World Bank's East Asia and Pacific Update Reviews Issues Facing Solomon Islands Economy

 

Contacts:
Honiara: Hamish Wyatt
+677 21444
hwyatt@worldbank.org

Sydney: Aleta Moriarty
+61 2 92356545
amoriarty@worldbank.org

HONIARA- April 8, 2010- On Wednesday the World Bank released its twice yearly review of the economies within the East Asia and Pacific Region – The East Asia and Pacific Update. The Update details the economic situation within each economy including Solomon Islands. The World Bank’s Economics and Governance Specialist in Solomon Islands, Tobias Haque, described the findings of the Update for a group of journalists at the World Bank’s office in Honiara yesterday.

The East Asia and Pacific Update outlined that after a period of strong growth from 2003-2008, the Solomon Islands moved into negative growth in 2009 and, over the medium term, will face significantly slower growth as a result of a decline in logging prices and exports. The report stated that the decline in logging will impact on government revenues and foreign exchange receipts, calling for careful fiscal management from the Solomon Islands Government.

Growth is expected to recover to only around 3.5 percent in 2010. This slight recovery will be driven by a number of factors including the wider recovery of the entire East Asia and Pacific region following the Global Financial Crisis and a strengthening of commodity prices.

The Update recommends an increasing level of trade integration for the entire region to assist in the region’s transition into a new, slower-growing world. Lead economist and the principle author of The East Asia and Pacific Update, Ivailo Izvoroski said that "deeper integration will boost intra-industry trade within global and regional production networks, encourage agglomeration economies, reduce costs, and increase international competitiveness." Mr. Haque emphasized the relevance of these findings to Solomon Islands, where overcoming barriers to movements of labor, goods and capital within the country is vital for achieving regional and international competitiveness.

Mr. Haque pointed out that the "Solomon Islands Government continues to operate under a number of economic constraints and should be commended for steps taken to support reform while working with donors, such as the World Bank, to address barriers to growth."

The East Asia and Pacific Update is the World Bank’s comprehensive review of the region’s economies. It is published twice yearly and is available for free on our website at http://worldbank.org/eapupdate