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Timor-Leste Economic Reports

2026

Timor-Leste Economic Report: Leveling Up - How ASEAN Membership Can Support Timor-Leste’s Economic Transformation (April 17, 2026)

Also available in: Tetum | Portugueese

Timor-Leste is entering a new and potentially transformative economic chapter. Oil and gas production from the offshore Bayu Undan field has ended and the country now faces the task of building a durable foundation for prosperity - one driven by productive firms, exports, and a skilled workforce. The Tasi Mane project, including the development of a liquefied natural gas plant, remains a strategic national priority with the potential to anchor long-term revenues while strengthening energy security. Its fiscal contribution is, however, unlikely to materialize in the medium term. This edition of the Timor-Leste Economic Report argues that the country stands at a critical moment. Timor-Leste joined the Association of Southeast Asian Nations (ASEAN) in 2025, following the country’s accession to the World Trade Organization (WTO) in 2024, providing a timely platform to accelerate its transition from an oil-dependent economy to one driven by productive firms, exports, and skills. International experience shows that such transitions can succeed when regional integration drives domestic reforms. By treating ASEAN membership as a reform platform now, not later, Timor‑Leste can build a more competitive, job‑creating economy, and secure its long‑term prosperity.

2025

Timor-Leste Economic Report : From Resources to Results - Transforming Public Spending to High Growth (January 31, 2025)

Also available in: Tetum | Portuguese

Timor-Leste faces a defining moment in its economic journey. As the country seeks to transition from petroleum dependency to a more diverse and resilient economy, the stakes cannot be higher. The Petroleum Fund, a lifeline that has sustained much of the national budget, risks depletion by 2035, based on recent Ministry of Finance estimates, unless there are urgent reforms. Ambitious national goals - such as upcoming ASEAN membership - reflect the country’s aspirations to integrate globally and broaden its growth horizons. Yet, these opportunities are weighed down by significant fiscal challenges. More specifically, an expanding national budget that raises concerns about fiscal sustainability and the efficiency of public spending. The question is clear: how can Timor-Leste spend better to fuel sustainable growth while preserving fiscal stability?

Press release: Transforming Public Spending for a More Prosperous Timor-Leste

Timor-Leste Economic Report : Land of Opportunities - How Modern Land Administration Can Unlock Timor-Leste’s Economic Transformation (September 30, 2025)

Also available in: Tetum | Portuguese

Timor-Leste is at a defining moment - one that brings both urgent challenges and real opportunities to build a more resilient and prosperous future. With oil production halted, the country now relies on withdrawals from its Petroleum Fund, which can be depleted by 2038. This raises a pressing question: how can Timor-Leste build a sustainable future and preserve its fiscal buffers? The stakes are high, but so is the potential, with several pathways already emerging. Membership of the Association of Southeast Asian Nations (ASEAN) promises deeper regional integration, long-delayed infrastructure projects are starting to bear fruit, and the tourism sector is rebounding. To seize this moment, Timor-Leste needs to mobilize its financial assets to grow its private sector, but for this to happen it needs to tackle the lack of land tenure security which is a barrier to investment across the board. Get this right, and Timor-Leste can become a model for sustainable growth in Southeast Asia.

Press release: Land Reform Key to Unlocking Timor-Leste’s Economic Future, New World Bank Report Says

2024

Timor-Leste Economic Report : Leveraging WTO Accession for Economic Transformation (July 31, 2024)

Preliminary estimates from INETL, the Timor-Leste National Statistics Office, suggest that the economy grew by 2.3 percent in 2023, following growth of 2.9 percent in 2021 and 4.0 percent in 2022. The subdued economic growth in 2023 reflects the fiscal drag and low budget execution rates resulting from the Parliamentary Election and subsequent change in government. Private consumption increased by 3.2 percent, potentially fueled by substantial remittance inflows. The reliance on public sector-driven economic activity over the past decades has exerted a substantial influence on Timor-Leste's labor market dynamics.

