Page 11 - IB January 2023

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Tonga’s economic growth last year was badly affected by the volcanic eruption and tsunami. Photo: Tanya Edwards/File

PACIFIC ISLANDS ECONOMIC
OUTLOOK 2023

By Samantha Magick energy crisis in Europe, U.S.-China trade
tensions, and monetary tightening in the
After two long years of COVID-19 and the United States.
tourniquet it applied to the lifeblood of When World Trade Organisation Director
Pacific economies—connectivity and tourism — General, Dr Ngozi Okonjo-Iweala was in Fiji
what can our region expect in 2023? late last year, she stressed the need to bring
The United Nations predicts the global down inflation to protect global economies.
economy will slow to 1.9% growth this year, “We have strong inflationary pressures
one of the lowest growth rates for decades from high food and energy prices. Europe
(excluding the height of the COVID-19 is experiencing unprecedented, 400% in
pandemic and 2007-8 financial crisis). The In- some cases, increases in prices. Food prices
ternational Monetary Fund puts it marginally Dr Ngozi Okonjo-Iweala are high everywhere, including here in the
higher at 2.7%, which is still a record low. Pacific. So [there are] strong headwinds.
“In most countries we expect that private And central banks are having to tighten
consumption and investment will weaken monetary policy by increasing interest rates
due to inflation and higher interest rates,” almost all over the world. Particularly in the
said Ingo Pitterle, Senior Economist at the UN big countries, this is happening. You’ve seen
Department of Economic and Social Affairs double digit inflation in the UK, for the first
(UNDESA). “Several countries will see a mild time in many years, high single digits in the
recession before growth is forecast to pick U.S. and others. You have Australia and New
up in the second half of this year and into Zealand, I don’t think inflation is as high in
2024.” those countries as it is elsewhere, but still,
Amongst the prohibiting factors, continued their central banks are also tightening.”
slow growth in China, the continuing Ukraine- Dr Okonjo-Iweala says in Pacific Island
Russia war, lingering COVID-19 effects, an Fiji exceeded the $1 billion mark in terms economies, where imports are high, price
of remittances in 2022 says Minister of
Finance Professor Biman Prasad.
Islands Business, January 2023 11