Timor-Leste’s GDP growth forecast for 2021 has been raised by the Economist Intelligence Unit (EIU), to 4%, from 2.5% previously, owing to the performance of the oil sector.
“Strong oil production volumes in early 2021 have prompted us to raise our forecast for GDP
growth in 2021. An infill drilling campaign looks likely to boost oil production from the third quarter of this year”, the EIU says in its most recent report on the timorese economy.
In view of a fall in oil production volumes in 2020 and the publication of preliminary data on
non-oil GDP showing public and private investment down by 49.8% and 38.8% respectively, the EIU has revised down its GDP growth estimate for 2020, from 25% to 22%, unusually high due to a change in official economic output estimations.
Growth is expected to accelerate to 4.5% in 2022, as the state of emergency is lifted and agriculture recovers from flash flooding in 2021.
“Government spending will remain largely financed by drawdowns on the Petroleum Fund (PF, a vehicle for the investment of petroleum wealth). Concerns remain about the longer-term sustainability of this approach, but the PF is currently well capitalised”, the EIU says.
Co-operation with Australia over the forecast period will be vital to ensure that Timor-Leste
continues to receive petroleum-related income from maritime resources, it adds.
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