Gloomy outlook for sunny islands



By Jonathan Perez

Many island nations scattered around the vast Pacific Ocean were once untouched by the deadly coronavirus. Most of these small states are susceptible to outbreak-prone diseases, such as dengue, measles, rubella and influenza among others, vis-à-vis their fragile health care systems.


Extra vigilance has been their default defense. The immediate closure of their borders at the onset of Covid-19 helped block the entry of the coronavirus into their communities. But they were aware it was only a matter of time before the unwelcome visitor breached their sanctuaries.


Palau, Marshall Islands, Federated States of Micronesia Cooks Islands, Vanuatu, Kiribati and Solomon Island have been crossed off the list of Covid-virgin jurisdictions.


Just the same, their economies are not spared from the impact of the pandemic that put world travels on pause. The scenic allure of the sand, blue ocean and sky is the economic anchor for these tourism-dependent island nations.


The United Nations Economic and Social Commission (UNESC) noted that island nations and small developing states are also threatened by rising sea levels brought about by climate change.


The collective gross domestic product of these island nations has experienced a significant drop, which UNESC estimates at almost three times compared to more developed countries in the Pacific. Government and business sector revenues showed sharp declines when airlines halted their flights and travel restrictions were put in place to stem the tide of the deadly virus.


The economies of tourism-dependent island nations suffered an estimated 70 percent drop in travel receipts in 2020, which are “an essential source of jobs and livelihoods," according to a separate report by Unctad.

According to the Bank South Pacific’s Pacific Economic & Market Insight for the first quarter, economic growth in some of these countries was expected to remain below 9 percent while an estimated 10 percent would be the output loss over a period from 2020-2022.


“The economic outlook depends not just on the outcome of the battle between the virus and vaccines, it also hinges on how effectively economic policies and financial systems are arrayed under high uncertainty which can also limit lasting damage and adjust to new normal,” said Robin Fleming, BSP Group CEO. “As a leading financial institution in the South Pacific, we are building blocks to improve performance in future years, ease hardships and support our people in these challenging times.”


The Asian Development Bank anticipates the economic recovery of travel-dependent island nations and territories to be sluggish and the private sector will continue to be a major partner to keep things stable.


According to ADB’s Asian Development Outlook 2021, the economies of Cook Islands, Niue, Samoa and Tonga will continue to decline this year. Gross domestic product growth is expected to gradually return to positive levels in 2022 but they won’t have the pre-Covid numbers.


“While lives have been saved, livelihoods have been lost. To preserve future jobs and maximize the eventual economic recovery, it is imperative that spending sustains the private sector to survive and compete,” said James Webb, ADB Pacific Subregional Office public management economist and author of the ADB report.


Each year, more than $2 billion in foreign aid is invested in the Pacific Islands region, equivalent to roughly 8 percent of the region's GDP. This aid comes in the form of thousands of projects from more than 60 donors


In Papua New Guinea, which shares a land border with Indonesia, the coronavirus has reached the capital Port Moresby and slowly crept its way to the other provinces. Despite managing the number of cases, PNG’s healthcare system almost collapsed and the country still needs help to control the pandemic. Fiji was initially successful in controlling community transmission but now is showing strains.


Economists and health experts look to mass vaccinations as the key to recovery and return to normalcy.


Palau, which reported one travel-related Covid-19 case, had vaccinated 75 percent of its adult population as of the last week of June. PNG, Kiribati and Solomon Islands are behind. Vaccine hesitancy has been derailing hopes of conducting mass vaccinations.


Some island nations have yet to roll out their vaccination campaigns. Remote communities across mountains and separated by water are receiving scarce vaccine information.



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