boom.

PNG and Solomon Islands are particularlyvulnerable to deterioration in the terms oftrade. Given their heavy dependence onprimary product exports, the decline incommodity prices and the ensuingdeterioration in global demand will have aserious impact on growth rates in 2009 and inthe medium term. In PNG, the kina exportprice index declined by 32% in the lastquarter of 2008 compared with theSeptember quarter. In Solomon Islands, theprice of logs, which generate almost 70% ofexport earnings, have been relatively stable,though some easing is apparent in early2009.

There remains much uncertainty in theexternal environment. The world economyand hence international commodity prices aregenerally expected to improve in 2010, butthis remains uncertain. Risks to the outlookfor PNG and Solomon Islands are high andmainly on the downside. Plausible scenariosfor these two economies are consideredbelow.


25/32


25

Commodity exportsScenario: Papua New Guinea

PNG is highly vulnerable to movements incommodity prices owing to their importance toboth export and government revenues. Mineraland agricultural products account for morethan 95% of the country's merchandiseexports. The risk of further deterioration in theglobal economy means the country remainsvulnerable to additional weakening in theterms of trade.

Two scenarios were considered to assessPNGs vulnerability to decline in commodityprices: (1) a baseline scenario assumes a 30%decline in the export commodity price indexconsistent with the 2009 ADO forecasts, and(2) an alternative scenario assumes a 40%

decline in the export commodity price index.The growth projections do not incorporate theLiquefied Natural Gas project.

Under both scenarios, the fiscal position willturn into a deficit due to falling oil revenues,with revenue shortfalls being financed throughdrawdowns from trust funds. The currentaccount will also become a deficit in the shortrun due to the global crisis and continuedstrong import demand driven largely byexpansionary fiscal policies.

Under the alternative scenario, as compared tothe baseline scenario, reduced export earnings

would reduce government revenues and widenthe fiscal deficit from 3.0% to 4.7% of GDP.The current account would also widen from7.0% to 9.8%, as public expenditures wouldbe expected to remain elevated, with thesupport from withdrawals from trust fundaccounts.

The impact of lower export earnings ongovernment revenues is already evident. The2008 fiscal balance was 2.2% of GDPlowerthan had originally been anticipated. A smallersurplus was mainly the result of lower-than-forecasted revenues, which was attributed tolow international commodity prices and astrong appreciation in the kina against the USdollar. The government has begun to drawdown rapidly on trust fund savings to partiallymeet revenue shortfalls.

PNG: Key aggregates

Export earnings

(% of GDP)

0

20

40

60

80

2007 2009 2011 2013

ADO scenario Alternative scenario

ADO=Asian Development OutlookSource: ADB staff estimates.

Fiscal balance(% of GDP; includes trust fund account)

-5

0

5

10

2007 2009 2011 2013



Current account(% of GDP)

-10

-5

0

5

2007 2009 2011 2013




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26

Commodity exportsSolomon Islands: Key aggregates

Logging volumes

(million cubic meters; official projections)

m3=cubic metresSource: ADB. 2009. Solomon Islands Economic Report.Draft.

GDP growth(with a 30% logging decline in 2009)

-6

-3

0

3

6

9

2004 2006 2008 2010 2012

%

-5.0

-2.5

0.0

2.5

5.0

7.5SI$

Real GDP Growth

GDP Growth excl. ForestryReal GDP per capita (rhs)

excl.=excluding, GDP=gross domestic product, rhs=righthand sideSource: ADB. 2009. Solomon Islands Economic Report.Draft.

Key balances(% of GDP)

-25

-20

-15

-10

-5

0

5

2007 2009 2011 2013

Current account balanceRecurrent budget balance

Source: ADB. 2009. Solomon Islands Economic Report.Draft.

Scenario: Solomon Islands

Forestry accounted for a quarter of economicgrowth, two thirds of export earnings, and16% of recurrent government revenues in2007. In 2008, the sectors share to GDP was12% and to formal employment, 10%.

Growth in Solomon Islands has been drivenby unsustainably high logging rates. Thegovernment budget has already forecast amodest drop in logging from more than 1.5million cubic meters in 2008 to 1.35 millioncubic meters in 2009 due to declining stocks.However, evidence of a more rapid demand-driven decline in logging exports is nowemerging.

