At a macroeconomic level, the global economic crisis has had less impact on many Pacific countries than on most other developing countries across the world. However, economic growth rates for most countries in the Pacific region are still expected to be low for 2009 and 2010.
The main effects of the economic crisis include declining exports and government revenues, falling remittances and revenues from tourism and a loss in the value of trust funds. Pacific countries are heavily dependent on foreign aid and although aid programs so far have not been reduced, they remain vulnerable to political and economic changes and reductions in public support.
While Pacific countries might be less affected by the economic crisis than other developing countries, many have been hit hard by the recent food and fuel crises and have a low capacity to respond to crisis impacts. Climate change has exacerbated food security and all indications are that the conditions that led to the food crisis in 2007 and 2008 are set to return.
Key recommendations
- Governments, donors and non-government organisations should consider developing systems and methods to closely monitor the impacts of economic and other shocks.
- International donors should assist by providing Pacific country governments with budget support to protect social expenditures, such as health and education, from being cut further.
- Donors should support Pacific Island governments to meaningfully engage their populations to consider their future economic development.
- Policymakers should examine how traditional social support systems, the "traditional economy" and access to land for subsistence farming can be supported and strengthened to ensure they continue to provide resilience in times of crisis.
