The World Bank flags Pacific vulnerability, a AU$400 million pipeline project in Papua New Guinea, and a hardware giant’s Island entry.
Here are the weekly highlights in the Pacific economy.
The Pacific Business Brief tracks the capital, trade and trends shaping the regional economy.
Photo: RNZ Pacific / Koroi Hawkins
In this edition:
- World Bank warning to Pacific Island nations
- Australian gas giants double downs in Papua New Guinea
- Bunnings’ Fiji entry
Everything Pacific countries do to protect their people in response to a crisis, could be making them weaker in the face of the next one.
Photo: Bibek Raj Giri / NurPhoto via AFP
World Bank: how to keep the power on
Growth is slowing and inflation is rising as the global energy crisis takes hold, the World Bank has told Pacific countries.
In its new Pacific Economic Update, the bank said energy costs have spiked, squeezing households, firms, and budgets.
But in a more existential sense, the World Bank said over-exposure to global shocks stemming from crises, which includes Covid-19, is no longer a bug in the Pacific, but increasingly becoming a permanent structural feature.
“Heavy reliance on imported fuels leaves Pacific Island countries highly exposed, with petroleum imports accounting for roughly 6-18 percent of GDP and 80-90 percent of electricity generation dependent on diesel,” the report read.
“Policy responses centred on broad price controls or generalized energy subsidies are fiscally costly and often poorly targeted, further eating into already weak fiscal positions.”
In other words: everything Pacific countries do to protect their people in response to a crisis, could be making them weaker in the face of the next one.
Their message is relatively simple: nearly 20 percent of youth are not in education, employment, or training, and that needs to change.
“By 2035, today’s youth could account for one-third of the Pacific labour force-yet only about half of working-age adults are employed.”
“Jobs remain concentrated in subsistence, the public sector, and informal work. Private-sector constraints continue to weaken the link between growth and jobs.”
It essentially means that Pacific workers are more dependent on revenue coming from elsewhere, such as remittances from family members in Australia and New Zealand, which has nothing to do with actual productivity at home.
Inflation in the Pacific is largely the by-product of high trade exposure due to a heavy reliance on imports.
Over 2025, the Bank said inflation region-wide had moderated after several years of global shock-based jumps. Nevertheless, it remained “the most immediate driver of living‑standard stress-especially through food prices in small, import‑dependent markets.”
Each country with a large single dependence on tourism saw inflation stabilise post-covid, the bank said. For hose where sovereign rents play a large role, such as fishing revenues and trust funds, it remained more volatile.
For consumers, lacklustre wage growth in the Pacific’s largest economies, such as Fiji, would have eroded their purchasing power and kept living standards relatively low despite an easing. But that may all be up-ended by fuel, adding costs to virtually every supply chain there is, and pushing prices up as a result.
Fiji is forecast to see inflation effectively double this year; Palau, the Marshall Islands and the Solomon Islands will see similar spikes.
Meanwhile, economic growth is forecast not to plummet, but to plateau.
Yearly changes to Gross Domestic Product (GDP) will not diverge much from 2025 onwards, though Samoa, Fiji and the Solomons will grow at the fastest rate. It could show the ultimate end of the Pacific’s post-covid economic momentum
Samoa has so far lavished in the tourism revival, with major events such as CHOGM that boosted arrivals. Nevertheless, added fees at their international airport, which will drive up return tickets by NZ$100 a piece, will not help matters.
Meanwhile, the Solomon Islands enjoyed a solid mining, services, and agriculture performance that offset the continued structural decline in logging. All the same, the bank said their prospects remain conditional on foreign investment.
Sovereign rent-led countries remain exposed to volatile fishing revenue and external support.
Santos holds a 39.9 percent interest in the PNG LNG joint venture.
Photo: Facebook / Santos Ltd
Santos pipes up on PNG
Australia’s largest natural gas company, where more than half of their revenue comes from Papua New Guinea, has decided on a new AU$400 million gas pipeline.
The 19-kilometre pipeline will tie the Agogo Production facility to the existing PNG LNG gas pipeline, set to come on line in Q2 of 2028.
Santos holds a 39.9 percent interest in the PNG LNG joint venture. Joint venture partners are ExxonMobil PNG Ltd, ENEOS Xplora, Kumul Petroleum and the Mineral Resources Development Company.
The company said it will tap into 66 million barrels of oil equivalent worth of undeveloped 2P (Proved + Probable) reserves.
“Key regulatory approvals are in place, required land access has been secured and all material joint venture approvals have been obtained,” it said.
According to the Santos 2024 annual report, the firm generated $2.5 billion in revenue from PNG operations. PNG makes more for Santos than it’s Australia and Timor Leste operations combined (about $1.7b).
Santos’ assets in PNG also hold more proved plus probable reserves of gas (2,567 PJ) than their Australian and Timor Leste assets.
Bunnings managing director Mike Schneider said Fiji is an ideal starting point for a Pacific-wide expansion thanks to a relatively high population.
Photo: RNZ
Bula from Bunnings
Bunnings Warehouse is expanding into the Fiji market with an online website.
It taps into a wider goal of Fiji, seen as an important regional distribution hub for freight, including fuel, to take a leap into the internet age with e-commerce.
The home and hardware retailer has announced that its online store will now ship to Fiji, introducing products previously unavailable to local consumers.
Bunnings managing director Mike Schneider said Fiji is an ideal starting point for a Pacific-wide expansion thanks to a relatively high population.
He says orders will be fulfilled in Australia, and that delivery times will be longer than local purchases.
RNZ Pacific asked whether those longer delivery times, combined with less developed processing and courier arrangements in the country, would drive up prices in Fiji. We did not get a response.
