Tonga: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tonga
IMF Staff Country Reports, November 25, 2024
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- Tonga: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tonga
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Bibliographic details
- Published: November 25, 2024
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9798400293801.002
Economic activity and drivers
- Economic activity has strengthened, bolstered by consistent remittance flows, continued tourism recovery, and robust construction activities.
- Near-term baseline economic outlook remains favorable, appropriately supported by expansionary fiscal and monetary policy.
- Large public investment projects and a rebound in agricultural output (as the effects of El Nino dissipate) are key contributors to domestic demand.
Inflation
- Headline inflation peaked at 14.1 percent in September 2022 and has since been normalizing.
- Inflationary pressures have substantially eased.
Growth projections
- Real gross domestic product (GDP) growth is projected to accelerate to 2.4 percent in FY2025, mostly led by continued strength in domestic demand including large public investment projects and a rebound in agricultural output.
- Tonga’s long-term growth is projected at 1.2 percent, reflecting structural constraints.
Medium- and long-term risks and constraints
- Medium-term growth prospects remain uneven.
- Long-term constraints identified:
- Exposure to increasingly frequent natural disasters.
- Persistent loss of workers to emigration.
- Limited economies of scale due to geographical barriers.
Policy recommendations and structural priorities
- Implement structural reforms focused on:
- Bolstering disaster resilience.
- Advancing digital transformation.
- Strengthening governance frameworks to foster a conducive business environment.
- These reforms are described as essential to meet Tonga’s development goals.
Publication metadata and identifiers
- Pages: 82
- Series: Country Report No. 2024/326
- Issue: 326
- Volume: 2024
- ISBN: 9798400293801
- DOI: https://doi.org/10.5089/9798400293801.002
Source: Tonga: 2024 Article IV Consultation-Press Release; Staff Report; and Statement by the Executive Director for Tonga (November 25, 2024).
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