The forthcoming ADB Solomon IslandsEconomic Report models the effect of adecline in logging. The model assumes thefollowing: (1) a 30% decline in logging in2009 and 5%10% annual rate of declinethereafter; (2) 2.5%4% annual growth ofreal GDP in other sectors; (3) Gold RidgeMining Ltd. does not commence operations inthe medium term and no other sizeablemining projects come on stream; and (4)budget and external grants are maintained at2009 levels.

The model shows that economic activity isstagnant, real per capita income falls, and the

current account deficit reaches around 10% ofGDP in 2009. Real per capita incomestagnates for the next 4 years, with a 3%decline in 2013 compared to the 2008 level.The model also shows that the recurrentbudget balance moves into increasing deficitin 2009 to 2011, breaking the commitment tothe medium-term fiscal strategy.


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27

Tourism Australian outbound tourism(All destinations)

-4

0

4

8

12

2005 2006 2007 2008 2009f 2010f

persons (million)growth (%)

f=forecastSource: Tourism Research Australia. 2008. TourismForecasting Committee Forecast 2008 Issue 2 . Canberra.

New Zealand outbound tourism(All destinations, monthly)

-200

-100

0

100

200

Jan-08

Mar-08

May-08

Jul-08

Sep-08

Nov-08

Jan-09

Mar-09

-20

-10

0

10

20

persons ('000)


Source: New Zealand Ministry of Tourism.

Australian tourism (key destinations)(% annual change)

-6

0

6

12

2005 2006 2007 2008 2009f 2010f

To New Zealand

To Europe and US

f=forecast, US=United StatesSource: Tourism Research Australia. 2008. TourismForecasting Committee Forecast 2008 Issue 2 . Canberra.

Key risks

Income and prices are key drivers of tourismdemand. The international economicdownturn will see a decline in householddiscretionary income. This will in turn result ina cutback in non-essential expenditures, suchas vacations and holidays to the Pacific.Uncertainty in neighboring economies, notablyregarding job prospects, will add to thiscontractionary effect on tourism to the Pacific.

However, the Pacific may benefit from somepositive price effects. Tourists fromneighboring economies may decide to foregolonger, more expensive trips, such as toEurope and the US, in favor of shorter trips tothe Pacific. This sort of switching was unlikely

early in this decade, because a lack of airlinecompetition in the Pacific and the presence ofhigh-cost government-owned airlines tendedto make the region an expensive destination.But the recent entry of budget airlines hashelped reduce airfares and make the regionfar more competitive. The recent decline ininternational fuel prices is also now working inthe region's favor.

The potential importance of price effects isshown in the end-2008 forecasts fromTourism Research Australia. While theyproject a 5% overall decline in tourism fromAustralia to Europe and the US, tourism fromAustralia to New Zealand is expected toincrease. An important source of thedifferences between destinations is that NewZealand is assumed to benefit from additionalairline capacity and lower airfares. Despite theglobal economic crisis, New Zealand isforecast to do better because it has a priceadvantage

In the Pacific economies, so far the negativeincome effect appears to be outweighing thepositive price effects. This is shown by loweroverall tourist departures to the Pacific fromAustralia, New Zealand, and the US.

Global tourism is projected to weaken over2009. A prudent working assumption is thattotal tourism flows into the Pacific will alsodecline in 2009 and remain low throughout2010. Tourist arrivals from Asia are at mostrisk, while those from Australia, New Zealand,and the US are also at risk.


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28

Tourism Arrivals in 2009(assumed % change)

Country Tourism Australiascenario

Latest Actualsscenario

Cook Islands -5.5 8.9Fiji Islands -5.5 -29.8Palau -5.5 -19.5Samoa -5.5 15.4Tonga -5.5 -7.2

Vanuatu -5.5 25.4Source: ADB staff estimates.

Visitor arrivals(% change in 2009 by scenario)

-30

-15

0

15

30

COO FIJ PAL SAM TON VAN

Tourism Australia

Latest actuals

COO=Cook Islands, FIJ=Fiji Islands, PAL=Palau,SAM=Samoa, TON=Tonga, VAN=VanuatuSource: ADB staff estimates.

Tourism receipts(change as % of GDP in 2009 byscenario)

-15

-10

-5

0

5

10

COO FIJ PAL SAM TON VAN

Tourism Australia

Lates t actuals

COO=Cook Islands, FIJ=Fiji Islands, GDP=gross domesticproduct, PAL=Palau, SAM=Samoa, TON=Tonga,

VAN=VanuatuNote: Scenarios assume a 1% increase in arrivals leads to a1% increase in receipts and vice versaSource: ADB staff estimates.

