THE Pacific is entering a period of slower growth and higher inflation as repeated global shocks, especially energy disruptions, continue to hit countries that have not fully recovered from the pandemic, Ekaterine T. Vashakmadze said, in a presentation outlining the region’s economic outlook.
The senior economist with the World Bank said the region is facing “renewed global energy crisis with differentiated outcomes,” advising that the real threat is not just the shock itself, but the way it arrives before countries have rebuilt their defences.
“Shocks are now overlapping rather than spaced over time,” she said, adding that governments are managing pressures with “weaker buffers and unfinished recoveries.”
“The way how countries respond to this shock now can help sustain stability and protect future growth, and policymakers should stop treating disruptions as temporary.
“Shocks should not be taken as now temporary disruptors. They are becoming really more normal in our operation,” she said.
The World Bank presentation argued that the same global shock can produce very different outcomes across Pacific economies, depending on local conditions, including shipping costs, port efficiency, and contracting arrangements.
In some cases, logistics costs alone can add 20–40 per cent to landed fuel costs, underscoring how import dependence amplifies the impact of global price spikes.
Vashakmadze said fiscal space has narrowed sharply after years of consecutive crises.
“Many governments have been forced to spend down reserves to cushion households and businesses, leaving less room to respond to the next shock.
“Every single decision we are making today, we should not take it that this is the last shock. The global world is still uncertain,” she said.
Vashakmadze added that the policy response should focus on non-regret actions, such as securing fuel supplies, conserving demand, and using targeted support for vulnerable households rather than broad subsidies.
“Crisis measures should not distort incentives; they should use existing institutions and should not undermine fiscal sustainability.”
Tying the region’s outlook to longer-term growth prospects, she said, “Without investment, there is no growth. Without growth, there are no jobs.
“With the right priorities, early action, coordinated responses, countries can protect stability today and strengthen growth tomorrow.”
