Asia and Pacific > Palau, Republic of

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International Monetary Fund. Asia and Pacific Dept
This 2016 Article IV Consultation highlights that Palau’s economy has performed well in recent years. The economy grew strongly in FY2015 (ending September 30, 2015) at 9.4 percent, with tourist arrivals and construction activity expanding by 35 percent. However, the rapid rise in tourism activity strained infrastructure and was tilted toward low budget tourists, which led the authorities to limit the number of charter flights in FY2016. The outlook for Palau is also favorable. Economic growth is expected to slow temporarily to zero in FY2016 as tourist arrivals decline, but to rebound to 5 percent in FY2017 as tourism activity recovers with the entry of new hotels and construction picks up.
International Monetary Fund. Asia and Pacific Dept
This 2014 Article IV Consultation highlights that after two years of strong expansion, growth is estimated at about zero percent in the fiscal year 2013 (FY2013, ending in September) in the Republic of Palau owing to declines in construction and tourism. Inflation moderated to 2¾ percent (annual average) in FY2013 thanks to stable international food and fuel prices, and it is expected to stay at about 3 percent in FY2014. Growth is projected to increase to 1¾ percent in FY2014 and to 2¼–2½ percent over the medium term driven by the recovery in tourism and infrastructure developments.
International Monetary Fund
The economy has recovered following the stabilization of commodity and food prices. The Article IV discussions focused on policies to secure a sustained recovery and achieve long-term economic and fiscal sustainability. The recovery will likely remain weak, and the consolidated fiscal surplus is expected to decline in the near term. Long-term sustainability could be achieved through increasing the fiscal surplus. The reliability, coverage, and timeliness of economic statistics need to be improved to guide policies. The global crisis has increased the urgency of major fiscal and structural reforms.