Economy

If the international community is to have a chance of addressing twenty-first-century challenges effectively and equitably, the global economic and financial architecture that was created eight decades ago must be radically reformed. Eight priorities stand out.

Timor-Leste’s Infrastructure Fund was created to assist in the process of diversifying the economy, with strong investments so far in transport and power. But to facilitate further economic activities, shifts in government spending and investment into the productive sectors such as agriculture and tourism will lay the path to greater diversification. 

Economic diversification has been the most important public policy issue in Timor-Leste over the past decade. It has been presented as the alternative path towards sustainable and inclusive economic development but results have not been encouraging. Timor-Leste continues to depend on petroleum, with key issues surrounding institutional settings that are sustained by its easy money. Petroleum provides an easy comfort zone for policymakers and therefore hinders any hard decisions and shifts away from the current status quo.

Economic diversification requires a change in policy approach and direction, and changing policy requires changes in institutional settings. This means changing the social and political context that sustains and reinforces existing policies – a delicate challenge that requires political leadership at the very top level.

At the height of the COVID-19 pandemic in March 2020, the global community anticipated a recession as a result of industry closures. However, COVID-19 has only been one of many factors contributing to a wider economic slowdown of late. Thailand and the Philippines have both recorded rising inflation, but are on divergent paths in managing it for their populations.