Economic growth in the Pacific region is expected to rise to 4.1 percent in 2025, followed by a moderation to 3.4 percent in 2026, as per the Asian Development Bank’s (ADB) September 2025 Asian Development Outlook. Papua New Guinea (PNG), the subregion’s largest economy, plays a pivotal role in this growth due to its booming resource output.
Although the economic prospects appear promising, ADB Director General for the Pacific, Emma Veve, pointed out ongoing risks posed by geopolitical and trade tensions. The ADB reaffirms its commitment to enhancing resilience against potential shocks like climate change and global supply chain disruptions.
PNG’s economic growth is forecasted at 4.6 percent in 2025, reducing to 3.6 percent in 2026, as resource activity slightly tapers. Despite unchanged inflation forecasts, strategic investments in resource projects are likely to further invigorate PNG’s economy.
Fiji’s 2025 growth projection remains steady at 3.0 percent, but the 2026 forecast is revised down due to the indirect effects of U.S. tariffs on Fiji’s major trading partners. Inflation for both years is anticipated to decrease, aided by fiscal measures and subdued global commodity prices. Despite limited fiscal buffers and climate risks, Fiji’s initiatives in water security and coastal protection are set to bolster resilience.
In the Solomon Islands, growth forecasts hold at 2.9 percent for 2025 and 3.2 percent for 2026, with a slight inflation uptick predicted for 2025. However, a shift to expansionary monetary policy is expected to foster growth and curtail inflation. Vanuatu faces a revised growth down to 1.5 percent in 2025 due to earthquake recovery delays, whereas 2026 figures stay fixed at 2.5 percent.
Central Pacific nations, including Kiribati and Nauru, experience modest downgrades in growth forecasts, but public infrastructure projects remain a growth driver. Economic predictions for Tuvalu remain stable. Commodity price volatility and supply chain issues pose key risks to these economies.
In the North Pacific region, a growth increase is seen in the Marshall Islands, while forecasts for Micronesia and Palau have been adjusted downward. Growth in the Marshall Islands benefits from fisheries and construction activities, while Palau sees incremental recovery in tourism. Utilization of financial aid in Micronesia faces delays due to capacity challenges.
Tourism continues as a major growth contributor across the South Pacific. Cook Islands anticipates a vigorous 10.4 percent growth in 2025, led by tourism, before moderating. Niue and Tonga also see tourism and construction as growth catalysts, but Samoa’s prospects are dampened by reduced agriculture and fisheries output alongside slowing visitor arrivals.
The optimistic projection for the Pacific region’s economics emphasizes diverse growth patterns due to varying influences, such as natural resource outputs and tourism. However, susceptibility to global economic shifts and climate-related issues underscores the importance of strategic interventions and sustainable investments for enduring regional resilience and growth.