31 Oct 2008

ADB fears for Pacific over slump in NZ and Australia

1:36 pm on 31 October 2008

The Asian Development Bank says the economies of Pacific Island countries could be dragged down by the slump in New Zealand and Australia.

The ADB says the Pacific is sheltered from some of the impacts of the global meltdown because its financial institutions are not as exposed as other regions.

But the Bank's Pacific Director Hafeez Rahman says the effects of a slowdown in New Zealand and Australia could be widely felt.

"And we believe that as this financial crisis puts pressure on Australia and New Zealand, and their economies slow down, that export remittances and tourism will likely be hit."

Mr Rahman says the key to providing a sustainable response to a crisis such as this is for the island countries to undertake structural reform of their economies.

This would include looking at the tax administration and encouragement of the private sector.