Timor-Leste Economic Report : Fit for Purpose - Crafting a Stable, Inclusive, and Resilient Financial Sector (January 31, 2024)

The final national accounts for 2022 have slightly raised the non-oil growth rate, with consumption driving economic activities. The IX Constitutional Government has an ambitious target of creating some 50 000 jobs over the next five years, but the lack of economic dynamism hinders job creation for rapidly expanding workforce. In response to severe slow budget execution, the new government revised the 2023 budget, decreasing planned expenditure by 12 percent, aligning closely to the actual spending in 2022. For the first nine months of 2023, consumer price inflation remained high at 8.3 percent year-on-year, driven by a notable rise in both food and non-food prices. The growth in money supply has paralleled fiscal expansion, leading to substantial liquidity in the banking sector which remains largely unutilized by the real sector. There have been consistent trade deficits since Q4 2022, reaching 17.1 percent of gross domestic product (GDP) by September 2023.

Press release: Timor-Leste Economic Grow Forecast to Pick Up in 2024-2025 Amid Easing Inflation, Stable Fiscal Outlook

2023

Timor-Leste Economic Report : Ways to Harvest Prosperity (July 1, 2023)

Timor-Leste’s economy continued its recovery in 2022, expanding by 3.9 percent, fueled by public consumption and investment. Private investment rose from an exceptionally low level while net exports continued to be a drag on growth. Headline inflation soared in March 2023 at 9.6 percent, spurred by significant increases in food and non-food prices. High inflation is part of a global trend driven by prices of tradable goods. Within Timor-Leste, the government’s policy of enforcing higher excise taxes on tobacco products, implementing import taxes, and applying excises to sugar and sugary beverages, partially drove the inflationary trend. To advance a reform agenda, the new government may want to consider institutionalizing fiscal consolidation through robust fiscal rules. Both revenue mobilization and expenditure rationalization efforts should not only be maintained but also enhanced. Given that significant increases in public spending have had a limited impact on Timor-Leste’s medium-term economic growth, it is possible to sustain growth levels with a reduced budget.

Press release: Great Expectations Hang on New Government to Steer Timor-Leste's Economy

2022

June 2022 Timor-Leste Economic Report

Investing in the Next Generation

Report Page | Press Release | Download report (.pdf)

Key Findings

Buffeted by the twin shocks of COVID-19 and Tropical Cyclone Seroja, the non-oil economy grew by 1.5 percent in 2021. A record-high budget with expenditure of nearly 90 percent of GDP bolstered government consumption. A series of fiscal stimulus measures supported employment and incomes, allowing households to maintain their spending. However, this growth follows recessions in 2017, 2018, and 2020 which have left Timor-Leste’s Gross Domestic Product (GDP) lower than it was in 2016.
Rising commodity prices spurred by the Ukraine-Russia war imposes an additional hurdle but Timor-Leste has the policy space to absorb the shocks through various social protection schemes. Despite the negligible direct impact, the Timor-Leste economy is greatly exposed to the indirect impacts of the war through commodity markets. Headline inflation rose to 6.6 percent year-on-year (YoY) in April 2022, driven by surging global food and energy prices.
The President has recently promulgated a 2022 budget revision of US$1.24 billion (74.8 percent of non-GDP). Of the new measures proposed by the government nearly 90 percent will be allocated to the National Liberation Combatants’ Fund (NLCF). The revised 2022 State Budget will amount to USD 2.4 billion (nearly double of non-oil GDP), the largest budget in the country’s history and will accelerate the depletion of the Petroleum Fund to less than a decade.
Uncertainties surrounding the baseline forecast remain large whilst risks are tilted to the downside. Macroeconomic risks include further increases in global food and energy prices and COVID-19-related mobility restrictions. Timor-Leste’s exposure to extreme weather events and natural disasters also makes it vulnerable to upward pressure on food prices ‒especially if there is another spell of heavy floods. Domestic political uncertainty and policy reform slippages can also lead to protracted macroeconomic imbalances.
According to the report, a strategy to address short- and medium-term challenges is urgently needed. Fiscal policy should aim to protect the vulnerable from rising food and fuel prices, preferably through targeted assistance. The government can promote policy actions conducive to reducing food prices through increasing agricultural productivity and increasing nutrition through diversifying domestic production.
Diversification of the economy through development of export sectors is essential for sustained growth. On the energy side, the efficiency of electricity generation and provision should be improved as doing so would positively impact the budget and reduce the carbon footprint of the country. Diversified energy sources, including renewables, should be explored.
The report also includes a special focus on Human Capital (HC) – which refers to the knowledge, skills and health that people accumulate over their lives, that allows each person to fully realize his or her potential. Measured by the Human Capital Index (HCI), a child born in Timor-Leste today will only be 45% as productive as an adult than she could be if she enjoyed complete education and full health.
The risk of the Petroleum Fund depletion over the next decade - having underpinned the oil-driven economy and allowed increased spending - means that the Timorese people themselves need to be the drivers of the country’s economic growth. With 37 percent of the population under the age of 15, designing cost-effective interventions to invest in people to accumulate and protect human capital is critical.

