PM says 2020 a challenging year for the economy

PRIME Minister Manasseh Sogavare says 2020 is a challenging year for the economy. 

The Prime Minister in his nation-wide address on Thursday 5 June said the COVID-19 pandemic is causing human costs worldwide, and the protection measures on social distancing and travel restrictions are impacting economic activity on a global scale. 

He said the COVID-19 pandemic is having a severe impact on the economy.

“Even though we have no cases, we feel the economic impact on our shores,” he said.

Prime Minister Sogavare said the Solomon Islands economy is expected to contract this year.

He said this will be a direct result of declines in logging, mining, agriculture and fisheries exports, a substantial reduction in tourism, as well as general depressed domestic demand.

“Our economy is forecast to contract sharply to negative 4.9 per cent in 2020, with growth in the economy rebounding in 2021 in a ‘v’ shaped recovery setting.  There are still many unknowns in relation to the economic outlook and lingering risks to achieving fast recovery.  This underscores the importance of our stimulus package currently being implemented,” he said.

Prime Minister Sogavare said most commodity prices have fallen slightly in the first few months of this year, but are still in a stable position. 

He said the logging sector has represented an important component of the country’s economy, in terms of revenue, economic activity and growth. 

The Prime Minister said with the impact of COVID-19, there are expectations for further reductions in the export of round logs as international trade continues to be disrupted and there is lower domestic growth demand in our export destinations. 

He said this will directly impact growth and will be felt across the country.  

“Decreased activity in the economy translates to reduced Government revenues.  A slowing economy and ongoing international disruptions hurts our business, negatively impacts our farmers, and ultimately impacts our people and our communities across the country,” he said.

However, the Prime Minister said as a country, we have moved fast to protect our people from the health risks, and we have moved quickly to design the stimulus package which will be vital to support activity in our economy to keep it moving.

“The Government will work constructively to pursue reform opportunities and provide a basis for sustainable long‑term growth on a broader economic base.  We understand the issues at play. We are closely monitoring the economic situation and we stand ready to act when we need to,” he said.

The Prime Minister adds that core components of the stimulus package have commenced, with important infrastructure spending in the pipeline and further reforms to the business environment will assist in the post-COVID-19 landscape.