Vanuatu’s economy is projected to grow modestly in 2025, with a further slight increase expected in 2026, according to the Asian Development Bank (ADB).

In its latest economic outlook released in April, ADB estimates the country’s Gross Domestic Product (GDP) grew by 1.7% in 2024. The forecast predicts growth will reach 2% in 2025 and rise to 2.5% in 2026.

The report attributes the slow recovery to several key factors, including the liquidation of Air Vanuatu in May 2024, which disrupted air transport, trade, and tourism. Despite efforts by other airlines to boost services, international visitor numbers fell by 22% compared to 2023.

ADB also pointed to political instability, such as the dissolution of Parliament in November, and the December 2024 earthquake as major setbacks to economic performance.

However, the bank remains cautiously optimistic that growth will continue, driven by tourism recovery and post-earthquake reconstruction.

ADB further warned that recent U.S. tariff increases on Vanuatu exports—raised to 23%—could negatively impact the country’s long-term economic prospects.