The World Bank has released its latest Pacific Economic Update, urging significant increases in investment to combat the region’s declining economic growth. The report, titled “Diminishing Growth amid Global Uncertainty: Ramping Up Investment in the Pacific,” emphasizes the urgent need for focused investments to generate jobs, enhance infrastructure, and bolster resilience against climate change, especially in light of ongoing global uncertainties.
These initiatives are vital for improving the living standards of Pacific communities and narrowing the income disparity with more affluent nations. According to the report, economic growth in the Pacific is projected to drop to 3.6 percent in 2024, down from 5.8 percent in 2023, as the initial rebound from the pandemic wanes and the growth rate settles into a slower trajectory, reflecting a less favorable outlook compared to prior years.
The decline in growth is attributed to decreased investment, increasing climate-related risks, and structural challenges, all compounded by persistent global uncertainties that hinder progress. The report warns that without immediate investments, Pacific nations may struggle to alleviate poverty and create new economic opportunities for their populations.
Stephen N. Ndegwa, the World Bank Country Director for the Pacific and Papua New Guinea, remarked, “The Pacific faces mounting challenges, but there is also an opportunity for transformation.” He added that by focusing on key sectors and enhancing efficiency, Pacific nations can unlock economic growth that benefits local communities, generates jobs, and improves resilience against climate change.
The Pacific Economic Update outlines six essential recommendations to stimulate investment and ensure that local communities reap the benefits of economic growth. These recommendations include increasing investment in promising sectors such as agriculture, sustainable tourism, and the blue economy, which can foster job creation and support rural livelihoods.
Enhancing infrastructure, including roads, ports, and energy systems, will improve connectivity, allowing businesses to grow and create additional job prospects. Building fiscal and climate resilience is also crucial; investments in climate-resilient infrastructure, disaster preparedness, and financial reserves will help safeguard communities against future shocks and promote stability.
To attract private investment, regulatory reforms are necessary to simplify business operations, which can boost growth in key sectors and encourage local development. Moreover, improving access to finance for small businesses will be critical for achieving sustainability and driving long-term economic growth.
The report emphasizes the importance of leveraging international financial support to initiate high-impact projects that directly benefit Pacific communities. The Economic Update concludes that with appropriate policies to enhance investment, Pacific nations can navigate current economic challenges, forge a more resilient future, and deliver meaningful advantages for communities, businesses, and governments across the region.