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publication May 6, 2019

Timor-Leste Economic Reports

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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. 

 

October 2020 Timor-Leste Economic Report

Towards a Sustained Recovery

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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

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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
 

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

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  • 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%..

 

October 2018 Timor-Leste Economic Report   

Regaining Momentum?

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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.