Wednesday, 16 October, 2024
Growth in the Pacific Islands is projected to slow to 3.6% this year, down from 5.8% in 2023, as the post-pandemic recovery diminishes and Fiji—responsible for half of the region's output—experiences a significant slowdown, the World Bank reported on Tuesday.
The report attributed this long-term deceleration to weaker investment, escalating climate risks, and structural challenges. It cautioned that without immediate efforts to boost investment, Pacific Island nations may face difficulties in reducing poverty and creating new economic opportunities.
The Washington-based global lender said investment had shrunk on average across Pacific Island countries in seven out of the past 15 years.
In a "troubling outlook", investment growth in 11 Pacific Island countries is expected to be around 1% annually this decade, significantly lower than the 4.2% average growth from 2000 to 2019, the report said.
Natural disasters cost an average 1.5% of gross domestic product per year, and many Pacific Island countries struggle to manage economic shocks after disasters such as cyclones and are locked into a cycle of "construction, destruction, and repair", the report said.
While several smaller Pacific Island nations dependent on tourism experienced growth with the return of visitors from Australia and New Zealand, Fiji's growth is expected to slow to 3% in 2024.
Fiji's public debt, projected at 79% of GDP in 2024, ranks among the highest in the region and is one-third above pre-pandemic levels.
In Vanuatu, the liquidation of the national airline, Air Vanuatu, severely impacted tourism, leading to a significant economic shock and growth slowing to 0.9%. The World Bank noted that Vanuatu has faced a decade of declining investment.
In addition to investment in sustainable tourism and agriculture, the region requires funding for ports, inter-island shipping, and digital connectivity.
Despite having some of the largest maritime zones globally, Pacific Island nations have struggled to fully leverage opportunities in sustainable fishing, aquaculture, and marine biotechnology.
The cost of internet connectivity is relatively high, and speeds are subpar compared to global standards, according to World Bank senior economist Dana Vorisek.
"Digital connectivity must be prioritized," she said during a media briefing in Suva and emphasised the need for reforms in payment systems and the expansion of digital payment services to enhance the impact of remittances sent home by overseas workers.
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Growth in the Pacific Islands is projected to slow to 3.6% this year, down from 5.8% in 2023, as the post-pandemic recovery diminishes and Fiji—responsible for half of the region's output—experiences a significant slowdown, the World Bank reported on Tuesday.
The report attributed this long-term deceleration to weaker investment, escalating climate risks, and structural challenges. It cautioned that without immediate efforts to boost investment, Pacific Island nations may face difficulties in reducing poverty and creating new economic opportunities.
The Washington-based global lender said investment had shrunk on average across Pacific Island countries in seven out of the past 15 years.
In a "troubling outlook", investment growth in 11 Pacific Island countries is expected to be around 1% annually this decade, significantly lower than the 4.2% average growth from 2000 to 2019, the report said.
Natural disasters cost an average 1.5% of gross domestic product per year, and many Pacific Island countries struggle to manage economic shocks after disasters such as cyclones and are locked into a cycle of "construction, destruction, and repair", the report said.
While several smaller Pacific Island nations dependent on tourism experienced growth with the return of visitors from Australia and New Zealand, Fiji's growth is expected to slow to 3% in 2024.
Fiji's public debt, projected at 79% of GDP in 2024, ranks among the highest in the region and is one-third above pre-pandemic levels.
In Vanuatu, the liquidation of the national airline, Air Vanuatu, severely impacted tourism, leading to a significant economic shock and growth slowing to 0.9%. The World Bank noted that Vanuatu has faced a decade of declining investment.
In addition to investment in sustainable tourism and agriculture, the region requires funding for ports, inter-island shipping, and digital connectivity.
Despite having some of the largest maritime zones globally, Pacific Island nations have struggled to fully leverage opportunities in sustainable fishing, aquaculture, and marine biotechnology.
The cost of internet connectivity is relatively high, and speeds are subpar compared to global standards, according to World Bank senior economist Dana Vorisek.
"Digital connectivity must be prioritized," she said during a media briefing in Suva and emphasised the need for reforms in payment systems and the expansion of digital payment services to enhance the impact of remittances sent home by overseas workers.
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