CBSI reports weaker global and domestic outlook in first quarter 2025
BY NED GAGAHE
Solomon Islands’ economy has weakened since January this year, according to the Central Bank of Solomon Islands (CBSI).
In its March 2025 Quarterly Report released on July 8, 2025, CBSI said the International Monetary Fund (IMF) in its April 2025 World Economic Outlook had revised global growth for 2025 down to 2.8 percent from the previously forecasted 3.3 percent.
IMF attributed the downgrade to the widespread impact of US tariff hikes and retaliatory measures by key trading partners.
It expects a mild recovery to 3.0% in 2026.
On domestic economy, CBSI said domestic economic activity was mixed in the first quarter of 2025.
“The primary sector shrank, with the production index dropping to 119 points from 125 in the last quarter of 2024. The fall came from weaker output in agriculture, fishing, and mining, though forestry posted gains,” CBSI said.
CBSI said the secondary sector also remained weak due to low performance in manufacturing and utilities.
“Services delivered uneven results across subsectors, while investment remained moderate and labour market conditions improved slightly as inflation cooled in the first quarter.
“Headline inflation dropped to 2.4% in March, down from 4.6% in December 2024.
“Lower electricity prices and better food supply helped push domestic inflation down. This outweighed a small rise in imported inflation.” the report said.
Core inflation also declined, reaching 0.9% in March from 1.9%, while external conditions weakened in early 2025.
The balance of payments (BOP) surplus narrowed to $237 million, down from $277 million in the last quarter of 2024.
This was due to a smaller capital and financial account surplus, despite gains in the current account.
Gross foreign reserves rose by 1% to $5,889 million, covering about 10.9 months of imports.
On fiscal position, the government recorded a provisional fiscal surplus of $83 million in Q1, reversing a $225 million deficit from Q4 2024.
CBSI said the surplus comes from a sharp drop in development spending due to slow budget execution.
“Revenue declined slightly but stayed in line with budget plans. Public debt also dropped, aided by consistent debt servicing,” the report said.
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