Dili, May 2019 – Economic growth in Timor-Leste is expected to accelerate to 3.9 percent in 2019 and 4.6 percent in 2020, according to a new World Bank report released today. The April 2019 Timor-Leste Economic Report underscored that this rebound would be supported by stronger public spending, as well as renewed consumer and business confidence.
The twice-yearly report from the World Bank, which aims to provide ongoing analysis of the country’s economy, highlighted that a strong decline in public spending weakened economic activity in 2017 and continued to affect growth in 2018. Public expenditure increased significantly in the last 3 months of the year, but that was insufficient to avert a contraction of non-oil GDP by 0.7 percent. However, the outlook for 2019 seems more favorable than six months ago.
“With the approval of the 2019 state budget in February, we expect an economic recovery to take place,” said Pedro Martins, Senior Country Economist for Timor-Leste. “GDP is forecast to grow by 3.9 percent under a scenario of greater political and economic stability. Increased government spending, coupled with stronger private consumption, will steer economic recovery.”
The report also notes that consumer price inflation remains low at 2.3 percent and that a stronger US dollar has contributed to an increased real exchange rate. The trade deficit improved with stronger exports of coffee and travel services and lower imports of goods and services. Higher international oil prices increased petroleum-related revenues – despite lower production volumes – which contributed to an improvement in the current account balance.
The Timor-Leste Economic Report also includes an in-depth analysis of the role of agriculture in poverty reduction. The report identifies agriculture as a key sector for poverty reduction and economic diversification, however productivity levels remain low, with significant investment needed to expand production.