CBSI projects economy to grow by 2.7 percent

The Central Bank has said it expects the country’s economy to grow by 2.7 percent in 2025.Governor of Central Bank (CBSI) Dr Luke Forau uttered this during the Launch of the 2024 CBSI Annual Report, on Monday, April 28 at the Heritage Park Hotel.He said the 2.7 percent projected growth is based on the assumption that the forestry sector will slow down.“Nevertheless, growth is expected to be driven by the agriculture, fishing, manufacturing, construction, mining, retail trade and tourism sectors,” Forau told participants at the launch.He echoed that the economy is expected to return to the pre-pandemic levels and stabilise at 2.5 percent, assuming there are no new sources of growth over the medium term.Forau, however, reiterated that sustaining medium-to-long-term growth requires targeted policy adjustments, including diversifying growth drivers, rebuilding fiscal buffers and strategically reallocating resources to where they are best utilised to improve the socioeconomic well-being of our people.“Despite the positive growth outlook, risks remain tilted to the downside. These include a slowdown in the forestry sector, the negative impact of climate change and pests on agriculture cash crops, coupled with a limited fiscal space and a narrow economic base, would limit the economy’s future growth potential and leave it susceptible to a range of shocks,” he said when reflecting on Challenges, risks and opportunities.He said that the country continued to face challenges such as rising costs of doing business, insecure access to land and an inefficient inter-island transportation system.“The escalation of the US trade tariff tension, the ongoing geopolitical tensions, and a potential global economic slowdown could weigh on the growth prospects,” said Forau.“While Trump’s tariff policy imposes a 10% tariff on Solomon Islands exports would have minimal impact, as the share of exports to the US market accounts for only 0.04%, on average, between 2020 and 2023, the indirect impact could be higher as we import largely from China and Australia,” he said.He said that the economy would continue to benefit from the ongoing donor support for infrastructure development and the expansion of the Pacific Australia Labour Mobility (PALM) scheme.The Governor, meanwhile, highlighted that Digital technology also presents new opportunities to leapfrog traditional development barriers and promote e-commerce and digital financing.End///