Tourism Rebounds in Pacific, Raising Hopes of Recovery, Says ADB

MANILA, PHILIPPINES - A recent increase in Australian and New Zealand tourists to Pacific island countries has raised hopes the region's vital tourism industry is recovering after being buffeted by the global financial crisis, according to a new Asian Development Bank (ADB) publication.

The November issue of Pacific Economic Monitor, a quarterly economic review of 14 Pacific island countries and Timor-Leste, noted that the number of Australian tourists to the region in July and August increased by 16.1% year-on-year, a sharp rise after modest gains in April and May. Meanwhile, the number of New Zealand tourists visiting the Pacific also climbed in August, to 2.6%, after eight consecutive months of contraction.

The Monitor described the tourist figures, together with a price rise in tree crops such as cocoa and palm oil, as "positive news for the Pacific" and an indication of a recovering global economy. The report also notes that Samoa, which was hit by a tsunami last month, is coping better than expected with the impact of the disaster because of financial support provided by Samoans living overseas and the broader international community. Rehabilitation efforts may now see a small economic expansion in 2010.

However, the report warns against complacency in the region, saying that improvements in the global economy will be gradual and will take time to fully flow through to the Pacific.

"Notably, unemployment is still on the rise in the Pacific's key neighboring economies, and this will delay prospects for a much-needed turnaround in remittances," the report said.

Most Pacific economies that have contracted because of the global economic crisis may find they can only hope for a solid economic recovery by late 2010, or perhaps even 2011. Fiscal pressures have intensified in many Pacific island economies, and the stress is likely to build in 2010 due to higher international oil prices.

The Monitor called for concerted government action to help bring about an economic recovery in the region, noting that a delayed response would adversely impact on the region's poor.

"It is estimated that an additional 50,000 people will fall below the poverty line in the Pacific in 2010 because of the crisis," said S. Hafeez Rahman, Director General of ADB's Pacific Department. "Governments must therefore strengthen fiscal efforts to speed up economic recovery."

The Monitor provides an update of developments and policy issues in the region. The ADB publication uses data from Australia, New Zealand, US, and Asia to supplement data from the region and provide more up-to-date assessments and broader coverage of the Pacific economies.