Economics & Development

Growth in the South Pacific has been supported by remittances, tourism, and government spending, including on reconstruction following the December 2024 earthquake in Vanuatu. Higher fuel prices will begin to strain household budgets and dampen tourism inflows in FY26. Raising growth and employment over the medium term will require boosting the quality and sustainability of public spending, increasing labor force participation, and improving the business environment.

FSM, RMI, and Palau enter FY26 with positive but uneven momentum. FSM grew 1.1 percent in FY25, constrained by weak private investment and delivery bottlenecks; near-term prospects hinge on resolving both. RMI expanded by 2.5 percent, and moderating to 2.0 percent in FY26 on fisheries and Compact spending. Palau's growth is expected to moderate from 6.7 percent to 3.0 percent as tourism normalizes. Poverty is declining, but energy costs pose a headwind.

Growth is expected to contract by 2.0 percent in FY2025/26, despite modest signs of recovery. Inflation moderated to 18.8 percent in December 2025, while the current account improved mainly on import compression and remittances. Conflicts in the Middle East could raise energy costs, adding to inflation and external pressures. Growth is forecast at 2 percent in FY2026/27, constrained by conflicts in the Middle East and domestic structural issues.

This statement, delivered by Antonio Guterres, Secretary‑General of the United Nations, to the 113th Meeting of the Development Committee on April 16, 2026, addresses the severe risks confronting global development amid escalating conflict in the Middle East and its far‑reaching economic and human consequences. It underscores that the current military escalation constitutes not only an energy shock but a multidimensional crisis for developing countries, amplifying poverty, food insecurity, health challenges, and job losses while exacerbating already constrained fiscal and policy space. Rising energy and food prices disproportionately affect poor and vulnerable households, triggering coping strategies that undermine long‑term human development and deepen inequality. The statement highlights stark warnings from UN agencies regarding sharp increases in food insecurity and poverty if hostilities persist, and stresses the urgency of preventing irreversible development reversals. It strongly supports the World Bank’s focus on creating more and better‑paid jobs, complementing UN initiatives such as the Global Accelerator on Jobs and Social Protection for Just Transitions. At the same time, it calls for urgent reform of the international financial architecture to deliver faster, fairer debt resolution, scaled‑up affordable development finance, and stronger resilience to external shocks. The statement urges immediate action: adherence to ceasefire commitments, protection of vulnerable populations through social protection, rapid deployment of multilateral crisis instruments, and decisive implementation of agreed reforms, reaffirming the UN’s readiness to work with the World Bank Group and partners to protect people, safeguard development, and restore progress toward the Sustainable Development Goals.

This statement, delivered by Baroness Chapman, Minister for Development and Africa, and Rachel Reeves MP, Chancellor of the Exchequer of the United Kingdom, to the 113th Meeting of the Development Committee on April 16, 2026, sets out the UK’s priorities for strengthening multilateral action in an era of heightened geopolitical instability, climate risk, economic uncertainty, and widening development challenges. It underscores the central role of the World Bank Group and the International Monetary Fund in delivering coordinated responses to crises, supporting resilience, and protecting development gains, particularly in countries most exposed to shocks. The statement emphasizes the need for a faster, more flexible, and shock‑responsive global financial system, including expanded use of pre‑arranged financing, crisis tools, and insurance mechanisms, to mitigate the human and fiscal costs of crises. It calls for a step change in mobilizing private capital at scale through deeper One‑WBG integration, expanded guarantees, securitisation platforms, and upstream project development. The United Kingdom reaffirms strong support for IDA21, debt sustainability reforms, capital adequacy and balance‑sheet reforms across MDBs, and greater system‑wide coherence to reduce fragmentation. The statement also highlights UK priorities on climate, nature, fragility and conflict, forced displacement, women’s and girls’ empowerment, governance, accountability, and illicit finance, while reaffirming commitment to IMF reform, enhanced surveillance, and crisis prevention. Overall, it calls for ambitious, coordinated, and results‑driven multilateralism to deliver inclusive growth, resilience, and sustainable development.

Jordan’s economy continued to expand in 2025, supported by stable macroeconomic conditions and reforms. Inflation declined, while external balances improved. Fiscal consolidation continued, although public debt remains high. The outlook is subject to heightened uncertainty amid the ongoing conflict in the Middle East. Growth is projected to gradually strengthen to around 3 percent over the medium term, supported by reforms and stronger private-sector dynamism.

Eighteen months after the revival of economic reforms, macroeconomic conditions are improving. In the first half of FY26, exports and revenues were robust, inflation continued easing, reserves increased, and poverty began to decline. Continued foreign exchange (FX) market distortions, and the Middle East conflict, are risks to these gains. Whether reforms deliver tangible gains for people will depend on sustaining momentum over the medium term.

Growth slowed to 2 percent in 2025 amid internal and external pressures. It is projected to recover to 2.7 percent in 2026, as consumption and investment rebound gradually although external uncertainty persists, including due to the conflict in the Middle East. The incidence of poverty remained broadly flat at 7.8 percent in 2025 and is projected to continue falling, albeit at slower rate, as the remaining poor are often characterized by chronic unemployment.

Russia's economy slowed sharply in 2025, with GDP growth falling to 1 percent from 4.9 percent in 2024, as fiscal stimulus faded and tight monetary conditions weighed on consumption and investment. Inflation moderated in line with cooling demand. The fiscal deficit widened and external surplus narrowed amid falling oil revenues. Growth is projected to remain anemic in the medium term, hovering around 0.7 percent.

Oil production ended in 2025, shifting Timor-Leste into a post-oil phase in which large fiscal deficits are financed primarily by Petroleum Fund drawdowns, accelerating depletion risks. Growth reached 4.5 percent in 2025 on high public spending and a rebound in tourism and is projected to average about 4 percent in 2026–28. ASEAN and WTO membership provide reform anchors, but the payoff hinges on reform implementation and a credible path towards fiscal sustainability.

Grenada’s economic growth has remained robust, driven by tourism and construction sectors. Despite the post-Beryl reconstruction, the country is expected to continue its downward debt trajectory due to strong revenues and effective disaster risk management. Returning to fiscal rules after 2027 and implementing institutional reforms will be critical for Grenada to sustain growth and make continued progress in poverty reduction.