Scenarios

A scenario analysis was conducted to explorethe potential impact of alternativeperspectives on the outlook for tourism.

One scenariothe Tourism Australiascenariodraws on the 2008 year-endprojections from Tourism Research Australia.They are for a 5.5% decline in tourism fromAustralia to the Fiji Islands. In this scenario,the 5.5% decline is assumed to apply to allmajor Pacific destinations.

A second scenariothe Latest Actualsscenarioassumes that the 2009 outcome forarrivals matches the latest actual data frommajor source economies. For example, itassumes that arrivals to the Fiji Islands willdecline by 29.8% over 2009. This is thedecline in arrivals, on a year-on-year basis,from Australia and New Zealand as of March2009.

Under the Tourism Australia scenario, theweakening in tourism would reduce GDPgrowth. The effect is forecast to be larger themore tourism-intensive the economy. In thisscenario, for example, there is a largecontractionary effect in the Cook Islands. Thislarge contractionary effect from tourism is onereason why the Cook Islands should beconsidering a fiscal stimulus in 2009.

Under the Latest Actuals scenario, somePacific destinations receive a positiveeconomic stimulus from tourism over 2009. Incontrast, the Fiji Islands is even worse offthan under the Tourism Australia scenario.This is mainly because of the switching oftourism from the Fiji Islands underling theLatest Actuals scenario.

The Fiji Islands is expected to win backtourists later in 2009, helped by the recentdevaluation of its currency. Hence theswitching of tourism from the Fiji Islands isexpected to be temporary. For this reason,the Tourism Australia scenario is consideredthe more likely scenario.

On a year-on-year basis, total arrivals tomajor Pacific destinations from Australia andNew Zealand were down 13.0% as of March2009. This suggests the overall decline of5.5% assumed in the Tourism Australiascenario may prove to be optimistic.


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29

ECONOMICM ANAGEMENT

Responding to the global economic crisisGovernments need to decide if the globaleconomic crisis is a priority for economicmanagement. If so, a proactive, targeted, andcoherent policy response tailored to theindividual circumstances of each Pacificeconomy would be best.

The first step in responding to the globaleconomic crisis would be to better track andunderstand its impact. Reliable and frequenteconomic and financial monitoring is needed.This is largely in place in some Pacificeconomies, but in others, monitoring has anarrow coverage and suffers long lags.Economic monitoring is generally backward-looking, a limitation that will hinder earlywarning of approaching impacts. Effectivemonitoring is important to both theencouragement of an open dialogue on a policyresponse and reducing uncertainty facingbusiness and households.

For those countries that operate anindependent monetary policy, a cautiousexpansionary monetary expansion would be asensible second step where conditions allow it.The level of official foreign exchange reservesis a good indicator of whether there is room tolower interest rates and/or expand liquidity.There is probably room when reserves areabove a target of 3 to 4 months of imports andreserves are stable or declining slowly.Inflation is also a good indicator of whether amonetary expansion should be consideredthemonetary stance should only be relaxed ifinflation is under control.

If reserves are below the target and/or fallingrapidly, it can be a sign that the exchange rateis out of line with the economic fundamentals.During the 1997 Asian financial crisis, the FijiIslands and Solomon Islands were able to useexchange rate management to shieldthemselves from the full impact of the crisis.While the current circumstances are different,it is clear that maintenance of a competitiveexchange rate will be important to lesseningthe impact of this crisis. It is preferable toachieve macroeconomic conditions that avoid aneed for exchange rate adjustment, butauthorities need to act decisively when there isa substantial misalignment of their exchangerate. The Fiji Islands has already done sothrough a 20% devaluation in April 2009.

The global economic crisis will add to fiscalpressure. Most 2009 budgets were formulatedbefore the full extent of the global crisis wasknown, and it is very likely that their revenueforecasts will prove to be overestimates. Thebest course is to proactively manage the fiscalshock.

Governments may want to do more than justmanage the fiscal shock. Most of the largerindustrialized and emerging countries areimplementing fiscal stimulus packages that areincreasing government expenditure and/orreducing taxes. A proactive fiscal stimulus mayalso make sense in the Pacific as a way ofcountering the economic slowdown. Here, afiscal stimulus can be thought of as adeliberate change on either the expenditure orrevenue side of the government budget thatraises aggregate demand above what itotherwise would be. The primary role of a fiscalstimulus would be to lift internal demand to tryand offset the decline in external demand. Asecondary role would be to protect thevulnerable that are made worse off, even withthe efforts to lift aggregate demand.

