Solomons’ economy strengthened in 2nd half of 2025 due to solid mineral exports, active key sectors: Central Bank
BY NED GAGAHE
Economic activity strengthened in the second half of 2025, exceeding earlier expectations, according to the Central Bank of Solomon Islands (CBSI).
Speaking during the announcement of the Bank’s accommodative monetary policy stance for the next six months alongside the introduction of a new 1.5 percent policy rate, CBSI Governor Dr Luke Forau said stronger growth was driven by solid mineral exports and improved performance across key sectors.
Dr Forau said agriculture, fishing, communications, wholesale and retail trade, and tourism all recorded better-than-expected outcomes, while labour market conditions remained broadly supportive.
“Against this backdrop, CBSI has revised up its growth outlook to 3.6 percent for 2025 and 3.8 percent for 2026, underpinned by mining expansion and broad-based growth in services, more than offsetting the decline in logging,” he said.
CBSI said that global growth is projected to remain steady in 2026, with inflation in many economies easing towards central bank targets. International food and fuel prices are expected to remain subdued amid ample supply, supporting lower imported inflation.
On the external front, the country’s foreign reserves are projected to remain adequate at around 12 months of import cover in 2026. This will be supported by robust export earnings and continued donor inflows.
Fiscal policy is expected to shift towards consolidation this year as Government works to manage the fiscal deficit and rebuild cash buffers.
Monetary aggregates are projected to grow moderately, while credit growth is expected to remain modest, mainly driven by personal lending.
Headline inflation eased sharply to 1.6 percent in December 2025, down from 3.7 percent in June. The decline reflects lower domestic price pressures and subdued imported inflation.
Core inflation also moderated to 0.9 percent over the same period, indicating contained underlying demand.
Looking ahead, headline inflation is expected to rise temporarily in the first quarter of 2026 due to heavy rainfall affecting local food prices. However, it is projected to ease to around 3.5 percent by June and 3.4 percent by December 2026. Core inflation is forecasted to remain low at about one percent this year.
CBSI cautions that risks to the outlook remain, including heightened geopolitical tensions that could lift global oil prices, more extreme weather events that may disrupt food supply, and ongoing domestic market inefficiencies.
The Bank says it will continue to closely monitor both domestic and global developments and stands ready to adjust its policy stance if inflationary pressures intensify or significant macroeconomic shocks arise.
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