3.8 percent economic growth projection for 2019
BY PRIESTLEY HABRU
SOLOMON Islands economic growth is projected to pick up to 3.8 percent next year, says Dr Luke Forau, Advisor to the Governor’s Office, Central Bank of Solomon Islands (CBSI).
He told participants of the 10th Australia Solomon Islands Business Forum in Brisbane last week that this growth will be geared by fishing, manufacturing, construction, transport and other services sector.
“Over the medium term, forestry will either taper off or slow, while mining should pick up.”
However, Dr Luke said there would be some downside risks that could impair this forecast.
“These include global volatility from tighter monetary policy in the advanced economies and the looming trade war. Other external risks such as higher than expected oil and imported food prices could also impact the country.
“On the domestic side, adverse weather conditions would generally affect supplies and domestic prices, while structural issues continue to hinder prospects for stronger growth.”
He said this growth narrative for 2019 is also supported by the optimistic outlook by firms in the country.
“The recent CBSI expectations survey projects economic conditions to generally remain positive.”
Next year’s economic projection comes on the back of a moderate 3.5 percent this year compared to 3.7 percent in 2017.
“This 2018 growth is an upward revision of 10 basis points from our March Monetary Policy Stance forecast. The major sectors expected to drive growth this year includes forestry, agriculture, fishing, construction, wholesale retail, and transport.”
Meanwhile Dr. Luke said there are several opportunities that the economy has in play which includes the major pipeline projects near completion or about to start such as the Honiara road project, Tina hydro, Gold Ridge and the additional IFC investment in the fisheries sector.
“In addition, there are opportunities for financing in the financial sector with banks having enough liquidity to fund appropriate investments.”
He added that the economy’s external sector remains resilient with foreign reserves being able to readily facilitate the country’s capital and current flows.
Dr Luke noted that there are also challenges.
“Not least, the fiscal pressures that if not moderated, could restrain growth and business activity.
“Another potential issue is the possible adverse impact the Least Development Countries (LDC) graduation could have on our fisheries and agriculture sectors, and thereafter the economy, should the country not appropriately prepare for it over the medium term.”