East Timor economy to expand 32.1 pct in 2007, the fastest rate in Asia

2 April 2007

Manila, Philippines, 2 April – The East Timor economy is expected to grow 32.1 percent this year, recovering from the 2006 recession and reaching the highest growth rate on the Asian continent, according to the Asian Development Bank.

In one of the planet’s youngest countries, “a strong resurgence is expected in 2007 based on greater government spending and by international staff stationed in the country,” said the bank in a report published Friday in Manila.

“Reaching development objectives depends on the State’s capacity to turn the strong flow from oil and gas reserves into investments,” it added.

East Timor is currently one of the poorest countries in the world, with a per capita gross domestic product (GDP) of US$347 in 2006, according to International Monetary Fund estimates, which exceeded only Myanmar and Nepal.

Last year, the economy receded 1.6 percent, against growth of close to 2.3 percent the previous year.

The lack of security of the last few months, which can still be felt, affected coffee production and led to the suspension of public investment projects and the restriction of commercial activities, the report noted.

The United Nations currently has around 2,000 staff in the country, and their spending, the Bank said, generates “strong demand” for housing, consumer goods and services.

Demand has driven inflation, which reached 6 percent at the end of 2006, but should slow to 5 percent this year, according to the Bank’s forecasts.

In the report the Bank forecast that revenues from oil and gas in Timor would more than double this year and next, “as production increases in existing fields.”

In 2013, the “Greater Sunrise” field is expected to go into production in the joint exploration area with Australia, which is expected to generate revenues of US$10 billion over its lifetime.

East Timor’s growth is expected to be much above the average for the region, which is an estimated 7.1 percent, a slowdown in relation to the 8.3 percent posted last year and the slowest growth rate of the last four years.

In 2008, when UN military personnel are expected to leave East Timor, the country is expected to see growth of 3.5 percent. (macauhub)