Economy expected to recover in 2022

Elma Elbling ADB Pacific Country Office
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THE Solomon Islands economy is expected to recover to one percent in 2021 and 4.5 percent in 2022 as fishing and construction rebound.

However, logging output is expected to continue falling.

Asian Development Bank’s Solomon Islands Country Office Unit Head Elmar Elbling said this when he presented Asian Development Outlook (ADB) 2021 at Heritage Park Hotel yesterday.

Elbling said as part of its policy redirection, the Solomon Islands government declared a hiring freeze in February with positions vacant since January made inactive.

He said although essential services and education are exempted, the freeze will contract public services.

“Growth in construction and related business is expected to benefit from infrastructure projects, notably the Tina River Hydropower Project, upgrades to transport, the rehabilitation and expansion of water supply and sanitation systems, and construction for the 2023 Pacific Games.

“The fish catch will likely rebound in 2021 and 2022, but logging output is expected to fall further to 1.8 million cubic meters, reflecting government efforts to improve sustainability,” he said.

Elbling said the government is relying on the COVID-19 Vaccines Global Access Facility (COVAX) to provide vaccines for the remainder.

He said it aims to vaccinate the whole population by the end of 2021, but this may prove to be a challenge, especially on outer islands.

“Only 19 cases of COVID-19 had been recorded as of 31 March 2021, all of them repatriates.

“Despite the cuts in spending, budget deficits are expected to persist in 2021 and 2022 with the need to continue funding for COVID-19 preparedness and support to the economy, subsidies to keep Solomon Airlines operational, and expenditures for the Pacific Games,” he said.

Elbling said inflation is expected to ease to 2.5 percent in 2021 as food supply chains normalize, then accelerate to 3.5 percent in 2022 in tandem with global price increases.

He said although exports in particular fish, crops, and minerals are expected to rise, the current account deficit is forecast to widen to equal 9 percent of Gross Domestic Product in 2021 and 11 percent in 2022 as imports rise to supply construction projects.