The World Bank's October 2024 Pacific Economic Update offers a comprehensive evaluation of the economies in several Pacific nations, including the Federated States of Micronesia, Fiji, Kiribati, and others. This report is the first post-pandemic analysis to provide fresh insights into investment trends and forecasts for the region.
As recovery from the pandemic diminishes, economic growth in the Pacific is decelerating. Factors such as reduced investment, natural disasters, and climate change are anticipated to continue impeding growth. This deceleration poses challenges for improving living standards in the region, with poverty levels expected to remain high compared to countries with similar income levels. The income disparity between these nations and wealthier ones is also likely to increase. To counteract these challenges, strategies aimed at boosting investment are deemed necessary.
A March 2024 report highlighted a slowdown in growth across Pacific island countries after achieving a record-high rate of 9.1% in 2022. This was largely due to declining economic activity in Fiji, which significantly contributes to the region's output. As pandemic recovery effects wane and fiscal policies tighten gradually, slower growth is projected for 2024 and 2025. Despite ongoing recovery efforts, substantial hurdles remain for these nations.
An August 2023 update noted a resurgence of growth driven by tourism resumption and increased public investment and construction activities; however, risks persist amid unstable global economic conditions. Although there has been some progress in reducing inflation within major economies globally, it remains challenging.
In February 2023's inaugural update, an extensive review was conducted on eleven Pacific Island economies focusing on their growth prospects amidst recent global events that have adversely affected them—ranging from pandemics causing negative economic impacts due to border closures—to fluctuations in commodity prices limiting export demand internationally.
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