A construction boom in Palau is seen as driving economic growth for 2019 despite a slight tourism slump in 2018, according to next fiscal year’s economic outlook.
The 2019 economic outlook, which was submitted with the proposed Fiscal year 2019 spending package, stated that next year’s economic development is expected to be “favorable,” projecting an economic growth of three percent.
Ongoing infrastructure projects will spur the growth and contributed to an increase in labor demand.
In the face of a decline in tourism activities in 2018, Palau is anticipating a rebound in tourism and this will be reflected in the anticipated hotel occupancy tax projected revenue of $4.9 million. According to the projected revenues, the Palau Pristine Environmental Fee (PPEF) is also expected to bring in $2-6 million in 2019.
Finance Minister Sadang also said the tourism decline, however, did not impact revenues. Visitors spending are up, he said as reflected by the increase in collection of gross revenue taxes, exceeding target collection by 17 percent as of August 31, 2018.
However, Palau’s heavy reliance on fuel and food imports makes it highly vulnerable to global changes in prices.
He also noted that Palau has anticipated a drop in tourism arrivals in 2018, which allowed them a conservative estimate of revenues in order to balance the budget.
Palau is also expected to slightly miss its target collection for 2018 due to the decline in tourism but its confident that it will not cause a serious dent to the economy.
Palau’s heavy reliance on fuel and food imports also makes it highly vulnerable to global changes in prices. It is also expecting a hit from the ongoing United States and China trade war. (Bernadette H. Carreon)