Fall in log exports & fishing expected to lower country’s GDP next year
BY PRIESTLEY HABRU
SOLOMON Islands Gross Domestic Product (GDP) growth is expected to drop in 2019.
Prime Minister Rick Houenipwela told participants of the 10th Australia Solomon Islands Business Forum in Brisbane last week, the GDP growth is projected to drop from 3.5 percent this year to 3.4 percent in 2019.
“The strong momentum experienced in 2017 is not expected to carry into 2018 and 2019, with GDP growth projected to be 3.5 percent in 2018 and 3.4 percent in 2019. This is primarily due to the expected fall in the value of log exports and fishing activities.”
PM Hou said of the 3.5 percent growth, the primary sector is expected to contribute to around 0.5 percentage points to growth.
Service and industrial are forecast to contribute 2.4 percent and 0.6 percent growth in 2018.
“Output in logging activities is anticipated to be stable (albeit at high level) in 2018-19 and expected to slowly decline in the medium term.
“Fishing activities is projected to drop in 2018, due to a reduction of number of fishing days and unfavourable weather pattern.”
The Prime Minister said a key challenge for Solomon Islands is therefore to seek alternatives for fishing and log exports.
“A key challenge we must start to contemplate is that the levels of both these resources will decline and with that decline, key parts of our revenue generation will also decline.
“We must start thinking of alternatives to round log exports to supplement future growth,” he added.
Meanwhile PM Hou stated that the Solomon Islands Current Account Deficit is expected to widen to around 5 to 6 percent of GDP in 2018- 2019 compared to 4 percent of GDP in 2017.
“This is in line with the expected stabilizations in the value of logs exports, stabilisation of donor inflows allied with the expected increase in the value of oil imports and associated with large project investments. Balance of trade fell by 0.6 percent of GDP in 2017 compared to 1.2 percent of GDP in 2016.”
A key economic risk for Solomon Islands according to the former Governor of the Central Bank of Solomon Islands (CBSI) now the PM; are the recent uncertain developments of logging activities and outbreaks of Coconut rhinoceros beetle.
Despite these challenges PM Hou believes the 2016-2035 National Development Strategy (NDS) is the country’s long-term national vision to improving the social and economic livelihoods of all Solomon Islanders.
“And I want to continue welcoming newcomers who bring the skills and experience that we need in Solomon Islands.
“We cannot, and must not, close our doors to the world around us. Our economy and our people can thrive on globalization. Our challenge is to ensure that all our people reap the benefits of development, modernisation and globalisation.”
The Australia Solomon Islands Business Forum, hosted by the Australia Pacific Islands Business Council in partnership with the Solomon Islands Chamber of Commerce and Industry, brings together senior Australian and Solomon Islands business and government representatives to hear and discuss information on current issues relating to doing business in the Solomon Islands.
Honiara will host the 11th Australia Solomon Islands Business Forum next year.