After defeating coronavirus, Pacific islands region is now bracing for economic meltdown
Most Pacific island states may have managed to proof their communities against Covid19 through prompt border closures, but the shutdown has come at a huge cost to the movement of trade, services and people.
Already facing all sorts of challenges such as over-fishing, marine pollution, coastal erosion and the effects of climate change, Pacific nations are now also grappling with the impact of the pandemic, which has taken a toll on the region’s economies, especially with global tourism now at a standstill.
The Asian Development Bank’s newly released 2020 Pacific Economic Monitor projected a regionwide economic shrinkage of 4.3 percent among the 14 member countries this year.
"Over the longer term, countries will need to sustain efforts, not only in health system strengthening, but also broader disaster resilience to safeguard against future shocks," said Rommel Rabanal, co-author the latest PEM.
He noted that at least two nations, Solomon Islands and Vanuatu, are currently experiencing twin shocks with Covid-19 but also TC Harold.
The level of impact across the Pacific island countries varies considerably. Vanuatu, for example, is expecting to register marginally positive (0.6 percent) GDP growth in 2020, while at the other end of the spectrum Fiji and Palau have projected negative growth rates at 21.7 percent and 9.5 percent, respectively.
“Economies that are tourism dependent and rely on a few sectors for development have faced the full brunt of the economic fallout, highlighting the importance of diversification, and identifying added pillars of growth,” said Seve Paeniu, minister of Tuvalu’s Minister of Finance and Economic Planning and chair of 2020 Forum Economic Ministers Meeting.
In his opening remarks at FEMM in August, Paeniu underscored the need to recognize the “new normal,” which he said requires a complete rethink of the region’s economic structures.
“It entails the diversification of economies to reduce reliance on limited sectors for growth and economic development as well as adoption of technologies and policies that capitalize on opportunities arising from the digital economy,” he said. “It is my hope that within a few years we will see greater penetration of e-commerce in the Pacific with contactless and cashless transactions being the norm rather than the exception.”
But in the face of the region’s multiple tipping points, there are huge opportunities to invest in an impactful way though the Blue Economy, according to International Financial Corp., a sister organization of the World Bank.
At its core, IFC said, the Blue Economy involves the sustainable use of ocean resources to create economic growth, prosperity and jobs, while ensuring ocean ecosystem health.
“While the challenges faced by the nations of the Pacific are profound, we also see immense opportunities to harness benefits that flow from the Blue Economy in a way that puts sustainability at the top of the agenda,’’ said Mike van Niekerk, partner and chief impact officer at Inspire Impact.
“This event creates an avenue for matching investors that have the capital and desire to have a positive impact on environmental and social issues with like-minded investors and companies in the Pacific, helping them solve some of the challenges they face,’’ he said.
IFC held the Pacific Blue Economy Roundtable on Sept. 18 to map out the steps needed to realize the potential of the Blue Economy.
The importance of the Blue Economy cannot be overstated,” said Thomas Jacobs, IFC country manager for Australia, New Zealand, Papua New Guinea and the Pacific Islands. “A business as usual approach simply won’t work and risks having negative environmental and social impacts on the people of the Pacific and the oceans upon which they rely for their livelihoods. We need to move collectively to a business model and investment footing that enhances sustainability, including in sectors that rely on our oceans.”
“The Blue Economy is a significant component of the economy of small island developing states in the Pacific and elsewhere, creating challenges and opportunities for investing,’’ said Paul Holthus, World Ocean Council CEO and president.