It may be possible to cope with the fiscalshock, and where sensible fund a short-livedfiscal stimulus, by trimming low priorityexpenditures and increasing the revenueeffort. This suggests an immediate need toreview the composition of public expenditureand to reprioritize less productive or wastefulexpendituresespecially on the recurrentsideso they are reined in or eliminated.

The ability to quickly trim low priorityexpenditure and increase the revenue effort is,however, likely to fall short of fully meeting thefiscal need. Extra resources are likely to berequired. Options include external grants,where made available, and borrowing, where itis affordable. The composition of publicspending would be crucial. Investmentspending to rehabilitate and upgradeinfrastructure, the protection of spending onsocial sectors (health and education), andsupport for the vulnerable warrant top priority.They need to be preserved even if revenueenvelopes contract, and warrant targeting byany fiscal stimulus that is adopted. Any taxcuts provided as a fiscal stimulus also need tobe carefully designed so they offer maximumsupport to economies and the poor and


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30

ECONOMICM ANAGEMENT

vulnerable. In contrast, pay increases forpublic servants would be a very poor form offiscal stimulus.

These observations highlight that any fiscalresponse needs to be highly prioritized andtargeted. It needs to be consistent with overallfiscal prudence and avoid excessive buildup inpublic debt and pressure on the balance ofpayments. In some cases, a fiscal stimulus isalready in place, not deliberately as a responseto the global crisis but because budgets hadalready allowed for increases in budget deficitsand the revenue outlook has subsequentlyweakened. In other cases the fiscal expansionappears to be too rapid and extra care isneeded to ensure it provides value-for-money.There is a risk that overly rapid fiscalexpansion in PNG and Timor-Leste will lead tonew expenditure initiatives that are not alignedwith national priorities.

Structural initiatives that enhance the regionscompetitivenesssuch as reforming state-owned enterprises, removing distortions in thetax and duty systems and mobilizingcustomary landcan also support the regionseconomies. But many such initiatives carrylong lead times, in some cases decades may beneeded to achieve substantive change. Anyquick-win initiatives that are available shouldbe vigorously pursed as a means of lesseningthe economic downturn and helping economiesprepare to recover.

Efforts to provide targeted help to thevulnerable, such as establishing social safetynets, have merit. But, like structural initiatives,they face the difficulty of long lead times. Thebest immediate option for helping thevulnerable is to limit the decline in economicgrowth, complemented where affordable by ashort-lived fiscal stimulus that pays specialattention to their needs.

Development partners have been an importantsource of support to the region in times ofcrisis. They can also help the Pacific economiesthrough this global economic crisis.Development partners can support monitoringand policy dialogue, fast-track the activitiesthey are involved in, help governments fast-track others, and if necessary offer prudentbudgetary support for a short-lived fiscalstimulus that minimizes pressure on thebalance of payments.

Budget support is normally provided withconditions. In this instance, an appropriatefocus may be to minimize the risk that budgetsupport would work against long-term growthprospects by easing the incentive forgovernments to improve their performance.Conditions attached to such support could bepreventive (as opposed to curative); forexample, by requiring protection of core socialexpenditures or preservation of maintenance ofphysical infrastructure (perhaps on a multi-year basis). Any budget support provided couldalso appropriately include sunset clauses toindicate that it is a temporary and specificresponse to the global crisis.

Table 1 provides a broad, preliminaryassessment of key initiatives by country.

Actions best avoided

Too large a fiscal expansion

Excessive Government pay increases

Subsidies for business

Cuts to essential public services

Labor-intensive approaches to public worksthat are too costly

Borrowing when it is unaffordable

Structural initiatives that cost jobs

Reform programs that lack broad support

10 Steps to an effective response

Step 1 : Track and understand the impact ofthe global economic crisis

Step 2 : Encourage open policy dialogue

Step 3 : Get the monetary policy stance right

Step 4: Maintain a competitive exchange rate

Step 5: Cut and trim low prioritygovernment expenditure

Step 6: Raise the revenue effort

Step 7: Protect expenditure on services forthe most vulnerable

Step 8: Secure external financial support,where needed and affordable

Step 9: Pursue quick-win structural initiatives

Step 10: Provide targeted support to thevulnerable


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ECONOMICM ANAGEMENT

Table 1: Key potential responses to the global economic crisispotential or already in place

