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Published by: Business Monitor International
Published: Aug. 24, 2009 - 58 Pages
Table of Contents
- Introduction
- Finding Hidden Potential In The South Pacific
- Table: regional gdp growth, %
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Regional Overview
- Pacific Islands: Formidable Challenges, No Easy Solutions
- chart: Off The Radar
- Pacific Island States
- Key Economic Characteristics
- Volatility Of Economic Growth
- Underdeveloped Economies
- chart: Moving In Tandem
- Regional Exchange Rates (US$ per unit)
- Lack Of Monetary Independence
- Trade, current account, and budget deficits
- Dependency on remittances
- Vulnerability to natural disasters
- The Impact Of The 2009 Recession On The Pacific Islands
- Remittances
- Tourism
- Commodities
- Key Political Characteristics And Geopolitical Factors
- High political risk profile
- Australia as regional policeman
- chart: When Good Neighbours Become Good
- South Pacific: Australian Development Aid, 2009-2010 (AUDmn)
- China - Taiwan Rivalry
- Rising Chinese Influence
- Organised crime
- Country Overview - Australia
- Economy To Remain An Outperformer, Long-Term
- chart: Worst Is Yet To Come
- Australia: Unemployment Rate (%)
- chart: Household Debt In Retreat
- Australia: Household Debt (LHS) and Assets (RHS) To Disposable Income
- chart: Long-Term Prospects Still Solid
- Australia: Expenditure On GDP Growth (% y-o-y, Real Terms)
- Table: Australia economic data and Forecasts
- indicators: Nominal GDP, US$bn [1], Real GDP growth, % change y-o-y [1], Population, mn [1],
- GDP per capita, US$ [1], Consumer prices, % y-o-y, ave [2], Current account, % of GDP [3],
- Exchange rate AUD /US$, eop [4]
- Table: Australia Long-Term Macroeconomic Forecasts
- indicators: Nominal GDP, US$bn [1], Real GDP growth, % change y-o-y [1], Population, mn [1],
- GDP per capita, US$ [1], Consumer prices, % y-o-y, ave [2], Current account, % of GDP [3],
- Exchange rate AUD /US$, eop [4]
- Country Overview - New Zealand
- Lower Trend Growth Expected, But External Imbalances To Be Addressed
- chart: Post Recession Years: Steady, If Unspectacular
- New Zealand: Real GDP Growth (%)
- chart: Recessionary Period Splurge To Have Long-Lasting Impact
- New Zealand: Fiscal Balances (% Of GDP)
- Net Exports To Witness A Turnaround
- chart: Expecting A Turnaround In Net Exports
- New Zealand: Contribution Of Net Exports To Real GDP Growth (pp)
- Table: new zealand economic data and Forecasts
- indicators: Nominal GDP, (US$bn), GDP per capita (US$bn),, Population, (mn), real GDP
- growth, Cpi, avg (%), Current account, (% of GDP), Exchange rate US$ /NZD, eop
- Table: new zealand Long-Term Macroeconomic Forecasts
- indicators: Nominal GDP, US$bn 2, Real GDP growth, % change y-o-y 1, Population, mn 4,
- GDP per capita, US$ 3, Consumer prices, % y-o-y, ave 3, Current account, % of GDP 3,
- Exchange rate NZD/US$, eop 4
- Gaping Current Account Deficit To Narrow Sharply
- chart: Deficit To Steadily Narrow
- New Zealand: Current Account Balance
- Country Overview - China
- Policy Missteps Pose Key Threat To Positive Long-Term Outlook
- Table: china economic data and Forecasts
- indicators: Nominal GDP, (US$bn), GDP per capita (US$bn),, Population, (mn), real GDP
- growth, Cpi, avg (%), Current account, (% of GDP), Exchange rate US$ /NZD, eop
- Table: CHINA Long-Term Macroeconomic Forecasts
- indicators: Nominal GDP, US$bn [1,2], Real GDP growth, % change y-o-y [1,2], Population,
- mn [2], GDP per capita, US$ [1,2], Consumer prices, % y-o-y, ave [2], Current account, % of GDP [2],
- Exchange rate CNY/US$, eop [3]
- chart: Positive Long-Term Outlook
- China: Real GDP Growth (%)
