THE 2026 Budget aims not only to address domestic priorities but also to protect the Solomon Islands economy from external shocks, ensuring resilience and sustainable development for the country.
This comes as the IMF’s April World Economic Outlook projects global growth to fall from an estimated 3.3 percent in 2024 to 2.8 percent in 2025, before slightly recovering to around 3.0 percent in 2026. The slowdown is largely attributed to rising tariffs worldwide, which have triggered trade spillovers, weakened investor confidence, and increased global uncertainty.
When tabling the 2026 Appropriation Bill 2025 in Parliament on Monday, Minister of Finance and Treasury, Rexson Ramofafia, said these global trends have direct consequences for the Solomon Islands.
“As a small island economy, our trade, investment flows, and fiscal stability are highly sensitive to shifts in global growth, commodity prices, and geopolitical tensions,” he said.
Ramofafia noted that in some regions—such as China and parts of Europe—targeted fiscal measures have helped cushion the impact of slowing growth.
Among advanced economies, GDP growth is projected to decline to 1.4 percent in 2025 and 1.5 percent in 2026. In the United States, growth is expected to fall from 2.8 percent in 2024 to 1.8 percent in 2025—one full percentage point lower than the forecast issued in January. This drop is driven by policy uncertainty, trade tensions, and weaker consumption across the economy.
“In the Euro area, growth is projected at 0.8 percent in 2025 and 1.2 percent in 2026,” he said. “Countries such as Germany and Spain have introduced fiscal support to cushion these pressures, but it remains uncertain how long such measures can sustain growth.”
Other advanced economies—Canada, Japan, and the United Kingdom—have also recorded downward revisions for 2025, with weak projections extending into 2026.
Emerging market economies are expected to grow by 3.7 percent in 2025 and 3.9 percent in 2026. Ramofafia said this reflects continued trade downturns across Asia, especially among ASEAN countries affected by US tariffs. China’s growth is forecast at 4 percent for both years, while India continues to maintain stable growth driven by strong rural consumption.
By EDDIE OSIFELO
Solomon Star, Honiara
