Tonga: 2017 Article IV Consultation-Press Release; and the Staff Report for Tonga
IMF Staff Country Reports, January 17, 2018
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- Tonga: 2017 Article IV Consultation-Press Release; and the Staff Report for Tonga
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Bibliographic details
- Published: January 17, 2018
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781484338032.002
Macroeconomic overview and recent performance
- Over recent years, Tonga has enjoyed robust growth and macroeconomic stability.
- Real GDP growth:
- 3.4 percent in FY2016
- 2.7 percent in FY2017
- Growth drivers in FY2016–FY2017:
- construction
- agriculture
- tourism
- strong remittances
- strong private credit growth
- Inflation:
- Inflation spiked in FY2017 because of a new import tax and an increase in domestic food prices.
- External sector:
- The country’s external position weakened slightly owing to construction-related imports.
- Reserves were supported by strong remittances and donor aid.
Outlook and projections
- The outlook for the Tongan economy is favorable, despite external headwinds.
- Real GDP growth is projected at 3.4 percent in FY2018, driven by:
- construction
- agriculture
- tourism
Key takeaways for policy focus
- Monitor inflationary pressures stemming from tax policy changes and domestic food-price movements.
- Manage external vulnerabilities related to construction-led import demand to safeguard reserves.
- Leverage strong remittances and donor aid to support reserve buffers and macro stability.
- Sustain reforms and policies that support private credit growth and sectoral drivers (construction, agriculture, tourism) to achieve the projected 3.4 percent growth in FY2018.
Source: Tonga: 2017 Article IV Consultation-Press Release; and the Staff Report for Tonga, January 17, 2018.
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- Country Report