Solomon Islands' economy strong, says bank

Jemima Garrett

Last Updated: Mon, 21 Feb 2011 20:12:00 +1100

One of the Pacific region's biggest banks says the Solomon Islands economy has bounced back strongly from the global economic crisis.

ANZ Bank economist Paul Gruenwald says that means Solomon Islands ranks alongside Papua New Guinea and Timor-Leste, as one of the strong economies of the region.

In its latest Pacific Quarterly, the bank says that in the fourth quarter of 2010, employment in the Solomons expanded rapidly, production surged, trade grew and inflation remained benign.

The production and trade growth was largely a result of increased logging.

Strong

Mr Gruenwald told Radio Australia's Pacific Beat that preliminary data for the end of 2010 "showed production up about 30 per cent in the last quarter, log production is up about 24 per cent for the year.

"That flows back into employment, so it looks like a strong finish for the Solomon Islands in 2010."

It was a less certain picture for other industries like palm oil, cocoa or fish.

Mr Gruenwald, the bank's chief economist for the Asia Pacific, said: "Palm oil production actually fell in December, but we had a positive increase in cocoa, so it's a bit of a mixed bag for the soft commodities."

Logs have always dominated Solomons' exports, but is growth based on unsustainable logging really what the Pacific nation wants?

Managing

"They have to base their growth on what they have," the economist said.

"For us it's more a question of managing log production. It is a renewable resource if it's managed properly.

"So I would think over the longer term, it's a question of not overproducing and running down the capability to produce in the future."

The quarterly survey shows a workforce there now numbering over 150,000.

The bank says the figures suggest Solomon Islands will grow at 6 per cent this year, up from 3.5 per cent last year.

Language News