Tourism and public infrastructure spending funded by development partners still sustain the economies of the South Pacific and while the latter may have slowed slightly in the region in recent times, growth is widely expected to pick-up in the near term as infrastructure spending rises again in most South Pacific Rim economies.
This comes against a backdrop of fluctuating commodity markets that continue to unsettle economic projections in the region, most notably for a commodity-exporting advanced economy like Australia. China has become a major participant in commodity markets; only a fraction of the huge demand for energy and metal commodities by the China can only be met by domestic production, leaving the country largely dependent on commodity imports and in turn fuelling increased demand in these markets over the last decade. But the sustained slowdown in China’s economy has coincided with a volatility of late in commodity markets and leads to questions over its future role in this influential international arena.
Indeed, the April 2016 World Economic Outlook from the International Monetary Fund (IMF), titled Too Slow for Too Long, noted that the downturn in China’s imports in 2015 has been an important drag among advanced economies in Asia. Commodity-exporting advanced economies continue to adjust to reduced income and resource-related investment, it added, and in Australia growth is expected to remain below potential at 2.5% in 2016 – but to rise above potential to 3% over the next two years, supported in part by a more competitive currency.
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