Solomon Islands Economic Update : Harnessing the New Roots of Growth

Overview & Synopsis

Solomon Islands is the third-largest economy among Pacific Island countries, after Papua New Guinea and Fiji, with a gross domestic product of US$1.7 billion in 2025. The economy is recovering from a three-year downturn but remains vulnerable to shocks such as the current energy crisis and the recent Cyclone Maila, with growth estimated at 2.8 percent in 2026. The recovery remains uneven, with poverty and unemployment still elevated, and most people rely on informal work. The political impasse that lasted for about three months in 2026 ended in May with the formation of a new government. Looking ahead, Solomon Islands will need to move beyond a fragile, extractive-led rebound by cultivating new roots of growth in higher-value agriculture, fisheries, tourism, renewable energy, and private sector development. As it approaches its 50th anniversary, Solomon Islands stands at a development crossroads: it can remain in a low-growth equilibrium or it can build on its natural resources, diversify the economy, and harness the potential of its young population. Natural resources remain central to the country’s development prospects, but their contribution depends on whether resource extraction can be converted into fiscal space, productive investment, jobs and diversification. The key policy challenge is to ensure that the transition from logging to mining supports diversification rather than simply replacing one enclave extractive sector with another.