Tonga’s domestic economy is likely to remain strong in the near future, but the market has been a mixed bag for Tongan consumers over the past month.
In its latest monthly report, the Reserve Bank of Tonga said that while the cost of imported foodstuffs like mutton flaps had fallen, the cost of Kava-Tonga had dramatically increased and the price of domestic vegetables had risen.
And while oil prices had dropped, there were fewer cruise ships in the period under review, which meant that the domestic transport sector suffered, as did people who sold handicrafts to visitors.
The Reserve Bank said it expected domestic economic activity to remain strong in the near term, but cautioned that a strong domestic economy could also risk lower foreign reserves and higher inflation.
The Reserve Bank predicted a rise in the level of imports, mostly driven by growth in the construction sector. The growth in private housing construction continued, supported by a $0.02 million rise in housing loans and $1.3 million increase in imports of construction materials over the month.
The expected receipts of remittances and foreign aid funds would help maintain the kingdom’s foreign reserves. Inflationary pressure remained low due mainly to declining global food and oil prices.
Domestic food prices had increased over the month, indicating a decline in the supply of domestically produced food. However, agricultural exports volume rose over the month by 15.3 tonnes, owing to higher export of fruit, particularly brown coconuts and breadfruits.
Agricultural export proceeds increased by $0.03 million over the month. Total marine exports, however, fell by 166 tonnes because of a decrease in the export of tuna. Proceeds for fisheries exports also declined by $0.25 million in March.
The number of tourist arrivals fell by 4070 passengers over the month, mostly due to fewer cruise ship arrivals. This had a knock-on effect on the transportation and handicrafts sector.
The transportation sector benefitted from the low global oil price as local fuel prices fell during the month. Vehicle import payments rose by $0.3 million and 193 new vehicle registration were recorded over the month.
The number of job advertisements over the month rose to about 60 vacancies. Public Administration continued to record the highest number of vacancies advertised, as government ministries want to fill in their vacancies before the end of the fiscal year.
Prices for petrol, diesel and tobacco fell by about four percent. Imported food prices fell for items such as potatoes, apples and mutton flaps, but at the same time prices rose for domestic produce such as talo futuna, cassava, tomatoes, cabbage, taro tarua leaves, pineapple and pele leaves and Kava-Tonga.
The Agricultural Census for 2015 revealed that agricultural land used for Kava- Tonga plantation significantly dropped from 5,273 acres in 2001 to only 1,257 acres in 2015.
The main points
- Tonga’s domestic economy is likely to remain strong in the near future, but the market has been a mixed bag for Tongan consumers over the past month.
- In its latest monthly report, the Reserve Bank of Tonga said that while the cost of imported foodstuffs like mutton flaps had fallen, the cost of Kava-Tonga had dramatically increased and the price of domestic vegetables had risen.
- And while oil prices had dropped, there were fewer cruise ships in the period under review, which meant that the domestic transport sector suffered, as did people who sold handicrafts to visitors.
- However, the Reserve Bank says it expects domestic economic activity to remain strong in the near future.
