Pacific Growth Slows to 2.6% Amid Global Shocks; Women’s Jobs Key to Recovery

Economic growth in the Pacific is expected to decline sharply in 2025, according to the World Bank’s latest Pacific Economic Update, with regional growth projected to fall to 2.6 percent, down from 5.5 percent in 2023. This sobering forecast comes as post-pandemic recovery wanes, tourism cools, inflation lingers, and vulnerability to external shocks remains high across the region’s small island economies.

Released today, the flagship biannual report paints a picture of mounting macroeconomic pressures coupled with a major untapped opportunity: boosting women's participation in the workforce to drive long-term resilience and prosperity.

Post-COVID Momentum Fades Amid New Global Headwinds

Many Pacific Island Countries (PICs) had shown strong economic rebounds following the reopening of borders in 2022 and 2023. However, growth in 2024–2025 is expected to slow significantly as global demand softens, climate-related disasters intensify, and major donor countries tighten budgets.

• Tourism and remittance-dependent nations like Samoa, Tonga, Palau, and Vanuatu will see their growth rates cut in half by 2025.

• Solomon Islands, the second-largest economy in the region, continues to face persistent structural hurdles, including declining logging revenues, limited diversification, and infrastructure gaps. Its growth is projected to hover around 2.5 percent.

Compounding these challenges, many PICs continue to rely heavily on foreign aid, imported goods, and remittances. In several countries, foreign grants contribute up to 40 percent of gross national income, leaving them vulnerable to external funding volatility.

Inflation Eases, But Cost of Living Remains High

While inflation is expected to moderate from its 2023 peak of 7.4 percent to 3.6 percent in 2025, prices remain above pre-pandemic levels, placing a heavy burden on households. Food and fuel remain key inflation drivers, especially in import-dependent island nations, where currency volatility and supply chain disruptions continue to influence costs.

Closing Gender Gaps: A Powerful Tool for Recovery

A central theme of this year’s report is the critical role of women’s economic empowerment in unlocking growth across the Pacific. On average, only 42.7 percent of working-age women participate in the labor market—15 percentage points lower than men.

The report finds that closing the gender labor participation gap could increase long-term GDP per capita by over 20 percent across the region.

“While Pacific nations can’t control global shocks, they can invest in domestic resilience. One of the most high-impact reforms is expanding women’s access to work,” said Ekaterine Vashakmadze, Senior Economist at the World Bank.

Currently, over half a million Pacific women of working age are not formally participating in the labor force. Many are held back by:

• Lack of paid maternity leave and childcare

• Weak labor protections and workplace safety

• Deeply rooted social norms that limit women to low-paid, informal jobs

Even highly educated women remain underrepresented in high-demand sectors, such as engineering, digital services, and energy.

Spotlight on the Energy Sector: Just 5% of Technical Roles Held by Women

Part Two of the report zeroes in on the Pacific energy sector, where women hold only 5 percent of technical positions. These jobs are well-compensated, central to the region’s clean energy transition, and critical for strengthening utility performance and resilience.

The World Bank’s Pacific Women in Power program, developed in collaboration with the Pacific Power Association, is working to change this. The report outlines a roadmap to promote inclusion in the energy workforce by:

• Improving workplace safety and harassment protections

• Offering flexible schedules and family support

• Partnering with schools and training programs to encourage girls into STEM fields

“Utilities are recognizing that inclusive workforces aren’t just fair—they’re essential to a resilient energy future,” said Helle Buchhave, Senior Social Development Specialist at the World Bank.

A Regional Outlook Demanding Bold Policy Action

The World Bank’s Pacific Economic Update—covering 11 nations: Micronesia, Fiji, Kiribati, Marshall Islands, Nauru, Palau, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu—stresses that economic resilience must be built from within. While global challenges are beyond the region’s control, structural reforms, especially those targeting gender gaps, job creation, and climate adaptation, can foster inclusive and sustainable growth.

As governments across the Pacific prepare for tightening budgets and shifting aid landscapes, the report is a timely reminder that investing in people—especially women—is not just smart policy, but smart economics.