Asia Regional Integration Center

The economy contracted by 0.8% in fiscal year 2020 (FY2020, ending 30 June) from 1.0% growth in FY2019 due to pandemic-related disruptions in travel and shipping. Government expenditure rose by 22.3%, with funds used on health facilities and to support state-owned enterprises providing vital public services. The current account surplus fell to 4.6% of GDP (from 10.4%) as services exports suffered from the reduced operations of Nauru Airlines. GDP growth is expected to bounce back to 1.5% in FY2021 as infrastructure projects, notably the Nauru Port rehabilitation and upgrade, continue. Growth is forecast to moderate to 1.0% in FY2022 with the closure of an Australia-financed Regional Processing Centre.