The COVID-19 pandemic and related containment measures have severely impacted the economy. Border closure and the suspension of commercial flights curtailed tourist arrivals. Real GDP contracted by 9.7 percent in FY2020, notwithstanding policy support. The economic contraction is estimated to have deepened in FY2021, and a gradual recovery is expected in FY2022 as tourism activities resume. While Palau’s public debt remains sustainable, the economic fallout of the pandemic and the cost of the fiscal response have led to a sharp deterioration of the fiscal position and a rapid increase in public debt. The high share of concessional loans from multilateral creditors in Palau’s external debt is an important risk mitigating factor. Palau is vulnerable to climate change and natural disasters.

Palau has emerged from the pandemic with significant output loss, elevated public debt and historically high inflation. Adverse demographic trends, high dependence on tourism and external support, and vulnerability to climate change risks raise vulnerabilities. The authorities successfully enacted a fiscal responsibility framework and modernized the tax system. A new Compact Review Agreement (CRA-23), with better financial terms, is awaiting approval by US Congress.

The coronavirus disease (COVID-19) pandemic disrupted both supply and demand sides of an interconnected world economy in 2020. Asia and the Pacific was not immune as lockdowns and travel and trade restrictions affected nearly all aspects of cross-border economic activity. This publication examines the initial impact on trade, investment, finance, and people’s mobility across the region as the pandemic struck. It looks at how regional economies individually or collectively respond to the crisis by, for example, leveraging rapid technological progress and digitalization as well as increasing services trade to reconnect and recover. The theme chapter focuses on digital platforms and how they can accelerate digital transformation across the region.

The Pacific region is expected to grow by 4.7% in 2022 and 5.4% in 2023 as most economies emerge from the worst of the pandemic-induced downturn. This issue of the Pacific Economic Monitor focuses on building and financing resilience to climate change and disasters. It also explores the impacts on the region of the Russian invasion of Ukraine, such as higher commodity prices.

Fiji has been among the hardest hit by the pandemic—with infection rates at one point among the highest in the world. Despite swift action by the government to close borders, protect the population, and mitigate the worst economic effects, the economic contraction was the worst in Fiji’s history. The crisis has come at a heavy social cost, including large-scale layoffs, surging unemployment, and high non-performing loans. Multilateral and bilateral support has been critical in helping Fiji weather the worst of the crisis and has facilitated a strong government response—including rapid acceleration of the government vaccination program underpinning Fiji’s reopening to international tourism.

Early and decisive measures successfully prevented an outbreak of COVID-19 in Nauru, and as of January 2022 there have been no COVID-19 cases on the island. Strong pandemic policy measures supported the economy, which continued to expand in FY20 and FY21. Nauru’s remoteness and size constrain potential growth and it is severely exposed to the negative effects of climate change on sea levels and the ocean stock of tuna. Development challenges are exacerbated by limited capacity and a high incidence of non-communicable diseases (NCDs).

This timely handbook critically examines the development and role of tourism in small Pacific Island states located across Melanesia, Micronesia and Polynesia. The volume presents an expansive evaluation of current issues, challenges and potentialities for the 13 self-governing states. Interdisciplinary in coverage and borne of a varied and international authorship, this handbook incorporates 27 specifically commissioned and original contributions. Structured into four thematic sections and embellished with insightful tables and illustrations throughout, the overarching ethos of this volume is to contribute to framing the role of tourism, tourism development and the tourism industry within the context of self-governing Pacific Island states faced with the challenge of pursuing an independent path of development. In doing so, the work highlights and deciphers various tourism development perplexities in the Pacific, examining closely the intersecting sociocultural, geopolitical, environmental, organizational, operational and strategic challenges. This volume, thus, discusses a range of issues: facilitators and inhibitors of tourism growth and development; climate change, ecological concerns, and eco-tourism; non-tourism and undertourism; crisis management and the COVID-19 virus; transportation and tourism infrastructural concerns; tourism policy and planning (including tourism governance); sectoral links between tourism; food and agriculture; gender and micro-entrepreneurship; community management and participation; cultural and natural heritage sites; and the handicraft industry. The work pays critical attention to the various trajectories of sustainable tourism and the United Nations Sustainable Development Goals. Despite the many challenges and concerns raised, the book implicates the importance of good governance, progressive post-COVID-19 recovery strategies and directives, and creative and imaginative options in the successful development, re-development and advancement of tourism. As a definitive reference resource for this subject area, this handbook will be of great interest to students, researchers and academics within tourism, development studies, geography, Pacific studies, sustainability and environmental studies.

Republic of Palau: Selected Issues

The Fijian economy has recovered strongly from the pandemic. Real GDP rebounded by around 30 percent cumulatively in 2022–23, surpassing pre-pandemic levels. Inflation has recently ticked up modestly largely due to a temporary effect of the hike in Value-Added Tax rates. Supported by the economic recovery, the fiscal deficit and debt-to-GDP ratios continued to decline but remain at elevated levels. The FY2024 (August–July) budget included significant revenue enhancing measures, partially offset by spending increases, which, on balance, are expected to reduce the fiscal deficit and debt ratios. The monetary policy stance has remained accommodative, although the Reserve Bank of Fiji has begun tightening liquidity. The banking sector is sound overall, and asset quality is improving (although still lower than pre-pandemic levels). The coalition government is developing a program of growth-enhancing reforms, particularly in the National Development Plan due in June.

Nauru faces structural challenges due to its small size and remoteness, and is highly dependent on imports. The narrow revenue base comprises fishing license fees, residual phosphate processing, and revenue from the Regional Processing Center (RPC). Nauru is vulnerable to the negative effects of climate change, as the population inhabit in a narrow coastal area. The health and economic impact of the pandemic has been limited in Nauru, thanks to successful vaccination and containment strategies