World Bank2023-02-152023-03-062023-02-152023-03-062022-12https://hdl.handle.net/10986/39439The global economy continues to face steep challenges, but Timor-Leste’s economy is slowly recovering. Nevertheless, gross domestic product (GDP) per capita has not returned to pre-pandemic levels. Consumer price inflation reached 7.9 percent yoy in August 2022, one of the highest in the East Asia Pacific region. The real effective exchange rate (REER) has appreciated by about 10 percent since the first quarter of 2021. Enhancing productive capabilities through structural reforms and improving quality of public spending hold the key for accelerating and sustaining economic development. Extending the life of petroleum fund through fiscal consolidation is essential to delay the fiscal cliff and ensure the perpetuation of government spending to support economic growth. Despite receding impact of the pandemic, the level of government spending has not returned to the pre-COVID 19 levels.en-USCC BY 3.0 IGOECONOMIC GROWTHGDPSOCIAL PROTECTIONDELIVERY SYSTEMSREFORMReportWorld Bankhttps://doi.org/10.1596/39439