Report by the WTO Secretariat

Since its previous Trade Policy Review in 2014 and until 2017, Tonga’s economy grew at a strong pace, supported by construction and remittances-fuelled private consumption, as well as by an accommodative monetary policy stance. Real GDP grew on average by 2.35% (FY 2013/14-FY 2018/19) annually, compared with 1.27% (FY 2006/07-FY 2011/12) at the last period. A succession of natural disasters, namely the extensive damage caused by Tropical Cyclones Gita (2018), Tino (2020), and Harold (2020), and the large COVID-19- pandemic-induced contraction in global economic activity brought about a significant economic downturn. Apart from some temporary spikes in 2017-18, inflation remained low, reflecting favourable developments in international food and fuel prices. An Economic and Social Stimulus Package worth TOP 60 million was put in place to fund the National Action Plan for combatting the COVID-19 pandemic.