The World Bank has released its latest Pacific Economic Update, emphasizing the urgent need for a significant increase in investment to combat the region’s declining economic growth. The report titled “Diminishing Growth amid Global Uncertainty: Ramping Up Investment in the Pacific” highlights the critical importance of targeted investment to generate jobs, enhance infrastructure, and strengthen resilience against climate change during a time of global uncertainty.
The report indicates that economic growth in the Pacific is projected to drop to 3.6 percent in 2024, a decrease from 5.8 percent in 2023, as the initial recovery from the pandemic diminishes and growth stabilizes at a lower rate. This decline is primarily due to reduced investment, escalating climate-related risks, and existing structural challenges, compounded by ongoing global uncertainties that hinder progress.
According to the report, immediate action to boost investment is essential for Pacific nations to effectively tackle 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 emphasized that by focusing on investments in critical sectors and enhancing efficiency, Pacific countries can stimulate economic growth that benefits local communities, generates jobs, and bolsters resilience against climate impacts.
The Pacific Economic Update outlines six key recommendations to stimulate investment and ensure local populations reap the rewards of economic expansion. These recommendations include a greater focus on high-potential sectors such as agriculture, sustainable tourism, and the blue economy to create jobs and support rural livelihoods. Improving infrastructure such as roads, ports, and energy systems is vital to enhancing connectivity, facilitating business expansion, and generating job opportunities.
Additionally, strengthening fiscal and climate resilience is crucial. Investments in climate-resilient infrastructure, better disaster preparedness, and building financial reserves will safeguard communities from future challenges and maintain stability. Attracting private investment will necessitate regulatory reforms to simplify business operations, promoting growth in essential sectors and fostering local development. Lastly, enhancing access to finance, especially for small businesses, is critical for promoting sustainability and sustaining long-term growth.
The report also emphasizes the importance of utilizing international financial support to propel impactful projects that benefit Pacific communities directly. The Economic Update concludes that with appropriate policies to stimulate investment, Pacific nations can navigate current economic difficulties, establish a more resilient future, and provide meaningful benefits to communities, businesses, and governments within the region.