Economic recovery confirmed in 2023

Tahiti, July 15, 2024 – The Overseas Emissions Institute’s 2023 Annual Economic Report, just released online, shows continued economic growth driven by record numbers of tourists.

French Polynesia is currently in a phase of sustained economic growth, which should be confirmed by the GDP estimates for French Polynesia for 2023, which will be published this Tuesday by the Organization of Rapid Economic Accounts of Overseas Territories (Cerom: ISPF, AFD, IEOM). According to Cerom estimates, the Polynesian economy will maintain a solid growth trajectory until 2023, if growth in 2022 reaches +4.5%, returning GDP (648.2 billion francs) to 2019 levels, a result of record tourist arrivals (262,000 tourists). At the same time, the trend remains positive, with companies declaring an 8% increase in turnover. Exports remain generally well oriented, driven by record highs in tourism and the pearling sector, and should total 17 billion francs by 2023.

Meanwhile, the Business Climate Index (ICA) remains 8 to 15 points above the long-term average throughout the year. In addition, household confidence rose sharply in the third quarter, while inflation slowed (+0.6% year-on-year by the end of 2023).

Perform better in the job market

The good health of the economy is reflected in the labour market: business wage employment increased in all sectors, totalling 4.2% in the year to December 2023, compared with an average annual growth of 2.5% between 2018 and 2022. Against this favourable backdrop, the number of jobseekers registered with the Employment and Professional Integration Service (Sefi) fell by 9.9%, compared with -13.8% a year earlier. The number of job opportunities in certain sectors, such as business or tourism, increased sharply.

As of September 2023, eight in ten workers registered with the CPS are employed in the service sector. 15% are employed in commerce, 12% in the hotel and restaurant industry, 16% in the secondary sector and just 2% in the primary sector.

By the end of 2023, the National Civil Service employed 6,800 agents (+1%) and the National Civil Service employed 10,712 agents (5,611 of whom were teachers).

As for the unemployed, according to ISPF, the unemployment rate as defined by the International Labor Organization (ILO) is 8.5% in 2023 (8.7% in 2022), affecting 9,600 people (9,900 in 2022). The unemployment halo, defined by INSEE as inactive people, “not unemployed as defined by the ILO, but people in a state of near unemployment”, will affect 16,300 people in 2023, or nearly 9% of the working-age population. Finally, the inactive population, those who do not want to work, decreases to 55,700 (58,100 in 2022).

802 billion bank assets

The Overseas Emissions Institute (IEOM)’s monetary policy has largely contributed to the situation in 2023, restoring price stability and facilitating financing of the real economy by providing liquidity to banking institutions, which had outstanding amounts of 74 billion francs at the end of 2023.

Despite the increase in interest rates, the financing of the economy by Polynesian banks has actually led to a record high in credit production in 2023. At the same time, the savings of economic agents have been increasing, shifting from demand deposits and passbook accounts to investments with longer maturities and higher profits, such as time deposits.

Liquidity or short-term investments jumped by 19.4% (after a 1.8% increase in 2022), while demand deposits fell by 5.8% (after a 3.6% increase in 2022). Long-term investments maintained a similar growth rate to 2022 (+4.3% after +4.1%).

Household savings of 531 billion francs, or two thirds of the assets collected by local financial institutions, grew faster in a year: +4.4% compared to +3.7% in 2022. Short-term liquidity or long-term investments were particularly popular (+4.4% after +9.5%), especially in the form of time deposits (+16% after +76%), and special system savings accounts contracted by 15.3%. In contrast, demand deposits fell for the first time in nearly a decade (-2.2%).

Corporate deposits – 205 billion francs, or a quarter of financial assets – grew again in a year (+1.9% in a year, compared to -1.6%). They were also boosted by strong enthusiasm for time deposits, whose outstanding amount doubled in a year, while demand deposits fell (-10%).

The assets of other agencies (administrative bodies, CPS, etc.) – 66 billion francs, or 8% of financial assets – slowed down (7.1% in a year after 14.9%), taking into account the decline in their demand deposits ( -4% after +20.6%).