Bank predicts positive growth despite challenges

NATURAL disasters and the coronavirus outbreak present a challenging period for Pacific countries and their governments to navigate this year, BSP Group chief executive officer Robin Fleming says.
He said this last week when releasing BSP’s Economic and Market Insight December quarter.
He also added that “whilst natural disasters and external economic shocks pose a constant threat to economic growth and fiscal sustainability for each Pacific nation, pleasingly, these economies have positive growth outlooks in 2020.”
Group general manager offshore branches, Daniel Faunt, noted that “although some of the Pacific economies may soften slightly in 2020, notably Fiji and the Solomon Islands, all the other countries will maintain relatively positive growth levels driven by tourism receipts, agriculture and fisheries exports”.
Faunt said Fiji, which was BSP’s largest banking operation outside PNG, “the economy will likely be impacted by a moderation in consumption and investment, although visitor arrivals continue to outperform registering its ninth consecutive year of growth”.
“In the Solomon Islands, where BSP is the largest bank, growth in 2020 is expected to remain at 2.8 per cent which is broadly in line with 2019, despite the reduction in logging revenue,” he said.
“This presents a challenge for the Solomon Islands government given it (logging) provides a substantial source of both Government revenue and export receipts.”
Faunt said for Vanuatu, visitor arrivals increased by 14 per cent in 2019 and were a key driver in economic growth of 3.4 per cent.
“The tourism sector provided a cushion against the impacts of disruptions to agriculture caused by natural disasters.”
Tonga’s economy was impacted by Cyclone Gita, with reconstruction spending likely to drive economic growth up to 3.7 per cent in 2020.
He said that remittances continued to increase with a total of US$32.1 mil (K109mil) received in 2019, providing a significant source of foreign exchange revenue for Tonga.
He said Samoa’s economy was impacted late in 2019 by the measles epidemic and this would likely lead to constrained growth in 2020.