Tuesday, March 13, 2012
[IWS] ADB: PACIFIC ECONOMIC MONITOR--MARCH 2012 [13 March 2012]
IWS Documented News Service
Institute for Workplace Studies----------------- Professor Samuel B. Bacharach
School of Industrial & Labor Relations-------- Director, Institute for Workplace Studies
16 East 34th Street, 4th floor---------------------- Stuart Basefsky
New York, NY 10016 -------------------------------Director, IWS News Bureau
Asian Development Bank (ADB)
Pacific Economic Monitor - March 2012
[full-text, 36 pages]
n Recent Developments. Economic growth in the Pacific region accelerated from 5.5% in 2010 to 7.0% in 2011. The major contributors to this performance were Papua New Guinea (PNG), Solomon Islands, and Timor-Leste. However, growth in the Pacific islands also improved, rising from an average rate of 1.3% in 2010 to 3.0% in 2011. Increased value of agricultural production and higher tourist arrivals helped Fiji‘s economy recover from contraction in 2010, increased phosphate exports lifted Nauru‘s economy, and increased tourist arrivals contributed to faster economic growth in Palau. Spending related to infrastructure projects raised economic growth in Kiribati, the Republic of the Marshall Islands, the Federated States of Micronesia, and Vanuatu.
n Inflation in the Pacific region rose from 5.6% in 2010 to 8.6% in 2011 due to higher global commodity prices in the first half of the year. Lagged effects of the price increases are still being felt in certain economies.
n Outlook. The International Monetary Fund (IMF) projects the global economy will grow by 3.3% in 2012 (down from 3.8% in 2011), driven by ongoing sovereign debt problems and associated effects in Europe, as well as relative stability in other major global economies. Growth in the Australian and New Zealand economies is expected to accelerate as a result of strong demand for exports and expenditure growth related to recovery from recent natural disasters.
n Slower global growth is expected to have modest and largely indirect effects on Pacific economies. Trade, investment, and banking ties between the Pacific economies and their primary economic partners, namely Australia and New Zealand (for the South Pacific) and the United States (for the North Pacific), will determine the magnitude and timing of impacts.
n ADB expects economic growth in the Pacific region to decelerate to 6.0% in 2012 and 4.1% in 2013. Depletion of oil reserves and easing of international commodity prices is expected to slow PNG‘s economic growth. Reduced logging production, coupled with the completion of construction projects related to logging and mining, is seen to temper growth in Solomon Islands, although this is likely to be partially offset by a ramping up of gold production. The January 2012 floods in western Fiji adversely affected agricultural production, and could weaken tourism prospects.
n Inflation in the Pacific region is expected to run at 6.6% in 2012 due largely to an easing in international food prices. International fuel prices are expected to remain stable, but are particularly at risk due to geopolitical concerns in the Middle East. Appreciating Pacific currencies may mitigate inflationary pressures.
n Economic policy and management. Four articles consider tools and processes for efficient management of budget resources. The first article outlines fiscal management models, discusses the structure and application of this simple accounting framework, and explains how such models have been used to highlight budget trade-offs over the long term. The next article reviews recent progress and challenges in implementing multiyear rolling budget frameworks in the Pacific. Another article highlights the high costs associated with countries‘ failure to provide adequate funding for road maintenance and shows the long-term budget advantages of proper resourcing of road maintenance in Timor-Leste. A note discussing the implications of recent sovereign wealth fund management legislation on future development funding in PNG concludes this issue.
The Economic setting
Papua New Guinea
Economic policy and management
Fiscal management models for the Pacific
Medium term budgeting in the Pacific
Budgeting for road maintenance in the Pacific
Sovereign wealth management in Papua New Guinea
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