- Risks To Outlook
- Country Overview - Papua New Guinea
- Structural Instabilities To Constrain Commodties Potential
- chart: Rising Population Pressures
- Papua New Guinea: Population (‘000s)
- Table: Papua New Guinea economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP
- growth (%), CPI, average (%), Current account (% of GDP), Exchange Rate, US$/PGK eop
- map: A Troubled Country
- Papua New Guinea And Its Neighbours
- Economy Stable, But Well Below Potential
- chart: A Commodity -Driven Economy
- Real GDP Performance (%)
- chart: Still A Concern
- Average Consumer Price Inflation (%)
- Managing Commodities Wealth Key To Long Term Growth
- chart: Foreign Investment Crucial For Extraction
- Nickel (US$/tonne) & Gold (US$/oz) Prices
- Country Overview - East Timor
- Oil A Boon, But Private Sector Development Vital For Growth And Stability
- chart: Oil Exports Boosting Current Account
- East Timor: Current Account (US$mn)
- Political Situation Stabilising, But Still A Risk For Business
- chart: Political Turmoil Dictating Growth
- East Timor: Annual Real GDP Growth (%)
- Table: East Timor economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP)
- chart: Inflationary Pressures Re-emerging
- East Timor: Average Annual Inflation (%)
- Country Overview - Fiji
- Political Stability Remains Key To Sustainable Growth
- chart: Under Pressure From The Coup
- Fiji: Real GDP Growth
- chart: Dependent On Sugar
- Fiji: Breakdown Of Exports By Product (FJD’000, 2008)
- chart: Contraction In 2009 Probable
- Fiji: Tourist Arrivals (LHS) & Annual Growth (RHS)
- chart: Boosting Export Competitiveness
- Fiji: Exchange Rate FJD/US$
- Political Turmoil Clouding Growth Outlook
- Table: Fiji economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP), Exchange Rate, US$/FJD eop
- Country Overview - Kiribati
- No Near-Term Economic Solutions
- chart: Erratic GDP Performance
- Real GDP Growth (%)
- Table: Kiribati economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP)
- Unsustainable Budget Spending Needs To Be Rectified
- Chronic Trade Imbalance Supported For Now
- chart: Persistently Large Budget Deficit
- Kiribati - Budget Deficit Excluding Draw-downs Of RERF (% Of GDP)
- Political Stability A Major Positive
- Rising Sea Levels Pose A Major Threat
- Country Overview - Micronesia
- Microeconomic Challenges To Macroeconomic Outlook
- Relying On Fishing And Tourism For Future Growth
- Table: Micronesia economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP)
- US-Modelled Constitution Maintains Stability
- chart: A Poor pERFOR MER
- Micronesia - Real GDP Growth (%)
- Little Scope For Reducing Dependence On US Assistance
- Country Overview - Samoa
- Hit By Global Downturn, But Tourism Provides A Silver Lining
- Economy Hit By Global Slump
- chart: Yazaki Forcing Negative Growth
- GDP By Sector (% chg y-o-y)
- chart: A Nation On Remittances
- Gross Remittances In WSTmn & As % Of GDP
- Tourism Earnings To Compensate Lower Remittances
- chart: A Place In The Sun
- Tourism Arrivals
- chart: holding up
- Tourism Earnings
- Table: Samoa economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP), Exchange Rate, US$/WST eop
- US Tax Haven Crackdown Raises Local Concerns
- Stability Under A One-Party State
- Country Overview - Soloman Islands
- Long-Term Future Jeopardised By Deforestation
- chart: Heavy Dependence On Primary Sector
- Proportion Of GDP In SBD mn, Constant 2004 Prices
- Table: Solomon Islands economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP), Exchange Rate, SBD/US$ eop
- External Sector Dependent On Logging
- chart: Overreliance On Logging
- Exports Breakdown By Product (SBD’000)
- Short Term Manageable, But What About The Long Run?
