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BRIEFMarch 4, 2024

Pacific Economic Update March 2024

Pacific Economic Update March 2024

Back on Track?

The Imperative of Investing in Education

 

The World Bank’s Pacific Economic Update provides a twice-yearly assessment of 11 Pacific island economies: Federated States of Micronesia (FSM), Fiji, Kiribati, Marshall Islands, Nauru, Palau, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. (Papua New Guinea has a separate, dedicated report.)

Pacific Economic Update March 2024

 

 

 

The March 2024 Pacific Economic Update outlines the economic status of Pacific island countries, four years after the initial COVID-19 shock.

The report finds that:

  • Pacific Growth 2024
    • Growth in Pacific island countries decelerated to 5.5% in 2023 after a historically high growth rate of 9.1% in 2022, reflecting slowing economic activity in Fiji, which accounts for more than half of the region’s output.
    • Average inflation declined from a peak of 7.5% in 2022 to 6.5% in 2023, reflecting significant labour and supply shortages in tourism and remittances-led countries (Palau, Samoa, Tonga, and Vanuatu); nations that have grappled with pressures on the cost of goods and services.
  • Pacific Outlook 2024
    • Pacific island countries are expected to see slower growth in 2024 and 2025, as the boost from the pandemic recovery fades and fiscal policies gradually tighten. Short-term risks have become more balanced since the August 2023 Pacific Economic Update, with global commodity prices and inflation declining. However, shifts in global economic growth, trade, and international tourism pose significant challenges to economic prospects and poverty reduction, risks that could heighten due to geopolitical tensions.
    • Despite the ongoing economic recovery, Pacific island countries still face formidable challenges. Medium-term growth prospects have worsened, with output significantly below the pre-pandemic trend. More than half of Pacific countries in the report are projected to see slower per capita growth than advanced economies, leading to widening income gaps and deteriorating prospects for poverty reduction.
  • Investing in Education 2024
    • The March 2024 edition of the Pacific Economic Update includes a special analysis on how investment in education can support long-term development and improve medium-term growth prospects.
    • The report emphasizes that well-educated people are the most important asset for the Pacific. Improvements in education can be made through stronger teacher training and more cost-effective investments in infrastructure and resources.