Solomon Islands economy is reportedly recovering well after a severe drop back in early 2000 following the impact of the ethnic crisis in 1999. In 2007, GDP growth rate rebounded to 10% making it one of the highest in the Pacific Islands region. Much of this growth was attributable to improved export sector mainly from logging and agricultural commodity receipts, increase private sector investment, strong fiscal management, presence of RAMSI and the continuous support from development partners.
Solomon Islands economic base is quite limited to certain sectors and production is heavily derived from natural resources. Being rich in natural resources, Solomon Islands produce Gold, old palm, cocoa and copra, canned tuna, fish and frozen tuna, timber and logs and host untapped resources including nickel, bauxite and the natural environment. More than 60% of total productions are exported with timber and logging as the leading commodities. Oil palm and gold are considered to be the next major exports for 2009 and beyond.
Solomon Islands export totaled to more than US150 million in 2007 with import valued at around US$200 million in the same year. Most traded goods were derived from forestry, agriculture and fisheries products with bulk of export going to Asian countries. Import of machineries, fuel and food top the external expenditure list with major imports coming from also Asian countries. Australia is the single largest export partner while China is listed as the major import country.
With the current turbulences in the world economy and strong pressure to reduce logging activities, a forecasted growth of 6% is expected for 2008 and 5% for 2009. Despite the favorable economic outlook, numerous challenges still exist. The economy relies heavily on unsustainable logging as a single main contributor to export receipt, subsistence economy still a major attachment to GDP and export is more agriculture based driven. Manufacturing or value added productions are very minimal making Solomon Islands a primary based economy. Though export records are improving, the balance of payment remains deficit and with huge external public debt, prudent fiscal management plays a major role for future favorable economic outlook.