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Ms. Shari Boyce, Mr. Sergei Dodzin, Ezequiel Cabezon, Mr. Fazurin Jamaludin, Mr. Yiqun Wu, and Ms. Rosanne Heller

Abstract

This issue of the Asia & Pacific Small States Monitor focuses on the challenges facing Asia and Pacific small states associated with natural disasters and climate change. Most tourism-oriented economies experienced a robust increase in arrivals, partly reflecting country-specific factors. Among commodity exporters (Bhutan, Solomon Islands, and Timor-Leste) and other Asia and Pacific small states, growth remains uneven: robust activity in Bhutan was driven mainly by hydropower-related construction activities; Solomon Islands experienced a continuing decline of logging stocks and a short-term disruption of gold production; and Timor-Leste’s ongoing depletion of oil reserves has led to a tighter budget constraint and lower government spending in the non-oil sector.

Ms. Shari Boyce, Mr. Sergei Dodzin, Ezequiel Cabezon, Mr. Fazurin Jamaludin, Mr. Yiqun Wu, and Ms. Rosanne Heller

Abstract

Context: Bhutan is a small, until recently fast-growing, lower middle-income country with deep economic ties to India and a peg to the Indian rupee. Growth in Bhutan was robust during the last Five-Year Plan (2008/09 to 2012/13), driven by the development of the hydropower sector (exporting electricity to India) and a credit-fueled private consumption boom.

Ebrahim-zadeh Christine

One of the main points of contention surrounding globalization is whether the flow of technology, skills, culture, ideas, news, information, entertainment, and people across borders consigns many parts of the world to grinding poverty. On February 18, Jagdish Bhagwati (Professor, Columbia University), in discussing his new book, In Defense of Globalization, took on the skeptics, arguing that, when properly managed, globalization is the most powerful force for social good in the world today. The venue was an IMF Economic Forum moderated by Raghuram Rajan (Economic Counsellor and Director of the IMF’s Research Department) and with commentary by Daniel Yergin (Chair, Cambridge Energy Research Associates and author of The Commanding Heights: The Battle for the World Economy).

International Monetary Fund. Asia and Pacific Dept

This 2016 Article IV Consultation highlights that the economy of the Marshall Islands is estimated to have expanded by about 0.5 percent in FY2015 (ending September 30), as the fishery sector recovered. Following a moderate inflation of 1.1 percent in FY2014, headline inflation dropped to -2.2 percent in FY2015 amid falling oil and utility prices. The fiscal balance is estimated to have recorded a surplus of about 3 percent of GDP in FY2014-15, owing to record-high fishing license fees. Growth is expected to rise to about 1.5 percent and inflation to about 0.5 percent in FY2016, as the effects of the drought in earlier 2016 are offset by the resumption of infrastructure projects.

International Monetary Fund. Asia and Pacific Dept
This Selected Issues paper discusses correspondent banking relationships (CBRs) pressures on the Republic of the Marshall Island (RMI). RMI’s two banks currently have access to the US financial system. The Bank of the Marshall Islands is a domestic financial institution providing banking services to a substantial portion of the population and operates five branches throughout RMI, including on the Kwajalein Atoll. RMI, through the Trust Company of the Marshall Islands, provides offshore corporate and maritime registry services. Weak implementation of the anti-money laundering and combating the financing of terrorism (AML/CFT) framework by the authorities contributes to CBR pressures in RMI. The termination of BOMI’s CBR with First Hawaiian Bank would be expected to have significant negative economic repercussions without alternative arrangements. The RMI authorities are strengthening the effectiveness of the AML/CFT framework. Additional steps should be taken to further lower the risk of losing the last US dollar CBR. Once the national risk assessment is completed, an action plan should be developed to address the identified risks.
International Monetary Fund
This paper reviews economic developments in the Marshall Islands during 1996–98. Real GDP declined by 15.2 percent and 5.3 percent in FY1996 and FY1997, respectively, reflecting mainly the effects of the adjustment measures implemented by the government since 1996 under the Policy Reform Program aimed at correcting the large imbalances in the public finance and external sector. Agriculture and fishing activities declined in FY1996 but recovered partially the following year. Construction fell sharply in FY1996 and stagnated in FY1997 with no new major projects following the completion of a 150-room hotel and the dry dock.