SYDNEY, June 1 (Reuters) - The economy of the low-lying Pacific island nation of Tuvalu is forecast to expand by 4 percent in 2016, the International Monetary Fund said on Wednesday, as spending in response to Cyclone Pam spurs growth.
IMF representative Dan Nyberg said GDP growth was projected to rise from 2.6 percent in 2015 to 4 percent next year due to "several large infrastructure projects and recovery spending".
"A moderate deficit is projected in 2016 as expenditures will remain elevated, partly owing to continued Cyclone Pam recovery spending," Nyberg said in a statement.
Tuvalu was hit by the powerful tropical Cyclone Pam in March 2015, and remains susceptible to rising sea levels and global temperatures that fuel storms over warmer waters.
Tuvalu Prime Minister Enele Sopoaga last month called for a U.N. resolution to create legal protection for people displaced by the impacts of climate change. told the World Humanitarian Summit in Istanbul that it was time to work out how to deal with communities that might have to be moved due to rising seas and other threats.
Nyberg said the effects of climate change were one of the risks to Tuvalu's economic outlook, along with volatility in fishing revenues and a global financial downturn.
Those factors could affect distributions to the budget from the Tuvalu Trust Fund, he added. The trust fund is a sovereign wealth fund that includes development assistance payments from countries such as Australia and New Zealand.
The Tuvalu economy is also reliant on fishing licence fees and internet royalties linked to the ".tv" domain name, popular in the private sector, the country leases to other parties.