The World Bank has released its latest Pacific Economic Update, urging a significant increase in investment to counteract the region's slowing economic growth. The report, titled "Diminishing Growth amid Global Uncertainty: Ramping Up Investment in the Pacific," emphasizes the necessity for targeted investments to generate jobs, enhance infrastructure, and build resilience against climate change amidst global uncertainties. These measures are seen as vital for improving the livelihoods of Pacific communities and reducing the income disparity with wealthier nations.
According to the report, economic growth across the Pacific has decreased to 3.6 percent in 2024 from 5.8 percent in 2023 as the post-pandemic recovery loses momentum. This deceleration points to a weaker outlook compared to previous years, attributed to reduced investment, escalating climate risks, and structural challenges amid ongoing global uncertainty. The report warns that without prompt action to boost investment, Pacific countries may face difficulties in alleviating poverty or creating new economic opportunities for their populations.
"The Pacific faces mounting challenges, but there is also an opportunity for transformation," stated Stephen N. Ndegwa, World Bank Country Director for the Pacific and PNG. "By prioritizing investments in key sectors and increasing efficiency, Pacific countries can unlock economic growth that directly benefits local communities, creates jobs, and strengthens resilience to the impacts of climate change."
The update provides six key recommendations aimed at driving investment and ensuring that local communities reap the benefits of economic growth. These include increased investment in high-potential sectors such as agriculture, sustainable tourism, and the blue economy to create jobs and support rural livelihoods. Enhancing infrastructure—like roads, ports, and energy systems—will improve connectivity and facilitate business expansion while generating more employment opportunities.
Building fiscal and climate resilience is deemed crucial as well. Investing in climate-resilient infrastructure, enhancing disaster preparedness, and building financial reserves will safeguard communities from future shocks and ensure stability. Attracting private investment will necessitate regulatory reforms that simplify business operations, thereby promoting growth in key sectors and fostering local development.
Moreover, improving access to finance for small businesses is essential for sustainability and long-term growth promotion. The report underscores leveraging international financial support for high-impact projects that benefit Pacific communities directly.
The Economic Update concludes that with appropriate policies boosting investment levels, Pacific nations can overcome current economic hurdles, construct a more resilient future, and deliver tangible advantages for communities, businesses, and governments throughout the region.