GROWTH in the Solomon Islands economy is seen to moderate to 3 per cent in 2016 and 2.8 per cent in 2017 with expected declines in logging exports and development assistance.

According to the Asian Development Bank’s flagship annual economic publication, Asian Development Outlook 2016, which was recently launched by the bank, the Solomon Island’s Government plans for fiscal expansion to stimulate growth need to consider gradual spending increases to foster efficient use of resources, while safeguarding macroeconomic stability.

As Vanuatu’s economy recovers from last year’s Tropical Cyclone Pam, it states that growth is seen to pick up to 2.5 per cent in 2016 and 3.8 per cent in 2017.

However, it adds issues concerning safety of the runway at the Port Vila international Airport, severe El Niño conditions harming agriculture, and political uncertainties pose risks to the economy.

The outlook for the North Pacific economies — the Republic of the Marshall Islands and the Federated States of Micronesia — is generally positive, but hinges on their ability to access capital grants for major infrastructure projects.

In Palau, the bank highlights that growth is projected to ease this year with tourism facilities reaching capacity limits, but should increase next year when new hotels are scheduled to open.

“Growth in the South Pacific economies of the Cook Islands, Samoa, and Tonga is seen to remain steady but low over the outlook period. Public investment, additional sources of finance and business environment reforms are expected to drive growth prospects,” the report noted.

It says record high fishing licenCe revenues and investments from development partners are underpinning rising public expenditure and growth in the small island economies of Kiribati, Nauru, and Tuvalu.

Achieving fiscal and economic stability and sustainability remains a challenge for these countries given the volatility and uncertainty of their sources of growth and revenues.