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Figure 2.3.1.1.1: Real Economic Growth 2011 – 2015
Source: IMF, World Economic Outlook Database, April 2014
Emerging and developing Asia is one of the high growth areas in the world see figure 2.3.1.1.1 and Timor-Leste is performing particularly well within this group of economies.
The increased demand for goods and services associated with the strong growth outlook in Asian markets represents an important export opportunity for Timor-Leste.
Table 2.3.1.1.1: Real Regional Growth Rate
Country Actual
Projection
2012 2013
2014 2015
ASEAN-5 6.2
5.2 4.9
5.4 Australia
3.6 2.4
2.6 2.7
China 7.7
7.7 7.5
7.3 Indonesia
6.3 5.8
5.4 5.8
Malaysia 5.6
4.7 5.2
5.0 Philippines
6.8 7.2
6.5 6.5
Singapore 1.9
4.1 3.6
3.6 Thailand
6.5 2.9
2.5 3.8
Vietnam 5.2
5.4 5.6
5.7 Timor Leste
7.8 5.6
7.1 7.0
Sources: Timor-Lestes National Accounts 2000-2012, National Directorate of Economic Policy Timor-Leste and International Monetary Fund, World Economic Outlook Database, April 2014
Timor- Leste s GDP efe s to the o -petroleum sector only
Projection
2.3.1.2: Trends in International Prices
Global inflation in 2013 was 3.6, and is expected to remain below 4.0 throughout 2014 and 2015. IMF projections show that over the 2014-2015 period the rate of price inflation in
the emerging market and developing economies will decrease, while the rate of inflation will increase in the advanced economies.
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Agricultural Commodity Prices
Imported food represents a significant proportion of the food consumed in Timor-Leste. Thus changes in international agricultural commodity prices can have a large effect on both
the rate of inflation and standard of living in Timor-Leste. The FAO index, which consists of the weighted average of five key food commodity price indices, has been relatively stable
since the third quarter of 2012. International crop and meat prices are expected to decrease over the medium-term, this will reduce inflationary pressure in Timor-Leste.
Coffee is Timor-Leste s second largest export after oil and this sector has been identified as
one with significant potential for growth. After considerable fluctuations in the price of
coffee in recent years, the outlook for international coffee prices is stable. Oil Price
Compared to the large fluctuations in oil prices over the 2010-2012 period, oil prices in 2014 have been relatively stable. After increasing by 1.0 in 2012 international oil prices
1
decreased by 0.9 in 2013 to 104.07 per barrel. This decrease was the result of continued supply growth in North America, and would have been more significant if not for supply
disruptions in the Middle East. Projections suggest that international oil prices will remain stable in 2014, growing by 0.1, and then fall sharply in 2015 by 6.0, driven by increased
supply from North America and slow global demand growth. Changes in international oil prices have a significant effect on the Timorese economy as they affect both the value of
petroleum revenues and the cost of imported petroleum for businesses and consumers.
Exchange Rates
Recently there has been a general appreciation of the US dollar against the currencies of Timor-
Leste s ajo trading partners. In particular, the US dollar appreciated by 16.4 against the Indonesian rupiah, from July 2013 to July 2014, see figure 2.3.1.2.1. The
appreciation of the US dollar against the currencies of Timor- Leste s ajo t adi g pa t e s
may have made Timorese exports more expensive on international markets, constraining the development of export sectors. However, consumers across the country will benefit
from the lower rates of inflation associated with cheaper imports.
1
Simple average of UK Brent, Dubai Fateh and West Texas Intermediate crude oil
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Figure 2.3.1.2.1: Food, Oil and Exchange Rate Indices, January 2010-July 2014
Source: FAO Food Price Index and IMF Primary Commodity Prices
2.3.2: Domestic Economy
