Region: Economic downturn forecast, except for Fiji

Recent economic developments in the Pacific region reveal a mix of challenges and growth opportunities. The World Bank's Pacific Economic Update forecasts a slowdown in economic growth for Pacific Island nations, dropping from 5.8% in 2023 to 3.6% in 2024. This decline is attributed to waning post-pandemic recovery and stagnant investment growth, raising concerns about its impact on living standards and poverty reduction.

Conversely, Fiji is experiencing a construction boom, with building approvals rising by over 70% in the June quarter of 2024, driven by private non-dwelling projects such as shopping malls and warehouses. For the first half of the year, approvals increased by 45.1% compared to 2023. ANZ's Pacific Insight attributes this trend to policy and legislative stability, facilitating a pipeline of non-residential projects, including offices, hospitals, and hotels, set to commence in the next two to three years.  However, capacity constraints, including the availability of construction workers, could hinder timely project execution.

Assessment: Pacific leaders faced with economic downturns are more likely to accept politically and economically risky investments, especially when faced with imminent elections or unpopularity.