2021

December 2021 Timor-Leste Economic Report

Steadying the Ship

Report Page | Press Release | Download report (.pdf)

Key Findings

After dual COVID-19 and natural disaster shocks, available data points to some signs of economic recovery. Receipts from sales and excise taxes rebounded while household credit expanded as government executed a nominally higher budget in Q2 2021.
The COVID-19 situation has begun to improve. The pace of vaccine rollout continues to accelerate as nearly 71 percent of the eligible population has received one dose and about 46 percent are fully vaccinated. Nevertheless, there is considerable disparity of vaccine coverage.
The Government collected 11.3 percent less domestic revenue during the first half 2021 compared to 2020. Public spending grew by 20.3 percent, but capital spending remains relatively low.
Inflation increased to 3.6 percent in the second quarter of 2021, the highest reading in eight years, driven largely by rising food, beverage, alcohol, and tobacco prices. Private sector credit growth doubled to nearly 20 percent, driven by household credit. Outlook and Risks
Non-oil GDP contracted by 8.6 percent in 2020 but is projected to recover by 1.6 percent in 2021 on account of base effects and COVID-19 related fiscal expansion.
Uncertainty surrounding the growth outlook is high, given that COVID-19 is still evolving locally and globally. Rapidly expanding vaccination coverage is key to containing the pandemic and economic recovery.
Despite a reduced allocation and more coherent budgeting, allotment for recurrent spending in 2022 budget grows by 24 percent than the 2015-2019 average. In contrast, sustainable sources of revenue are set at nearly 40 percent lower than the recurrent spending. Fiscal deficit is projected to narrow in 2022, but still rather elevated at around 40 percent of GDP.

May 2021 Timor-Leste Economic Report

Charting a New Path

Report Page | Press release | Download report (.pdf)

Key findings:

COVID-19 is spreading quickly throughout the country, despite early successes in containing the virus. Meanwhile, flooding and landslides have caused considerable human loss and economic damage. These compounding health and humanitarian emergencies are undermining the economic recovery in 2021.
The economy contracted by about 7 percent in 2020, the largest decline since independence. Public health measures and lower consumer confidence weakened private consumption, while political uncertainty in early 2020 undermined public spending – by delaying the approval of the 2020 budget. Moreover, international travel restrictions hampered exports of services.
Public expenditure declined by 9 percent in 2020. Capital spending nearly halved, but public transfers increased to support households. Domestic revenues suffered from lower economic activity.
The fiscal deficit eased to 26 percent of GDP – mostly due to lower spending – but remains very large. The deficit was largely financed by withdrawals from the Petroleum Fund.
Exports nearly halved, owing to limited travel services but also lower coffee earnings.
GDP is forecast to grow by 1.8 percent in 2021, which is lower than the 3.1 projected in October 2020. The economy is expected to recover in the medium-term, but structural constraints will remain an impediment to faster growth. Reforms to boost productivity and competitiveness are critical.
COVID-19 remains the key risk to the outlook, as it may require prolonged containment measures to avoid large human losses. A swift vaccination rollout is more critical than ever.

2020

October 2020 Timor-Leste Economic Report

Towards a Sustained Recovery

Report Page | Press release | Download report (.pdf)

Key findings:

The COVID-19 pandemic and renewed political instability have taken a heavy toll on the economy. The lack of a 2020 budget constrained public spending, while public health measures and voluntary changes in behaviour have weakened private sector activity. However, an
The economic response package – financed through a special fund – provided some relief to households and businesses.
Public expenditure declined by 7 percent in the first half of 2020. Spending on capital projects was particularly affected. Domestic revenues suffered from lower economic activity and temporary relief measures (e.g. electricity subsidy).
Exports declined by 46 percent in the first half of the year, mainly due to lower travel services. Imports decreased by 20 percent, with services declining further than goods.
Gross domestic product (GDP) is expected to contract by 6.8 percent in 2020 due to the combined impacts of COVID-19 and political uncertainty (earlier in the year).
A second wave of COVID-19 infections is a key external risk to the outlook, while political instability remains the main internal risk. Strengthening health preparedness and building a durable political consensus are important preconditions for a robust and sustained economic recovery.

