Solomon Islands Economy  

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SOLOMON ISLANDS
GDP (2008): $1,078 million.
Annual growth rate 7.35
Per capita income (2008): $1,900.
Avg. inflation rate (2007): 6.3%.

Budget: Income .............. $49.7 million
Expenditure ... $75.1million

Main Crops:
Cocoa, beans, coconuts, palm kernels, rice, potatoes, vegetables, fruit; cattle, pigs; timber; fish .

Natural Resources:
Fish, forests, gold, bauxite, phosphates, lead, zinc, nickel.

Major Industries:
Copra, fish.

NATIONAL GNP
Its per capita GDP of $340 ranks Solomon Islands as a lesser developed nation, and more than 75% of its labor force is engaged in subsistence farming and fishing. Until 1998, when world prices for tropical timber fell steeply, timber was Solomon Islands main export product, and, in recent years, Solomon Islands forests were dangerously overexploited. Other important cash crops and exports include copra and palm oil. In 1998 Ross Mining of Australia began producing gold at Gold Ridge on Guadalcanal. Minerals exploration in other areas continued. However in the wake of the ethnic violence in June 2000, exports of palm oil and gold ceased while exports of timber fell.

Exploitation of Solomon Islands' rich fisheries offers the best prospect for further export and domestic economic expansion. However, a Japanese joint venture, Solomon Taiyo Ltd., which operated the only fish cannery in the country, closed in mid-2000 as a result of the ethnic disturbances. Though the plant has reopened under local management, the export of tuna has not resumed. Negotiations are underway which may lead to the eventual reopening of the Gold Ridge mine and the major oil-palm plantation, but each would take years.

Tourism, particularly diving, is an important service industry for Solomon Islands. Growth in that industry is hampered, however, by lack of infrastructure and transportation limitations.

Solomon Islands was particularly hard hit by the Asian economic crisis even before the ethnic violence of June 2000. The Asian Development Bank estimates that the crash of the market for tropical timber reduced Solomon Island's GDP by between 15%-25%. About one-half of all jobs in the timber industry were lost. The government has said it will reform timber harvesting policies with the aim of resuming logging on a more sustainable basis.

The Solomon Islands government was insolvent by 2002. Since the RAMSI intervention in 2003, the government has recast its budget, taken a hard look at priorities, and is now seeking to address the overhanging debt burden. Much work remains to be done.

Principal aid donors are Australia, New Zealand, the European Union, Japan, and the Republic of China.