While most Pacific countries are projected to reach their pre-pandemic Gross Domestic Product (GDP) by 2024, except for Palau, Samoa, and Solomon Islands, according to the latest World Bank’s Pacific Economic Outlook. 

As a tourism-based economy, Palau’s strong recovery from border closure will determine its growth. 

The report said that in Palau, “growth has been revised significantly downward for 2023 amid a weaker-than-projected tourism recovery resulting from a lack of direct flights from source countries, such as Japan and Korea.”

Palau however has announced that it will be seeing direct flights from Singapore and Korea in the coming months, 

The outlook also said that Palau, FSM, and RMI current account and fiscal outlook largely depend on the new Compact Agreement with the US. While the three countries have reached an agreement with the United States (US) on Compact renewal, the US Congressional approval is pending. The timing of the approval will impact the outlook. 

Palau’s debut level is relatively high compared to others in the region, “reflecting the negative impact of the pandemic on the economy and the cost of fiscal response.”  Fiji and Palau continue to hold the largest share of public debt in the region with an average of over 85 percent of GDP in 2022. 

Overall, Pacific growth is expected to reach 3.9 percent and then moderate to 3.3 percent in 2024.

“As the initial post-COVID-19 rebound dissipates and the region moves towards its long-term trend growth of 2.6 percent,’ it added.

However, uncertainty remains high which will depend on the trade partners as inflation is felt globally.

Inflation remained stubborn across the Pacific at an average of over 6.7 percent in 2022, a substantial increase from the 1.5 percent average during 2019-2021, it said. 

Leave a comment

Your email address will not be published. Required fields are marked *