SI Economy Grew 4.8 Percent

SI Economy Grew 4.8 Percent

The Solomon Islands economy grew by 4.8 per cent in 2012, but the growth was significantly lower than the 10.6 per cent growth of the economy in 201, said Central Bank Governor Denton Rarawa when he launched the bank’s 2012 annual report today.

Mr Rarawa said logging, minerals and fisheries exports grew last year and construction activities also picked up as a result of the hosting of the Festival of Pacific Arts and other large infrastructure projects.

However, agricultural exports declined with key agricultural exports palm oil, copra and cocoa shrinking by almost 30 percent due to weak export prices and volumes combined with muted logging activities that were more or less sustained at the same level in 2011.

“Lower export prices were translated into lower income for rural copra and cocoa producers. And with the significant portion of the country’s population living in the rural areas and relying mainly of agriculture for income, the drop in exports earnings from agriculture directly affected rural lives,” Mr Rarawa said.

But Solomon Islands become a net exporter for the first time in many years with a trade surplus of $346 million in 2012.

Mr Rarawa said the positive out turn came on the back of sustained log exports valued at $1.6 billion and mineral receipts that increased to $855 million to become the country’s second highest foreign exchange earner in 2012.

But he said gold as an exhaustible resource will continue to render the economy fragile until the country diversify its export base and fast the implementation of import substitution options for costly Imported items such as fuel and food items.

“Foreign reserves continue to trend upward to $3.7 billion in 2012, enough to support more than 10 months of trade imports,” he said.

The overall inflation measured by the Honiara Retail Price Index (HRPI) slowed down last year and was driven down mainly because of global food and energy prices that eased as a result of dampening global demand.
Mr Rarawa said the domestic component of the consumption basket also declined but remained relatively higher than the imported index.

He said an outstanding weakness of the inflation measure is that it only reflects price developments in Honiara as there is no national measure of inflation throughout the country.

Mr Rarawa said he envisage the economy to continue to decline in 2013 predicting just a 4 percent growth with a fall in production of the mineral sector.

ENDS

© Scoop Media