Pacific Islands Brace for Slower Economic Growth Amid Rising Costs
Economic growth in 11 Pacific Island countries is projected to decelerate to 2.8% by 2026 amid high energy costs, slowing tourism, and structural constraints. The World Bank highlights the impact of Middle East conflicts on fuel and shipping costs. Job creation, particularly for youth and women, remains a key challenge.
Economic growth across 11 Pacific Island nations is predicted to slow further by 2026 due to increasing energy and shipping costs, coupled with reduced tourism momentum and persistent structural challenges. The World Bank's report, unveiled on Tuesday, underscores these issues.
The World Bank's Pacific Economic Update outlines a slowdown in growth for these islands to an estimated 3.2% in 2024 and 2025 from 6.5% in 2023. It's expected to decelerate to 2.8% in 2026 before slightly recovering to 3.1% in 2027. Ekaterine Vashakmadze, a senior World Bank economist, noted in an interview that the Pacific region is among the most affected outside of conflict zones.
With the fiscal landscape weakening post-2025 as governments continue their spending to support growth, the World Bank urges a focus on policies enhancing skill sets and identifying growth sectors to boost job opportunities, especially for young people and women. Public debt remains a concern with several nations at high risk of distress.
(With inputs from agencies.)
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