BY JOHN HOUANIHAU
The Solomon Islands economic growth for this year is projected to 2.7 percent due to the ongoing crises in the Middle East.
Mission Chief of Solomon Islands for International Monetary Fund (IMF), Masafumi Yabara told local media this in a press conference last week, based on a preliminary report on 2026 Article IV consultation.
Mr Yabara said the Solomon Islands economy grew by 3.5 percent last year, driven by agriculture and gold production.
“And for 2026 this year, the conflict in the Middle East is projected to slow this growth to 2.7 percent. The IMF also expect inflation would go up from 3.4 percent last year to 4.8 percent on average this year,” he said.
He further adds that Solomon Islands is vulnerable to global shocks since its economy is highly dependent on imports.
“Not only for fuels, but also food. We’ve already seen some significant impacts in the Middle East. The oil prices have gone up by more than 50 percent. So, it could eventually impact the import prices of Solomon Islands. If the fuel costs go up, that will impact the wide economic activity,” Mr Yabara said.
He said IMF strongly suggest that rebuilding buffers, anticipating the coming shocks, will be very important at this stage for the country.
“We project that the growth could go down to 2.7 percent this year. But I would like to emphasise that even our projections are subject to high uncertainty,” he said.
He said if the Middle East crises is prolonged it could significantly dampen economic activity in Solomon Islands and raise inflation.
“And on a domestic front, we see a risk that the government could face a cash crunch, forcing a freeze in budget execution. And if it materialises, it will also negatively impact the economic activity in Solomon Islands,” he said.
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