Dr. Forau says SI’s economic growth is one-step forward, two-steps backward

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The Governor of Central Bank of Solomon Islands Dr. Luke Forau was blunt about the growth of the country’s economy in the past year saying: “We are actually growing at a pace with a one-step forward, and a two-step backward.”

Speaking at the launch of the CBSI 2024 Report, Dr Luke Forau said the country’s economy growth hovers around 2.9%, on average better than “our worst moments, but still far from our full potential.”

He said much of that growth came from a single event — the Pacific Games. However, Dr Forau said strip that away, and it becomes clear: “we are not growing fast enough, and not broadly enough. We are actually growing at a pace with a one-step forward, and a two-step backward. And if you look carefully at our current state of play, we are actually reversing in development.”

Looking ahead, the Central Bank projects that Solomon Islands economy will grow by 2.7 percent in 2025, on the assumption that the forestry sector will slowdown.

Dr Forau noted that nevertheless, growth is expected to be driven by agriculture, fishing, manufacturing, construction, mining, retail trade and the tourism sectors.
He stated that over the medium term, the economy is expected to return to the pre-pandemic levels and stabilize at 2.5 percent, assuming there are no new sources of growth.
Dr Forau said sustaining medium-to-long-term growth requires targeted policy adjustments including diversifying growth drivers, rebuilding fiscal buffers and strategically reallocating resources to where they are best utilized to improve socioeconomic well-being of our people.

Challenges, risks and opportunities
In spite of the positive growth outlook, Dr Forau warned that risks remain tilted to the downside and these include a slowdown in the forestry sector, the negative impact of climate change and pests on agriculture cash crops, coupled with a limited fiscal space and a narrow economic base would limit the economy’s future growth potential and leave it susceptible to a range of shocks.

Furthermore, he said, the country continued to face challenges such as rising costs of doing business, insecure access to land and inefficient inter-island transportation system.

Also, Dr Forau said the escalation of the US trade tariff tension, the ongoing geopolitical tensions, and a potential global economic slowdown could weigh on the growth prospects.

News@SBMOnline2025