Tonga’s economy likely to grow by 2.6%

There are several notable risks that the Tongan economy could face during the 2016 – 2017 financial year.

Radio Tonga reports it includes natural disasters such as tropical cyclones, large increase in spending and cost overruns in Tonga’s preparation for the 2019 Pacific Games – that could weaken the fiscal sustainability and raise public debt.

This is according to report from the Asian Development Bank – ADB.

Economic forecasts show that while the Tongan economy is expected to grow by 3.1% in the current financial year, it will not maintain that growth rate.

ADB stated the Tongan economy for the 2017 Financial Year will grow by only 2.6%.

This attributes to construction, tourism and trade, there is also a warning of cost overruns for the Pacific Games that contribute to the estimated (0.5%) point five of a percent decline in growth.

However the productivity of much of this investment is low, being channeled, for example into residential and office space construction, the latter has capacity.

There are many empty office spaces in Nuku’alofa.

According to the report, Tonga indicative allocation from the ADB for 2017 – 2019 is $39.89 million, including $10.41 million from Disaster Risk Reduction resources.
   
Source:
Radio Tonga