Economic growth in 11 Pacific island nations, including Fiji, has slowed to an estimated 3.6 percent this year, a decline from 5.8 percent in 2023. This slowdown is largely attributed to the performance of Fiji, which accounts for more than half of the region’s output, along with challenges faced by the Solomon Islands due to structural issues.
The World Bank’s October Pacific Economic Update, released in Suva, highlights that nearly half of the Pacific Island Countries (PICs), including the two largest economies—Fiji and Solomon Islands—are projected to see slower growth in 2024 compared to the previous year.
Conversely, growth in some other countries, excluding Fiji, is expected to rise from 3.6 percent in 2023 to an estimated 4.1 percent this year, propelled mainly by robust tourism activities and economies benefitting from remittances.
The report, titled “Diminishing Growth amid Global Uncertainty: Ramping up Investment in the Pacific,” also pointed out a significant easing of inflation across the region, with the median inflation rate decreasing from 6.8 percent in 2023 to 4 percent in 2024. In Fiji, inflation is anticipated to average 3.6 percent in 2025-26, following a temporary spike in 2024 due to upcoming tax adjustments. However, the report notes that the previous high inflation has kept the prices of essential goods still elevated.
Additionally, the report indicated that fiscal balances in several PICs have improved as a share of GDP. Still, the medium-term growth outlook for the region has dropped from an annual average of 3.2 percent during 2000-2019 to 2.7 percent for the 2020-2029 period. This decline is driven by the growing impact of natural disasters, climate change, and insufficient investment.
To foster sustainable medium-term growth, the Pacific region must adopt strategies that encourage sustainable investment.