- chart: Services Outpacing Ot hers
- Growth Rate By Sector, % chg y-o-y
- Recent Political Developments
- RAMSI Key To Sustained Peace And Growth
- Country Overview - Tonga
- Political Reform Offers Interesting Opportunities
- chart: Growth To Remain Sluggish
- Tonga: Real GDP Growth (%)
- Table: Tonga economic data and Forecasts
- indicators: Nominal GDP (US$bn)*, GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP)*, Exchange Rate, TOP/US$ eop
- chart: Efforts To Reduce Reliance On Primary Industry Paying Dividends
- Tonga: GDP By Industry (%)
- chart: significant Deficit To Persist
- Tonga: Current Account Deficit (% Of GDP)
- Political Reform To Boost Development?
- Country Overview - Vanuatu
- Economy Resilient, But Not Immune To Regional Downturn
- chart: What goes Up
- Vanuatu: GDP & Inflation
- Fiscal And External Positions Resilient
- chart: In The Black
- Vanuatu: Fiscal Balance, VUVmn
- chart: Unbalanced, But Thus Far No Cause For Alarm
- Vanuatu: Composition Of Current Account, VUVmn
- chart: Coming Down, But Still Healthy
- Vanuatu - FX Reserves (Months Of Import Cover)
- Table: Vanuatu economic data and Forecasts
- indicators: Nominal GDP (US$bn), GDP per capita (US$), Population (mn), Real GDP growth (%),
- CPI, average (%), Current account (% of GDP), Exchange Rate, VUV/US$ eop
- Tourism Sector Still Going Strong
- chart: Tourism Sector Relatively Unscathed
- Vanuatu: Quarterly Tourist Arrivals
- chart: Popular Among Antipodeans
- Vanuatu: Tourist Arrivals By Origin (2008)
- Challenges On The Horizon
- chart: Back To Trend Against Aussie
- Vanuatu: Exchange Rate, VUV/US$ & VUV/AUD
- Global Assumptions
- Global Outlook
- Developed States
- table: GLOBAL ASSUMPTIONS
- indicators: Real GDP Growth (%), Consumer Inflation (avg), Interest Rates (Eop),
- Exchange Rates (avg), Oil Prices (avg)
- Emerging Markets
- table: GLOBAL & REGIONAL REAL GDP GROW TH
- indicators: World, Developed States, Emerging Asia, Latin America, Emerging Europe,
- Sub-Saharan Africa, Middle East & North Africa developed market exchange rates:
- Eurozone, Japan, Switzerland, United Kingdom emerging market exchange rates: China,
- South Korea, India, Brazil, Mexico, Russia, Turkey, South Africa
- Table: nominal gdp, us$bn
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Table: gdp per capita, us$
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Table: population (mn)
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Table: real gdp per growth (%)
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Table: consumer price inflation, % y-o-y, ave
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Table: current account, % of gdp
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
- Table: exchange rate, eop
- indicators: australia, china, east timor, fiji, kiribati, micronesia, new zealand, papua
- new guinea, samoa, soloman islands, tonga, vanuatu
AbstractAlthough the Pacific Islands have not been directly exposed to the current global economic crisis, they have felt the second round effects emanating from the developed world. Revenues from the key commodity sector have fallen in line with global trends, while there are indications that tourist numbers are down and remittances from workers overseas have been falling. Tackling these cyclical problems has been made difficult by structural problems including high current account deficits, poor governmental structures, a weak security framework and ethnic tensions within many states. Amid these problems, however, we have identified two key areas in which the region could boast significant economic potential, and two further geopolitical factors which may add to regional stability in the long term.
Commodity Riches: Aside from the region’s potential to move further up the agribusiness value chain, there are still major opportunities in mining and energy in Papua New Guinea and East Timor. Provided these - states manage to avoid the ‘commodity curse’, there is potential for high levels of investment and stronger consumer spending over the coming years.
Niche Tourism: Fiji has long been the regional leader in the tourism sector, but there is still plenty of potential for other states within the region to develop. This is likely to be concentrated at the ‘niche’, rather than mass, end of the market.
The Rise of China: The region is already heavily tied to the economic cycles of Australia, New Zealand and the US. Strong real GDP growth in China - and higher development aid flows - offer the potential for another regional anchor to emerge, which will offer opportunities for the commodity and tourism sectors.
Australia’s Regional Role: Australia has started to take a more pro-active role in ensuring political stability in the South Pacific Region. We view this as a positive, given the potential structural and aid benefits it can bring with it. This is likely to be tied towards a long-term move towards stronger democratic institutions, even though this journey is likely to be very bumpy indeed.
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