Page 14 - IB January 2024

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Tourism has been on a rebound post-pandemic but what are the Pacific’s longer-term economic prospects? Photo: Richard Naidu

THE 2024 PACIFIC FORECAST:

A TURN FOR THE WORSE?

By Richard Naidu and Nic Maclellan 6.7% in 2022, and was forecast to remain elevated at an
average 6% in 2023.
It’s 2024. Heading towards the halfway mark of this decade, According to the World Bank, most Pacific countries are
the Pacific’s landscape is vastly different from four years ago, projected to reach their pre-pandemic GDP level by 2024,
gripped in a steadily escalating set of challenges that may with growth expected to moderate to 3.3% in 2024 as the
well define what the next decade will look like for the region. initial post-COVID-19 rebound dissipates and as the region
The failure of COP28 upping the climate ante for already moves towards a longer-term growth trend of 2.6%.
besieged Pacific Island states, as well as the overarching With many Pacific countries relying heavily on food and
struggle for dominance in the region by the world’s biggest energy imports, the worry will be that continuously elevated
powers frame the larger context for a region whose recovery international food and energy prices will create prolonged
from pandemic-wreaked devastation remains hampered by price pressures on the region. The World Bank has already
continuing supply chain disruptions, record inflation and warned that rising and prolonged inflation can “substantially
sporadic growth, while rising public debt levels from having to raise poverty levels in the Pacific by reducing the purchasing
fight the combined ravages of the pandemic and the climate power of lower-income households.”
crisis threaten to overturn hard-earned development gains In looking ahead into 2024, the United Nations Economic
from the previous decade. and Social Commission for Asia and the Pacific (ESCAP) also
In hindsight, the COVID-19 pandemic was just the beginning raises food supply worries for the region.
of structural shocks of an unprecedented scale to the Pacific. Hamza Malik, ESCAP’s Director of Macroeconomic Policy and
Inflation was the region’s biggest economic challenge Financing for Development, says the return of El Niño “could
last year. While the average Gross Domestic Product for the gather pace and potentially depress agriculture and fisheries,
Pacific was projected to bounce back to 3.9% in 2023 (final lowering local food supplies and contributing to inflation.
figures yet to be available), up from 2.0% in 2022, progress in More erratic weather patterns could further contribute to
reducing inflation in major economies was more challenging this.”
than expected, the World Bank said in its Pacific Economic The current El Niño phase of the Pacific Ocean is
Update in August. Inflation, it said, remained at a stubborn expected to be one of the strongest on record, setting off

14 Islands Business, January 2024