PM on -4.9% GDP decline prediction   - Solomon Star News

PM on -4.9% GDP decline prediction  

07 May 2020

PRIME Minister Manasseh Sogavare says preliminary predictions by CBSI and the Ministry of Finance indicate that Covid-19 is ‘likely to have a considerable negative impact on the economy’.  

Sogavare made the statement at the launching of the Economic Stimulus Package this week in Honiara.

He said the country is now heading towards recession in the second half of 2020 with a significant decline in GDP growth expected at [-4.9] percent.

“The decline is derived as a result of the reduction in logging and fisheries exports; a contraction in tourism, as well as the negative impact of containment measures that include suspension of all international flights, entry restrictions of non-citizens and strict mandatory quarantine for all returning passengers,” he said.

Sogavare said that the forestry sector is expected to decline by 11% in log output, 9% fall in foreign exchange receipts, and a 6% drop in government revenue from duties on logs.  

 “With nearly half of the Solomon Islands workforce thought to be directly or indirectly associated with the logging sector, the economic impacts will reverberate across all parts of the country,” he said.

He added that the tourism sector is also being hit hard especially operators in Honiara. 

“The tourism operators in Honiara predict a 10% occupancy rate for April and the predictions for May and beyond are expected to be lower. 

“This all points to a dire prospect for the national economy through business closures, loss of jobs, pressure on government revenues, and a serious contraction in aggregate demand,” he added.

Sogavare said that first-round Economic Stimulus Package of SBD309 million is part of his government’s efforts to dampen the impact of the pandemic, especially the immediate impacts to ease the fallout of the pandemic on businesses and the general population and to keep the economy afloat.

He said the package initiative falls under the second phase of the government response which is crucially important to dampen the negative impact of the Covid-19 pandemic on the economy.