Country Informationsharing and

opendialogue

Careful,short livedmonetaryexpansion

Maintain acompetitive

exchangerate

Manage the fiscal shock, and where sensible provide a shortlived, value-for money fiscal stimulus, by

Makingbetter useof existingresources

Usingexternalgrants

Drawingdown own

savings

BorrowinDomestic Ext

Cook IslandsFiji Islands x possiblyFSM X x Kiribati X x Nauru x Palau X x PNGRMI X x Samoa possibly

SolomonIslands x x

Timor-LesteTonga possibly x Tuvalu X x Vanuatu possibly

FSM=Federated States of Micronesia, PNG=Papua New Guinea, RMI=Republic of Marshall Islands.Legend: = justified, x = unsuitable, blank = not applicable.a. Some initiatives are already in place. In some cases additional action may not be required, while in others there may be good argumensome recent actions.Source: ADB . 2009. Taking the Helm: A Policy Brief on a Response to the Global Economic Crisis. Manila. May.

Please keep in mind:Key economic management issues raised by the global economic crisis are discussed in more detail in Taking the Helm: A Policy Brief oResponse to the Global Economic Crisis, released by the Asian Development Bank in May 2009 and avwww.adb.org/Documents/Briefs/ Taking-the-Helm/default.asp.

ADB is able to help counties develop their response to the global economic crisis. Support is available under the Pacific Economic ManagemeTechnical Assistance.


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D ATA

Latest Pacific Economic UpdatesGDP

growth InflationCredit

growthTrade

balanceImportcover

FiscalBalance

(%, 2009f) (y-o-y %) (%) (% of GDP) (months) (% of GDP)Cook Islands a 1.0 8.8 0.1 -68.5 -8.1

(Mar-Q 2009) (Dec-Q 2008) (2008) (FY2009f)Fiji Islands b -0.5 0.5 4.8 -35.8 2.7 -3.0

(Mar 2009) (Dec 2008) (2008) (Feb 2009) (2009f)FSM -0.1 5.0 17.7 -56.8 -3.0

(2008) (2007) (2006) (FY2008)Kiribati 1.0 11.0 -78.9 -13.0

(2008) (2007) (2008)Marshall Islands 0.5 5.6 -7.9 -46.6

(Mar-Q 2009) (FY2006) (2006)Nauru 1.5 2.5 14.6

(Mar-Q 2009) (2005)Palau -2.0 8.6 -72.3 -4.8

(Mar-Q 2009) (2005) (FY2008)PNG 4.0 10.2 0.7 32.5 10.9 -2.9

(Mar-Q 2009) (Apr 2009) (2008) (Dec 2008) (FY2009f)Samoa -1.0 12.4 0.0 -43.1 4.8 -5.5

(Mar 2009) (Mar 2009) (2008) (Mar 2009) (FY2009f)Solomon Islands 2.2 17.8 2.8 -20.5 2.5 -3.7

(Jan 2009) (May 2009) (2008) (Apr 2009) (2009f)Timor-Leste 10.0 2.7 -44.2 90.1

(Mar 2009) (2006) (2009f)Tonga -2.0 2.4 4.5 -52.3 4.7 1.0

(Mar 2009) (Mar 2009) (2007) (Apr 2009) (FY2009f)Tuvalu 1.0 5.3 -57.4 -5.4

(2008) (2007) (2008)Vanuatu 3.5 5.8 1.6 -43.3 5.4 0.9

(Dec-Q 2008) (Jan 2009) (2008) (Feb 2009) (2009f)

a = credit growth refers to growth in total lending; b = credit growth refers to growth in loans and advances bycommercial banks to public and private sectors.f=forecast, FSM=Federated States of Micronesia, FY=fiscal year, GDP=gross domestic product, PNG=Papua NewGuinea, Q=quarter, y-on-y=year on year.Note: period of latest data shown in brackets; import cover for PNG is months of non-mining and oil importsSources: ADB. 2009. Asian Development Outlook 2009 . Manila (March) and the statistical releases of the regions

central banks, finance ministries and treasuries, and statistical bureaus.

Key data sources:

The data used in the Pacific Economic Monitor are available in the ADB PacMonitor database, availablein spreadsheet form at http://www.adb.org/pacmonitor

Abou t the Asian Develo pment Bank

ADBs vision is an Asia and Pacific region free of poverty. Its mission is to help its developing member countriessubstantially reduce poverty and improve th