The Asian Development Bank has further cut growth expectations in the Pacific as coronavirus continues to squeeze the region's economies.
The ADB's Pacific Economic Monitor said business in the Pacific will contract by 6.1 percent this year - down from the 4.3 percent decline forecast in July.
The bank's Pacific director general, Leah Gutierrez, said it will be a balancing act to keep Pacific economies moving during the recovery period.
The Asian Development Bank (ADB) is an Asia regional development organization dedicated to reducing poverty in Asia and the Pacific. Photo: AFP/ Jay Directo
The ADB report said the Pacific is expected to post a cautious recovery in 2021 with growth of 1.3%, that will depend on how quickly travel and trade restrictions can be lifted to allow for some revival in economic activity.
ADB Assessments:
It said as Fiji waits for tourism to resume, the economy is projected to contract by 19.8% in 2020 and may only achieve a minimal recovery of 1.0% in 2021, assuming tourists return in the second half of the year.
The pandemic has heavily impacted Papua New Guinea's economy, which is forecast to contract by 2.9% in 2020. Some recovery is projected in 2021, but growth is expected to remain low at 2.5%, reflecting the lingering impacts of the pandemic.
The ADB said prudent expenditure will be key for the PNG recovery period.
In the Cook Islands the bank said even if borders reopen at the beginning of next year, GDP may decline by 15.4 percent in 2021.
In Niue, a potential travel bubble with New Zealand could help alleviate the fiscal strains of a prolonged pause in international travel.
For Palau, measures including tax and state-owned enterprise reforms, and prioritizing capital spending, will help the economy better weather the Covid-19 storm.
In Vanuatu, the government responded to the impacts of COVID-19 and Cyclone Harold with strong health and economic stimulus measures but fiscal pressures appear to be mounting for 2021.
In Samoa and Tonga, remittances may provide an opportunity to alleviate domestic economic pressures. Ultimately, expanding seasonal worker schemes would substantially alleviate economic pressures.
For Solomon Islands, beyond the immediate fiscal response to the pandemic, targeted efforts will be needed to improve fiscal buffers, and ensure that revenue mobilisation is efficient.
The Federated States of Micronesia and the Marshall Islands have been more affected by the socioeconomic impacts of the pandemic than initially estimated.
The ADB report said measures to safeguard public health, provide training and education, and protect the vulnerable will help those countries avoid the spread of the disease and lay the foundations for a strong and sustainable economic recovery.
The bank said the priorities for Nauru are to ensure critical services are efficiently delivered and private sector activities are not adversely affected.
For Kiribati and Tuvalu, it said geographical remoteness, isolation, and dispersion create additional hurdles for the government to respond.