Koror (Pacific Note) — Palau’s economy is forecasted to grow by 2 percent in 2016 and 5 percent in 2017, according to the Asian Development Bank (ADB). The island nation, which has a population of around 20,000, has benefitted from its strong tourism growth compared to other nations in the North Pacific.
Palau’s tourism industry, however, is less concerned with raising the numbers and more focused on inviting “quality” visitors. While Palau is estimated to continue its growth for the next year, they remain vulnerable to environmental impacts.
Revised estimates show Palau’s economy grew by 9.4 percent in Fiscal Year 2015, well above the earlier estimate of 6.7 percent. The growth reflected a dramatic increase in tourist arrivals, in particular by visitors on package tours from the People’s Republic of China in 2014 and 2015.
However, the challenges to sustaining such high increases in visitor arrivals became clear this year, prompting government measures to slow tourist inflows and encourage Palau’s development as a high-end ecotourism destination.
Tourism is the driver of Palau’s economy, accounting for close to 85 percent of its gross domestic product (GDP). While the nation welcomes a surge in tourism, its infrastructure can’t cope with the growth. Palauans are also worried that the influx will have a long-term damage to its pristine environment.
In 2015, Palau’s tourist arrivals reached 160,000, an unprecedented growth mainly due to packaged to