Timor-Leste Economic Report, October 2018 : Regaining Momentum?
The economic outlook for 2018 remains uncertain, partly hinging on the execution of the state budget. Economic activity was sluggish in the first half of 2018, as inferred by lacklustre public spending, weakened trade levels, and slower credit grow...
| Main Author: | |
|---|---|
| Format: | Report |
| Language: | English |
| Published: |
World Bank, Washington, DC
2018
|
| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/756821542739478616/Timor-Leste-Economic-Report-Regaining-Momentum http://hdl.handle.net/10986/30998 |
| Summary: | The economic outlook for 2018 remains
uncertain, partly hinging on the execution of the state
budget. Economic activity was sluggish in the first half of
2018, as inferred by lacklustre public spending, weakened
trade levels, and slower credit growth. The recently
approved 2018 budget proposes a substantial expenditure
increase in the last four months of the year, to offset
eighteen months of constrained spending. This presents a
significant challenge for the public sector and budget
execution rates may be lower than usual, due to the limited
time to spend funds. Moreover, a proportion of the 2018
budget will be used to settle previous financial commitments
for activities already undertaken, expenditure arrears,
rather than create new economic activity. Overall, it is
unlikely that this expansionary fiscal stance will
considerably influence domestic economic activity in the
short-term. GDP is forecast to grow by 0.8 percent in 2018,
under a fairly positive scenario for budget execution.
Political uncertainty affected consumer and business
confidence until recently, but private investment may pick
up in late 2018. The construction sector is set to recover,
partly through the Tibar Bay Port, as well as agriculture if
weather conditions are favourable. The broader implications
of two consecutive years of disappointing economic
performance are yet to be gauged, such as the impact on
employment levels and earnings, labour productivity, and
household incomes. In the medium-term, economic growth is
expected to recover by 2019. |
|---|