IMF: economy to grow by 0.4%

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BY MAVIS N PODOKOLO

THE country’s economy is projected to grow by 0.4 per cent this year despite the negative impacts of COVID-19.

That’s according to Jarkko Turunen of the International Monetary Fund (IMF) during a media conference in Honiara yesterday.

Turunen said the projected growth will come at the back of the contraction seen in the economy last year.

“The economy has been hit hard by the pandemic,” Turunen said.

“But following the contraction in 2020, real GDP growth is projected to improve by relaxation of COVID-19 related restrictions and construction activities,” he added.

Turunen stated fiscal deficit is expected to expand this year from 2.4 percent of GDP in 2020.

On foreign reserves, he said as of end-October 2021 the foreign reserves remained robust at about 11.5 months of prospective imports (US$708 million),reflecting inflows from development partners, subdued imports, and the new allocation of IMF Special Drawing Rights (SDRs).

“Inflation has been muted but is expected to increase.

“Labour market conditions have deteriorated, and the pandemic is likely to have disrupted progress in poverty reduction and human development.”

He stressed the risks to the outlook are twisted to the downside, with the main danger being community transmission of COVID-19, given low vaccination rates and weaknesses in health infrastructure.

“Delays to border reopening pose a key risk to the economic recovery.

“Vulnerabilities are exacerbated by a weaker fiscal position, owing largely to the impact of the pandemic on revenues and expenditures.

“Solomon Islands remains vulnerable to the impacts of climate change and natural disasters,” Turunen said.


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