Even countries that are spared COVID-19 will feel its economic impacts eventually if they aren’t already. Tourism will be hard hit, and likely to be one of the last sectors to recover from a global downturn.
Research shows three Pacific countries – Palau, Vanuatu, Fiji – are among the world’s 20 most tourism-dependent economies. Nine Pacific countries are more dependent on tourism than New Zealand.
Research by Terence Wood, at the Development Policy Centre of ANU says beyond tourism, most Pacific countries are completely reliant on the global economy.
“The World Bank lacks data on PNG and Fiji, but does reveal that for other Pacific nations shows imports and exports are a major share of GDP than in Australia and NZ. Imports mainly a major share of GDP in most Pacific countries, so slowing trade and disrupting trade routes, will hurt most Pacific economies.”
Wood says community social safety nets will ease some burden like the ability to grow one’s own food. But the ability of urban dwellers to grow food will be limited and they will still need cash to continue buying from local markets. Food takes additional time to grow and urban residents returning to rural homes may also place pressures on available land.”
“The research adds, domestically, lockdown measures, such as those in Tonga and Kiribati will add to economic harm.” he said.
Furthermore, Wood states, “An economic pinch will reduce Pacific governments’ revenues meaning more debt, already a problem in some Pacific countries, or less spending. While debt may rise to a point, spending cuts will obviously affect essential services.