OREANDA-NEWS. A ramping up of natural gas exports in Papua New Guinea (PNG) is expected to push the Pacific region’s average GDP growth to 10.7% this year, a new Asian Development Bank (ADB) report says.

ADB’s flagship annual economic publication, Asian Development Outlook 2015 (ADO) notes that most economies across the Pacific are expected to perform better in 2015 due to favorable domestic and external conditions.

Vanuatu will be a notable exception, with recent Tropical Cyclone Pam causing widespread damage which is expected to disrupt economic activity and hinder growth this year. Early assessments indicate the cyclone will have potentially large impacts on tourism and agriculture output, after tourism grew strongly last year, on an increase in cruise ship arrivals. Kiribati, Nauru, Solomon Islands, and Tuvalu were also adversely affected by Cyclone Pam.

“While most Pacific economies enjoy positive near term outlooks, recent disasters brought on by climatic events highlight the importance of increasing resilience to shocks across the Pacific,” said Xianbin Yao, Director General of ADB’s Pacific Department. “Delivering inclusive growth while faced with such volatilities requires the Pacific to focus on maintaining basic public services by investing in climate-proofed essential infrastructure, as well as human capital through education and health spending.”

In PNG, the sub-region’s largest economy, the first full year of liquefied natural gas exports is expected to drive GDP growth to 15% in 2015, but that is seen to subside to 5% in 2016. Policymakers need to ensure that the benefits of growth are shared widely to reduce poverty and reduce inequality.

Large increases in public spending saw economic growth in Timor-Leste accelerate to 7.1% in 2014. Growth is expected to slow to 6.2% in 2015 but recover to 6.6% in 2016 if major investments proceed as planned. However, encouraging private investment is key to diversifying the economy and maintaining positive growth in the face of declining petroleum production.

Fiji recorded broad-based growth in 2014—it’s fifth consecutive year of expansion—as expansionary fiscal and monetary policy continued to boost consumption and investment, and tourism and agriculture performed well. Growth is seen to moderate slightly as the economy shifts from growth driven by public spending, toward private investment-fueled growth. Structural and financial management reforms can facilitate this transition and help sustain the country’s economic expansion.

The Solomon Islands economy contracted slightly in 2014 following severe flooding in April. Recovery spending will likely bring back growth in 2015, and the expansion will be further boosted by foreign investment in 2016. Limited access to credit remains a hindrance to achieving stronger and more inclusive growth.

The South Pacific economies of Cook Islands, Samoa, and Tonga are all expected to experience faster economic growth this year, which would then slow somewhat in 2016.  For the third consecutive year in 2014, fishing license revenues spurred economic growth and improved fiscal balances in the small Pacific island economies of Kiribati, Nauru, and Tuvalu. Externally funded infrastructure projects also contributed to higher growth.

The performance of the North Pacific economies of the Republic of the Marshall Islands (RMI), Federated States of Micronesia (FSM), and Palau was mixed in 2014 as record tourist arrivals boosted growth in Palau, but expansion was weak in RMI and FSM. Growth in the North Pacific will likely accelerate in the short term due to favorable external conditions and stimulus from infrastructure projects.

ADB, based in Manila, is dedicated to reducing poverty in Asia and the Pacific through inclusive economic growth, environmentally sustainable growth and regional integration. Established in 1966, it is owned by 67 members – 48 from the region.