Asia Regional Integration Center

Reduced public spending in 2018 caused a 0.5% contraction in GDP, excluding the large offshore petroleum sector. Following a sharp decline in 2017, public expenditure (excluding off-budget grants from development partners) fell another 2.8% in 2018. While public capital investment increased significantly, it was more than offset by lower recurrent spending. Payments for salaries and wages fell by 2.2%, purchases of goods and services by 9.3%, and transfer payments by 23.9%. These reflect lower payments to the Special Administrative Region of Oe-Cusse Ambeno. GDP is forecast to grow by 4.8% in 2019 and 5.4% in 2020, as fiscal stimulus and renewed investor confidence help stoke growth.