14 Feb 2012

Tonga economy faces severe decline

7:29 am on 14 February 2012

Tonga's economy is experiencing a severe downturn due to the global recession.

According to the Tonga Broadcasting Corporation, the Tonga National Reserve Bank has urged the country to work together to limit the impact of the recession.

The TBC reports that a reduction in exports and remittances is the main reason for the slow economy.

According to the head of the National Reserve Bank Board, remittances alone fell by 48-million US dollars since 2008, an indication that people overseas are losing their jobs.

Tonga's GDP has also declined and Tonga's commercial banks are generating less income due to low interest rates.

The President of the National Reserve Bank, Steve Edwards says the decline in Tonga's economy means people are reluctant to take out bank loans in case they can not repay them.