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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
This section first reviews economic performance from 2007 to 2012. It then discusses economic projections for 2013 to 2015.
2.3.2.1: Review of Economic Performance 2007-2012 2.3.2.1.1 Total Gross Domestic Product
In 2012 the total GDP in Timor-Leste increased by 5.6 to 4,889.6 million in constant 2010 prices. The petroleum sector, which grew by 4.9 in 2012, remains the dominant sector in
the Timorese economy and contributes 76.4 of total GDP. In recent years the dominance of the petroleum sector has decreased, driven by a slowdown in petroleum sector growth
and exceptionally high non-petroleum GDP growth see table 2.3.2.1.1.1 and figure 2.3.2.1.1.1. Many economies which are dominated by a single resource extraction sector
ha e falle i ti to a esou e u se , ho e e , th ough p ude t poli aki g Ti o - Leste has been able to mitigate the risks associated with large natural resource wealth, see
Focus Box 1. In Timor-Leste total GDP is a poor measure of economic welfare because it is very sensitive
to short term changes in oil prices and production. In addition, few Timorese people work in the oil industry and therefore total GDP is not closely related to living standards. For these
reasons the Government focuses on non-petroleum GDP which is more closely related to living standards in Timor-Leste than total GDP.
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Table 2.3.2.1.1.1: Real GDP and Petroleum Sector Output 2007-2012
2
m
2007 2008
2009 2010
2011 2012
Total GDP m 4,090.0
4,582.9 4,275.3 4,215.5
4,630.6 4,889.6
Growth Rate Total GDP -0.6
12.1 -6.7
-1.4 9.8
5.6
Petroleum Sector m 3,428.3
3,826.6 3,421.7
3,281.3 3,559.4
3,734.5 Growth Rate Petroleum Sector
-2.7 11.6
-10.6 -4.1
8.5 4.9
Source: Timor-Leste National Account 2000-2012, General Directorate of Statistics
Figure 2.3.2.1.1.1: Real GDP by Sector 2003-2012
3
m
Source: Timor-Leste National Account 2000-2012, General Directorate of Statistics
Focus Box 1: How Timor-Leste Avoided the Resource Curse
What is the Resource Curse?
The resource curse is when natural resource wealth leads to conflict, macroeconomic instability and spending on white elephant useless projects. These in turn cause living
standards to stagnate or fall.
How Timor-Leste Used Natural Resources to Increases Stability
Political instability in Timor-Leste from 2006 to 2008 was not over access to natural resource wealth. Since 2008 Timor-Leste has enjoyed political stability and improved security even as
oil production has increased. Indeed the Government has used oil revenue to finance war ete a s pe sio s a d the PDID p og a that ha e p o ided a pea e di ide d to the
population and reduced the chances of conflict.
How Timor-Leste Avoided Macroeconomic Instability
Many countries have spent natural resource revenues soon after they have been collected. This results in the boom-bust cycle in commodity prices feeding through into volatile
government expenditure, demand and inflation. Timor-Leste has avoided this type of
2
Revised preliminary figures from the Timor-Leste National Accounts 2013.
3
Revised preliminary figures from the Timor-Leste National Accounts 2013.
