Revival in Tourism Expected to Boost Pacific Region's Economic Growth: ADB

Manila: A revival in tourism is expected to boost economic growth in the Pacific in 2022 and 2023, but the COVID-19 pandemic, rising commodity prices, and climate change continue to pose risks, according to the Asian Development Bank (ADB)
 
After an average economic contraction of 0.6% in 2021, ADB’s Pacific Economic Monitor (PEM), released today, says the Pacific is expected to grow by 4.7% this year and 5.4% next year. 
 
The turnaround reflects rising visitor arrivals in the tourism-dependent economies of the Cook Islands, Fiji, and Palau, as well as expectations for Papua New Guinea’s minerals sector to benefit from the higher international commodity prices being driven by the Russian invasion of Ukraine.

But the PEM says the Russia–Ukraine war also poses a risk to the subregion through rising import and transport costs, accelerating inflation, and increasing trade and fiscal deficits across the Pacific. 
 
Other risks to the Pacific’s recovery include community transmission of COVID-19 and some challenges in vaccine rollouts, as well as the region’s vulnerability to climate change and disasters.
 
"This outlook for the Pacific is welcome after more than 2 years of negative growth caused by COVID-19, but significant risks to this recovery remain," said ADB Director General for the Pacific Leah Gutierrez in a media release on Thursday.
 
"It is vital that development partners, stakeholders, and policy makers work closely together to ensure the continued recovery," Gutierrez added.
 
The latest PEM forecast represents an improvement on that seen in the Asian Development Outlook (ADO) 2022 released in April, which projected the Pacific’s economic growth to be 3.9% in 2022.
 
The PEM identifies Pacific economies as among the most vulnerable in the world to climate change and disasters, and that the impact of these shocks—compounded by the fallout from COVID-19 and commodity price spikes—has been sizable. 
 
Ensuring sustainable growth will hinge on investing in climate and disaster resilience, the cost of which can exceed the governments’ own resources. 

 
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