Economic Growth in the Pacific to Moderate in 2025 and 2026
The Asian Development Bank (ADB) has released a new report, the Asian Development Outlook (ADO) April 2025, which projects economic growth in the Pacific to moderate to 3.9 per cent in 2025 and 3.6 per cent in 2026.
Key Factors Affecting Growth
The outlook reflects anticipated easing in tourism, a key growth driver in many economies in the subregion, and muted petroleum production in Papua New Guinea, the subregion’s largest economy. Despite the growth that has been realised in recent years, the Pacific remains at risk from external shocks, according to ADB Director General for the Pacific Emma Veve.
Risks to the Outlook
The report noted that while economies in the region are resilient, faster and larger-than-expected changes in US trade and economic policies pose risks to the outlook. Along with higher US tariffs, increased policy uncertainty and retaliatory measures could slow trade, investment, and growth.
Growth Forecasts
The growth forecasts were finalized before the announcement of new tariffs by the U.S. administration on April 2, so the baseline projections only reflect tariffs in place previously, the Manila-based bank said in a press release.
Conclusion
The ADB’s report highlights the importance of monitoring external shocks and adapting to changes in global trade and economic policies to ensure sustained economic growth in the Pacific.
Frequently Asked Questions
Q: What is the projected economic growth rate in the Pacific in 2025 and 2026?
A: The projected economic growth rate in the Pacific is expected to moderate to 3.9 per cent in 2025 and 3.6 per cent in 2026.
Q: What are the key factors affecting economic growth in the Pacific?
A: The key factors affecting economic growth in the Pacific include anticipated easing in tourism, muted petroleum production in Papua New Guinea, and external shocks.
Q: What are the risks to the outlook?
A: The risks to the outlook include faster and larger-than-expected changes in US trade and economic policies, higher US tariffs, increased policy uncertainty, and retaliatory measures.
Q: How were the growth forecasts made?
A: The growth forecasts were finalized before the announcement of new tariffs by the U.S. administration on April 2, so the baseline projections only reflect tariffs in place previously.