According to the World Bank’s data on 6 March 2024, the Pacific Islands’ economic growth in 2023 has slowed to 5.5%. In some countries, the money from tourism and workers abroad has been revived. However, others have been blocked by cyclones and shocks caused by droughts.[1]
The reopening of borders after the COVID-19 lockdowns has revived tourism and increased remittances from Pacific workers abroad. This situation played an important role in the recovery in countries such as Samoa and Tonga.[2]
The report indicates that tourism and remittances from immigrants play an important role in Fiji. Fiji, which achieved 8% growth in 2023, demonstrated poor performance compared to 2022 when a 20% economic recovery was seen. However, this was above the pre-pandemic era level. On the other hand, Fiji creates half of the economy of the Pacific Islands.[3]
Pacific Islands except Fiji achieved 2.7% growth and passed the 0.5% rate in 2022. Nauru, which felt the economic impact of Australia’s downsizing of an immigrant processing center on the island, and Vanuatu, which is experiencing political instability, have fallen behind. The World Bank has classified Pacific Island countries into two groups: those reliant on tourism and remittances from migrants, and those reliant on grants or fees from other countries. Samoa’s recovery led the first group with a growth rate of 5.6% in 2023.[4]
There are countries such as Kiribati, Tuvalu, Nauru, Marshall Islands, and Micronesia in the second group. Growth of Nauru has fallen to 1% in 2023 due to Australia’s downsizing of the regional asylum center there. In addition, drought and climate change decreased the income of the fishing industry. Pacific Islands are expected to grow 3.5% in 2024 and 3.3% in 2025. This demonstrates quite a significant growth rate.[5]
The World Bank’s Senior Economist for the Pacific, Ekaterine Vashakmadze, stated, “The region’s potential growth is quite low, and due to all these shocks, the region is lagging in returning to pre-pandemic trend growth.” The report, particularly emphasizing the importance of investment in education, has revealed that in Kiribati, Tonga, and Tuvalu, two-thirds of ten-year-old children do not meet international reading standards, and it has strongly recommended a greater focus on teacher training to reduce poverty across the region. [6]
Palau, Micronesia, and the Marshall Islands have emphasized that the passage of legislation by the United States Congress to renew the financing agreements of the Compact of Free Association is “crucial.” When the COVID-19 pandemic eased in 2022, the region’s economy grew by 9.1%.[7]
The performance of Pacific Island economies in 2023 was determined by tourism, remittances from migrants, and the impact of natural disasters. In particular, the reopening of borders after Covid-19 closures has revitalized the tourism industry and increased remittances from Pacific workers abroad. This has particularly encouraged economic recovery in countries like Samoa and Tonga.
Some countries have been affected by natural disasters. Countries like Vanuatu have struggled with two cyclones and political instability. Such natural disasters and political uncertainties can adversely affect economic growth and hinder development efforts in these countries.
On the other hand, countries like Nauru, have suffered an economic setback because Australia has reduced the immigrant processing center. Circumstances like this highlight the importance of economic variety and show the risks of a country depending on only one industry.
Additionally, the struggles that the Pacific Islands’ economies are facing are complex issues that should be supported by local and international cooperation. This requires strong collaboration in areas such as regional integration, trade and development programs, technology transfer, and capacity-building activities.
As the World Bank suggests, these countries should invest for long-run growth. It is seen that investing especially in education has a crucial role in reducing poverty and the development of human capital. Focusing on teacher training can help students meet international standards, which can in turn support economic development in the long term.
As a result, the Pacific Islands face significant challenges in their economies. However, sustainable growth can be promoted with the right policies and investments. At this point, support from both local governments and the international community is crucial.
[1] “Pacific Islands Face Challenges as Growth Slows, Says World Bank”, Reuters, https://www.reuters.com/world/asia-pacific/pacific-islands-face-challenges-growth-slows-says-world-bank-2024-03-05/, (Access Date: 06.03.2024).
[2] “Pacific Islands Face Challenges as Growth Slows, Says World Bank”, U. S. News, https://t.ly/HD3g2, (Access Date: 06.03.2024).
[3] “Pacific Island Countries Growth to Slow Down in 2024 – World Bank”, RNZ, https://www.rnz.co.nz/international/pacific-news/510988/pacific-island-countries-growth-to-slow-down-in-2024-world-bank, (Access Date: 06.03.2024).
[4] “Pacific Islands Face Challenges as Growth Slows, Says World Bank”, Reuters, https://www.reuters.com/world/asia-pacific/
[5] “Pacific Islands Face Challenges as Growth Slows, Says World Bank”, a.g.e, (Access Date: 06.03.2024).
[6] “Pacific Islands Face Challenges as Growth Slows, Says World Bank”, News Break, https://www.newsbreak.com/news/3357016106281-pacific-islands-face-challenges-as-growth-slows-says-world-bank, (Access Date: 06.03.2024).
[7] “Pacific Islands Face Challenges as Growth Slows, Says World Bank”, AoL, https://www.aol.com/news/pacific-islands-face-challenges-growth-232257532.html, (Access Date: 06.03.2024).
