Timor-Leste’s economic growth slowed in 2017. The oil sector has been plagued by lower energy production and lacklustre global commodity prices. The non-oil economy has been supported by robust public investment. But a recent World Bank report suggests the political impasse, which caused the president to dissolve parliament in January 2018, has weighed heavily on government spending and growth.
Growth is forecast to improve over the coming years driven by robust public investment. Though weaker oil and gas production from the current fields will drag on the outlook. Elevated public investment is being funded by Timor-Leste petroleum fund, currently equivalent to 600% of GDP, but without new sources of public revenues the fund could fall to 3.5% of GDP by 2037.
Australia’s new maritime boundary signed in March 2018 provides the best opportunity for the development of the Greater Sunrise resource. Seventy or eighty per cent of revenue from the Greater Sunrise gas project will flow to Timor-Leste, depending on how the resource is developed. This will provide new commercial and industrial development opportunities.