Gloomy forecast for Solomon Islands economy
A leading financial institution in the region has made a substantial downward revision for its economic growth forecast for Solomon Islands in the coming year. <!--more-->Much of this is because the full impact of recent natural disasters – the cyclone and the flooding – is only now becoming apparent.
The ANZ’s latest Pacific Economic Quarterly has reduced growth expectations from 2.8 per cent to negative 1.5 per cent. It is the first time Solomon Islands has experienced negative economic growth since the global financial crisis in 2009. ANZ’s Economist Dan Wilson says the suspension of mining at Gold Ridge is partly to blame for the revised forecast.
Solomon Islands Minister of Finance Rick Hou acknowledged that the impact of the recent flooding has had a negative impact on government’s budget and growth forecasts.
“The impact of the floods not only affected the government’s budget, it also caused huge damages to the Guadalcanal Plains Plantation and Gold Ridge, two key revenue earners for the government,” the Minister of Finance said in Parliament.
Local economists say that the government needs to recognise that with the country’s narrow economic base the impact of such disasters will always be severe and proffered the need to be creative in order to identify potential areas of growth.
Economists say the agricultural sector has the potential to create opportunities for those in the rural areas.