Home Economy GDP growth estimated to be 2.3% in 2020

GDP growth estimated to be 2.3% in 2020

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The country’s Gross Domestic Product (GDP) growth is projected to be around 2.3 per cent in 2020.

Finance Minister Harry Kuma revealed in his 2020 budget speech in Parliament lately.

“The Solomon Islands economy continues to perform moderately, averaging around 3.5 per cent in real Gross Domestic Product (GDP) growth in recent years, but there are signs of slowdown in the first six months of 2019 given the sluggish conditions for growth in the global economy.

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“Real GDP growth for 2020 is projected to be around 2.3 per cent. This reduction on recent growth trends reflects the reduced contribution of the primary sector to overall growth under a more sustainable approach to logging. Although real GDP growth will be affected, it also signifies the Government’s approach to move to a more sustainable path in the forestry sector over the medium-term,” the Finance Minister said.

He added that the manufacturing, construction and utility sector is forecast to contribute 0.31 percentages to real GDP in 2020, in line with strong credit growth in these sectors and feedback from various industries.

“Over the medium term, the services sector is expected to be the main key contributor to overall Real GDP Growth.”

On inflation, Mr. Kuma said the country’s inflation is projected to be around 2.2 per cent in 2020, an increase of 0.2 per cent from 2019.

“The recent increase in prices is primarily driven by the increase in oil and fuel prices, due to reduced supply as a result of disruptions and voluntary restraints on output by the Organisation of the Petroleum Exporting Countries (OPEC). The increase in headline inflation is also a result of the increase in the domestic price of food, reflecting diminishing supply.

“Volatility in international commodity markets remains the primary external risk to domestic inflation. Solomon Islands high dependency on imported fuel and items for production and the lack of immediate substitutes will also add inflationary pressures to domestic prices. The high levels of liquidity currently in the banking system are also a potential risk for inflationary pressure, should lending activities pick up significantly.”

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