AEIR 2018

Economic recovery continued in 2017, sustaining the 3.5% growth since 2016. The upswing in construction, strong agriculture, and tourism supported growth. Air arrivals grew by an estimate of 12% due to the 2017 Pacific Minigames and the return of codeshare flights by Qantas and Air Vanuatu. Construction of international wharfs and tourist infrastructure buoyed the industry sector. Higher food and transport prices pushed inflation to 3.2%, while growth in domestic credit remained subdued.

As major construction projects approach completion in 2018 and 2019, economic growth is forecast to slow to 3.2% and further to 3.0% in 2019. The increase in value-added tax rate from 12.5% to 15% effective 1 January 2018 will increase government revenue and support the additional government expenditures for the year. Services, in particular tourism, comprise nearly two-thirds of the economy’s GDP. The sector is expected to expand moderately this year. Delay in implementation of large construction projects in the pipeline is a downside risk to growth, while increasing public debt to finance these projects is a potential area of concern.

Source: Asian Development Outlook 2018 Update, ADB.
Latest Month-Ago Year-Ago
Headline Inflation Rate 1 1.8 (Sep18)3.6 0.0
Merchandise Export Growth 1 58.1 (Jan19)58.1 323.4
1 y-o-y, %.
Source: CEIC database.

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