THE ECONOMIC SETTING 1 BUDGET ANALYSIS December 2013 www.adb.org/pacmonitor The Monitor provides an update of Highlights developments in Pacific economies and Weak global growth is impacting the Pacific largely through lower explores topical policy issues. commodity prices. Fiscal consolidation in the United States (US) and moderating growth in developing economies has slowed growth in the CONTENTS world economy in 2013. Subdued global demand is keeping international Highlights 1 commodity prices low—adversely affecting agriculture, mineral, and The economic setting 3 forestry export earnings of some Pacific economies. The moderation in growth in the People’s Republic of China (PRC) is expected to dampen the Country economic updates 5 outlook for Australia, with possible flow through effects on the Pacific. Policy briefs: Strong revenue performance in smaller Pacific economies has Economics of climate change 18 continued in 2013, while larger economies have struggled. For the second consecutive year, fishing license revenues are exceeding budget Economic indicators 32 targets in Kiribati, the Republic of the Marshall Islands (RMI), Nauru, and Tuvalu due to rising rates under a regional vessel day scheme. Tax How to reach us collections in the Cook Islands, Fiji, and Vanuatu are also higher than
[email protected] expected. In contrast, revenue collections in the large resource exporters of the Pacific are weakening. Revenues from the mineral and petroleum Asian Development Bank sectors are below budgeted levels in Papua New Guinea (PNG), while Pacific Department declining production in major offshore fields is resulting in lower Apia Level 6 Central Bank of Samoa Bldg. petroleum revenue in Timor-Leste.