April 2020 Timor-Leste Economic Report

A Nation Under Pressure

Report Page | Press release | Download report (.pdf)

Key findings:

Economic prospects for 2020 have been weighed down by the lack of a state budget for 2020, renewed political uncertainty, and the global COVID-19 outbreak
GDP is currently forecast to contract by nearly 5 percent in 2020, although this projection remains highly uncertain.
Public spending is likely to be constrained for most of the year, due to the duodecimal regime in place and execution delays owing to COVID-19.
A $250 million withdrawal from the Petroleum Fund was approved, 60 percent of which allocated to prepare and respond to the COVID-19 pandemic.
Timor-Leste has implemented several public health measures to help contain the spread of the virus, including: restrictions on international travel, school closures, rules on access to commercial premises, mandatory confinement of those infected or entering the country, ban on public gatherings, and minimum services for the public administration.
An effective response to COVID-19 will require measures to contain the virus and strengthen the capacity of the health system, protect vulnerable households, support affected businesses, and ensure the continuity of public services

2019

October 2019 Timor-Leste Economic Report

Unleashing the Private Sector

Report Page | Press release | Download report (.pdf)

Key findings:

Despite the late approval of the 2019 budget, public expenditure in the first half of 2019 was 16 percent higher than in the same period in 2018
Private investment is also expected to benefit from greater political and economic stability.
Gross domestic product (GDP) is expected to grow by 4.1 percent in 2019.
GDP growth is expected to accelerate to 4.9 percent by 2021, driven by larger public spending and household consumption.
Medium-term growth prospects are hampered by a weak private sector. Developing productive capabilities will require continued political and macroeconomic stability, strong investments in high-return connective infrastructure and relevant skills, as well as policy and regulatory reforms that improve the business environment.

April 2019 Timor-Leste Economic Report

Moving Beyond Uncertainty

Report page | Press release | Download report (.pdf)

Key findings:
GDP declined for a second consecutive year, owing to political and economic uncertainty.
Public spending constrained until (late) approval of 2018 budget, with strong increase in the last 3months of the year
Current account improved due to higher primary income. Trade deficit eased as imports declinded and exports increased.
Positive outlook for 2019, with GDP forecast to grow by 3.9% and inflation to remain below 4%..

2018

October 2018 Timor-Leste Economic Report

Regaining Momentum?

Report page | Press release | Download report (.pdf)

Key findings:

GDP growth has fallen sharply in 2017 to -4.7 percent.
GDP forecast to improve to 0.8 percent for 2018.
Outlook remains uncertain, depending on budget execution.
Offshore oil production continues to decline, however the Petroleum Fund recorded strong investment returns.

March 2018 Timor-Leste Economic Report
Lower Public Spending Leads to Slower Growth Report page \| Press release \| Download report (.pdf)
Key findings: GDP growth has fallen sharply in 2017 to a projected -1.8 percent. Reserve assets grow and the outlook for tourism and petroleum remains positive. Private consumption has been robust in 2017, but public and private investment has declined. Offshore oil production continues to decline, however strong Petroleum Fund investment returns has lifted GNI. Coffee exports dropped from US$23million in 2016 to US$14million in 2017. This reflects seasonal volatility and exports continue to trend upwards over the long term.

March 2018 Timor-Leste Economic Report

Lower Public Spending Leads to Slower Growth

Report page | Press release | Download report (.pdf)

Key findings:

GDP growth has fallen sharply in 2017 to a projected -1.8 percent.
Reserve assets grow and the outlook for tourism and petroleum remains positive.
Private consumption has been robust in 2017, but public and private investment has declined.
Offshore oil production continues to decline, however strong Petroleum Fund investment returns has lifted GNI.
Coffee exports dropped from US$23million in 2016 to US$14million in 2017. This reflects seasonal volatility and exports continue to trend upwards over the long term.