According to BSP Quarter 1 Pacific Economic & Market Insight report, growth in these economies is expected to remain around 9% below their pre-pandemic projected levels. The cumulative output loss over 2020- 2022 is estimated to be around 10% of the 2019 level, due to the collapse in global tourism and travel.
The recovery for Pacific Island nations depends on both the effectiveness of both vaccine rollouts and policy support.
While small island nations like Samoa, Tonga and Cook Islands economic growth will enter into recession in 2021, Fiji and Solomon Islands economy is projected to be gradual but contingently grow by 5.0% and 1.5% respectively.
Surprisingly, Vanuatu it has projected to an increase in economy to 3.2% in 2021, a 12.4% increase from 2020 due to increased fiscal spending on infrastructure.
2021 also saw BSP Vanuatu as part of the BSP Financial Group Limited (BSP) launched a significant upgrade of its banking system to a new Core Banking System- FLEXCUBE in April, 2021.
BSP Group CEO Robin Fleming stated that the new Oracle FLEXCUBE system would enable the bank to push forward with its digital banking initiatives that drives an efficient way of banking. The new system will make everyday banking a lot easier and convenient for businesses and people.
“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 is arrayed under high uncertainty which can also limit lasting damage and adjust to new normal,” said Fleming.
“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,” added Mr Fleming.
Similar to the global economy, the recoveries in the Pacific are vary across countries and sectors, reflecting variation in pandemic induced disruptions and the extent of policy and infrastructure support can only ease the economic disruptions.