ASIATODAY.ID, HONIARA — Economic growth is slowing across the Pacific as countries face weak global growth, natural hazards and climate related shocks. The World Bank’s flagship Pacific Economic Update, released today in Honiara, projects regional growth to fall to 2.6 percent in 2025, down from 5.5 percent in 2023.
This comes as post-COVID recovery fades, tourism weakens in some countries, and global policy uncertainty rises. Inflation is easing but remains above pre-pandemic levels—keeping the cost of living stubbornly high. Moreover, the region’s dependence on external aid, remittances, and imported goods may leave many economies vulnerable to shocks.
Aggregate growth among tourism and remittance led countries such as Samoa, Tonga, Palau, and Vanuatu is expected to halve from 2024 to 2025. In Solomon Islands, the second-largest economy among the 11 Pacific Island Countries covered in the update, growth has hovered around 2.5 percent, constrained by structural challenges including declining logging revenues and limited economic diversification.
Inflation is projected to fall to 3.6 percent in 2025, down from a peak of 7.4 percent in 2023, but elevated prices continue to strain household budgets. Many Pacific economies remain highly exposed to natural disasters, climate shocks, and external funding volatility, with foreign government grants making up nearly 40 percent of gross national income in some countries.
Amid these challenges, the report identifies a major opportunity to boost long-term resilience and growth: increasing women’s participation in the workforce. On average, just 42.7 percent of working-age women are active in Pacific labor markets. This is more than 15 percentage points lower than male participation. Closing this gap could raise long-run GDP per capita by over 20 percent on average across the region.
“While Pacific nations can’t control global shocks, there is an opportunity to build stronger domestic foundations. Real economic resilience will come from addressing these long-standing challenges through structural reforms,” said Ekaterine Vashakmadze, Senior Economist at the World Bank. “Engaging more women in work is one of the highest-impact reforms Pacific governments can pursue.”
The report shows that in many Pacific countries, the lack of paid leave, childcare, and protections in the workplace keep women out of work. Social norms often keep women in low-paid jobs and, even with more education, women are still underrepresented in high-demand fields like tech and engineering.
The Pacific Economic Update highlights that more inclusive labor markets can deliver broad-based benefits. Approximately half a million working age Pacific women are currently outside the labor force and are nearly invisible in many subsectors. Closing these gaps could significantly increase household incomes, support private sector growth, and strengthen long-term fiscal sustainability.
Part Two of the Update highlights the urgent need to boost women’s participation in the Pacific energy sector, where they hold just 5 percent of technical roles, which are well paid and central to the region’s energy transition. Building on the World Bank’s Pacific Women in Power program with the Pacific Power Association, the report outlines steps to close these gaps, such as improving workplace safety, supporting families, and partnering with educators to empower both women and men for workforce entry.
“Utilities across the Pacific are stepping up—not just because it’s the right thing to do, but because a stronger, more resilient energy sector depends on it,” said Helle Buchhave, World Bank Senior Social Development Specialist, June 17, 2025.
The Pacific Economic Update is published twice yearly and covers 11 countries: the Federated States of Micronesia, Fiji, Kiribati, the Republic of the Marshall Islands, Nauru, Palau, Samoa, Solomon Islands, Tonga, Tuvalu, and Vanuatu. (AT Network)
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