A new Asian Development Outlook for 2017 released this week, stated that Palau is expected to grow by 3.0% in FY2017 and 5.5% in FY2018, supported by a rebound in tourist arrivals, private investment in new resort hotels, and public investments in water supply and sanitation supported by development partners.
The center of business activity in Palau, Koror State
Despite a decline in tourism numbers in 2016, the decrease will not translate to a "dwindling" economy for Palau as its top tourist market from China "spends relatively little," to push the economy "into contraction."
It stressed that Palau is expecting a recovery in visitor arrivals and its fiscal situation will be boosted by the higher revenue generatedby a doubling of the fee imposed on tourists in FY2017 from $50 to $100.
ADB report stated that Palau can't depend on low-value package tourism as it created challenges to its infrastructure.
The ADB also pointed out that there seemed to be a "weak coordination" between government bodies and with the private sector, which will affect the "emergence of coherent policies and concerted
efforts," on tourism.
"Palau needs to establish a clear and shared vision toward high-end tourism. The lack of a long-term development strategy is eflected in the composition of public spending. Even with fiscal balances
in surplus since FY2011, public investments declined to the equivalent of 4.4% of GDP in FY2013–FY2015, less than half of the average of 9.2% maintained in FY2000–FY2012