Timor-Leste’s Petroleum Fund is ‘well capitalised’ to support economic growth, which is being hampered by the pandemic, according to the Economist Intelligence Unit (EIU).
In its latest report on the timorese economy, the EIU predicts Real GDP growth will increase by an ‘anaemic’ 2.5% in 2021, “as the ongoing state of emergency stands in the way of a stronger recovery of non-oil GDP”.
GDP growth of 3% is likely in 2022, “with upside potential if new wells being drilled begin production”, the report adds.
“Government spending will remain largely financed by drawdowns on the Petroleum Fund (PF, a vehicle for investment of petroleum wealth). Concerns remain about the longer-term sustainability of this, but the PF is currently well capitalised”, the EIU says.
Timor Leste is a small energy producer compared with its Asian neighbours and the world’s major producers. Offshore oil reserves are estimated to be hundreds of millions of barrels of oil, compared with billions of barrels for Saudi Arabia.
According to the EIU, “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”.
The Economist Intelligence Unit has raised its forecast for consumer price inflation in 2021 to 1.1%, from 0.7% previously, reflecting strong price increases in January and the likelihood that global oil and commodity price rises will filter through in early 2021
In 2019, China was the main destination of timorese exports, with over 46% of the total. Among top sources of imports, China number three, with 11.9%.