The Pacific region is poised for economic growth, with an expected rise to 4.1 percent in 2025 before moderating to 3.4 percent in 2026, according to the Asian Development Bank’s (ADB) latest outlook. A significant contributor to this growth is Papua New Guinea (PNG), the area’s largest economy, driven by its robust resource output.
Despite the optimistic projections, the region faces ongoing challenges. As highlighted by ADB Director General for the Pacific, Emma Veve, geopolitical and trade tensions present persistent risks. The ADB remains committed to building resilience against potential setbacks such as climate change and disruptions in global supply chains.
PNG’s economic prospects reveal growth anticipated at 4.6 percent in 2025, tapering to 3.6 percent in the following year as resource activity wanes slightly. Inflation expectations remain stable, with strategic investments in resource projects anticipated to further energize the economy.
Fiji’s economic growth in 2025 is projected to hold steady at 3.0 percent, with a downward revision for 2026 due to the impact of U.S. tariffs on its key trading partners. Inflation is expected to ease over both years, supported by fiscal measures and lower global commodity prices. Fiji aims to bolster its resilience through initiatives in water security and coastal protection despite limited fiscal resources and climate-related risks.
The Solomon Islands maintain growth forecasts at 2.9 percent for 2025 and 3.2 percent for 2026, though a slight increase in inflation is expected in 2025. A shift towards expansionary monetary policy aims to stimulate growth and control inflation. Vanuatu sees its 2025 growth forecast revised downwards to 1.5 percent due to delayed earthquake recovery efforts, while 2026 projections remain at 2.5 percent.
Central Pacific nations like Kiribati and Nauru have slightly downgraded growth forecasts; however, ongoing public infrastructure projects continue to drive economic activity. In the North Pacific, the Marshall Islands experience growth driven by fisheries and construction activities, while Micronesia and Palau face downward adjustments. In Palau, a gradual recovery is noted in the tourism sector.
Tourism continues to be a central driver of growth across the South Pacific. The Cook Islands expect a vigorous 10.4 percent growth rate for 2025, focusing on tourism, before slowing in subsequent years. Niue and Tonga benefit from tourism and construction, whereas Samoa faces challenges with reduced outputs in agriculture and fisheries and a slowdown in visitor arrivals.
The varied economic landscape in the Pacific region accentuates the diverse influences guiding growth, from natural resource exploitation to tourism. However, these economies remain vulnerable to global economic fluctuations and climate impacts. Strategic interventions and sustainable investments are crucial for maintaining long-term resilience and growth in the region.