Economic Analysis - Growth Downgraded But Still To Outperform Historical Average - NOV 2017

BMI View: We have revised our real GDP growth forecast for French Polynesia downwards to average 2.6% per annum through 2021, from 3.5% previously, as the mammoth Mahana Beach Project (which is expected to double the territory's hotel capacity) has been repeatedly scaled back in the last few quarters amid financial difficulties. That said, growth is still likely to outperform historical levels as other government tourism initiatives remain strong and efforts to diversify the economy are underway.

We have dialled back our optimism on French Polynesia's economic growth outlook over the coming years, forecasting real GDP growth to average just 2.6% per year through 2021, from 3.5% previously, as it appears that the massive USD2.0bn Mahana Beach Project has run into financial difficulties and has been repeatedly scaled back. Previously, we pointed out that the development of the Tahiti tourism project would drive fixed capital formation over the short-to-medium term, and consumption and services export growth over the longer term ( see ' Tourism Industry To Drive Growth ' , February 25 2016), but the boost to growth is expected to be smaller now. That said, we note that our forecast for growth to average 2.6% per annum over the next five years is still faster than the average of 2.0% seen in the last five years, and this will be underpinned by still-strong government initiatives to promote the tourism sector and efforts to diversify the economy.

Smart Tourism Initiatives Going Strong

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