Economic Analysis - New Research Pose Upside Risks To Long-Term Growth Prospects - APR 2018

BMI View: New research by the University of Auckland shows that Tuvalu's land size has grown despite rising sea levels, potentially debunking prevailing wisdom that the Pacific nation would bear the brunt of climate change and disappear completely under water by the turn of the century. We believe that this could encourage Tuvaluans to take a longer term view on their country's future and plug the brain drain, posing upside risks to our forecast for real GDP growth to average 2.2% per annum over the coming decade.

A new study from the University of Auckland shows that Tuvalu - long seen as a prime candidate to disappear as global warming drives up sea levels - has actually grown in size over the past four decades. We believe that this could pose upside risks to the country's long-term economic growth prospects, which we forecast to average 2.2% per annum over the coming decade. Although adverse weather conditions will continue to be a major threat to low-lying island nations, the new study could prompt a reconsideration on how Tuvaluans respond to the problem. Rather than accepting their country's demise is inevitable and imminent, and explore options to migrate to bigger Pacific countries such as Australia, New Zealand, and Fiji, its citizens and aid providers may shift their focus to adapting to climate change, investing in domestic infrastructure, and start to plan for a longer-term future.

New Findings To Prompt Rethink Of Established Norms

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