Pacific economic growth to slow, warns Asian Development Bank

ECONOMIC growth in the Pacific is expected to slow down in the coming years, with the region’s growth projected to moderate to 3.9 percent in 2025 and 3.6 percent in 2026, according to a new report from the Asian Development Bank (ADB).

The report, released on Wednesday, highlights key factors contributing to the slowdown, including a softening tourism sector and a decline in petroleum output from Papua New Guinea, the region's largest economy.

The Asian Development Outlook (ADO) April 2025 outlines how the Pacific's growth trajectory is closely tied to these sectors, with tourism being a major driver for several subregional economies.

However, expectations for easing in this sector, coupled with stagnation in oil and gas production in Papua New Guinea, are expected to dampen growth prospects.

Despite the setbacks, ADB’s Director General for the Pacific, Emma Veve, acknowledged that the region remains resilient but stressed the vulnerability of Pacific economies to external shocks.

“Despite the growth that has been realized in recent years, the Pacific remains at risk from external shocks,” she said,

The report also flags concerns over potential risks to the economic outlook, particularly due to shifting US trade and economic policies. “Faster and larger-than-expected changes in U.S. trade and economic policies pose risks to the outlook,” Veve explained. She pointed out that rising U.S. tariffs, coupled with heightened policy uncertainty and possible retaliatory measures, could impede trade, investment, and overall growth.

It is important to note that the growth forecasts were finalized prior to the announcement of additional tariffs by the U.S. administration on April 2, meaning that the projections only take into account the tariffs previously in place.

This suggests that the outlook could worsen if further trade restrictions are implemented.

The ADB's report underscores the challenges faced by the Pacific region, highlighting both the risks posed by external factors and the need for continued resilience in the face of a changing global landscape. – April 9, 2025