The recovery path of the world economy still involves a high level of uncertainty given escalating country conflicts, geopolitical tensions, and fears of trade protectionism. These will impact the Tongan economy negatively as we remain vulnerable to external shocks. The outlook for the Tongan economy to continue recovering remains, but it is not without its challenges. The recent shift in political power and the delay in the change of government may disrupt government operations and major projects in the pipeline.

Outlook for the Tongan economy remains positive, supported by infrastructure projects, tourism, and domestic events. However, global geopolitical tensions, potential disruptions to trade, and the upcoming cyclone season could pose downside risks. Inflation is currently below the 5% reference rate but the NRBT continues to closely monitor the inflationary environment and will adjust its policies accordingly. The overall financial system maintains stability with high liquidity but risks to asset quality and capital positions are tilted to the downside.

Outlook for the Tongan economy remains positive, supported by infrastructure projects, tourism, and domestic events. Inflation is currently below the 5% reference rate but the NRBT continues to closely monitor the inflationary environment and will adjust its policies accordingly. Foreign reserves are expected to remain at comfortable levels, above the IMF’s prescribed level of 7.5 months of imports cover in the near to medium term.

The overall economic outlook remains positive, supported by infrastructure projects, tourism, and domestic events. The NRBT will closely monitor the inflationary environment and implement appropriate monetary policy measure to maintain price stability. The Reserve Bank is currently reviewing its monetary policy tools in light of the current macro-economic conditions to continue and ensure both price and financial stability.

The overall economic outlook remains positive, supported by infrastructure projects, tourism, and domestic events. The NRBT will closely monitor the inflationary environment and implement appropriate monetary policy measures to maintain price stability. The Reserve Bank is currently reviewing its monetary policy tools in light of the current macro-economic conditions to continue and ensure price stability as well as support economic recovery.

The NRBT has projected a moderate growth of 2.6% for Tonga’s economy for the FY 2025. Major infrastructure projects, an anticipated influx of visitors for events such as the Pacific Islands Forum meeting, and the annual local festivities are expected to help contribute to this growth. The Reserve Bank is currently reviewing its monetary policy tools in light of the current macro-economic conditions to continue and ensure price stability as well as financial stability.

Moderate GDP growth is expected for FY 2024 as the economy gradually recovers from the 2022 disasters. NRBT has revised its projection indicating that inflation may rise above the 5% reference rate in the near term. Nonetheless, foreign reserves are projected to remain above the IMF’s prescribed level of 7.5 months of imports cover in the near to medium term. The banking system maintains high liquidity and sufficient capital reserves to absorb potential future shocks. The Reserve Bank will continue to closely monitor inflation trends while also supporting economic recovery efforts.

The NRBT expects the headline inflation to continue remaining below the 5% reference rate for the most part of 2024. Foreign reserves, are still at comfortable levels and projected to remain above the IMF’s prescribed level of 7.5 months of imports cover in the near to medium term. The financial system remains stable, characterized by high liquidity and banks maintaining sufficient capital reserves to withstand potential future shocks.

The NRBT expects the headline inflation to continue to stabilise, remaining below the 5% reference rate for the next part of 2024. An expectation of a further decline in the global oil price through the year helps support this forecast. The financial system continues to remain stable with ample liquidity available as well as the banks maintaining adequate capital reserves to absorb potential future shocks to the financial system. The Reserve Bank will continue to closely monitor inflation movements and at the same time support economic recovery.

The primary focus of the NRBT remains on inflation, GDP growth, and maintaining financial stability. We anticipate inflation to maintain a downward trend, staying below 5% throughout 2024, with the expectation of decreasing global oil prices. Nonetheless, the ongoing international conflict and tensions pose risks of disrupting oil supplies, potentially pressuring petroleum prices upwards. Additionally, the recent El Niño event has affected local food supply, likely exerting further upward pressure on prices.