Economic Analysis - Growth To Slow After 2019 - DEC 2017

BMI View: Tuvalu's real GDP growth is likely to remain supported over the coming quarters thanks to increased capital expenditure ahead of the 2019 PIF leaders' summit and the USD36.0mn Green Climate Fund. However, beyond 2019, we expect growth to slow, averaging just 2.1% per a nnum through 2026 as the island- nation continues to face deep structural challenges, and the tourism sector is unlikely to provide the much-needed solution.

We have revised our forecast for Tuvalu's real GDP growth to remain stable at 2.9% through 2019, up from an average of 2.3% per annum previously. Increased government expenditure, investment, and foreign aid as part of the preparation towards hosting the 2019 Pacific Islands Forum (PIF) leaders meeting and to safeguard against climate change are likely to provide a tailwind for the economy. Beyond that, however, we believe that the Tuvaluan economy is likely to return to a slow growth track, averaging 2.1% per annum through 2026, as the country continues to face numerous structural growth challenges which will make sustainable growth difficult. Although the tourism sector is commonly touted as a mainstay and lifeline for Pacific Island nations, we maintain that Tuvalu is unlikely to achieve significant success in this sector.

Investment In Coastal Protection And PIF Meeting To Boost GDP

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