World Bank Says Pacific Growth Projected to Slow to 2.8 Percent

(MENAFN) Economic growth across the Pacific region is set to decelerate to 2.8 percent in 2026, the World Bank Group cautioned in its latest Pacific Economic Update, as fuel costs, freight pressures, and deepening global uncertainty continue to bear down on some of the world's most exposed economies.

The report identifies a convergence of headwinds — escalating fuel and shipping expenses, persistent supply chain fractures, and renewed turbulence in the global economic environment — as the primary forces dragging on regional momentum, a broadcasting agency reported Tuesday.

In one of its starkest assessments, the World Bank warned that repeated external shocks are cementing themselves as the "new normal" across the Pacific, heaping compounding pressure on governments, the private sector, and ordinary households alike.

The region's structural dependence on imported oil amplifies that vulnerability considerably. In many Pacific nations, oil imports represent between 15 and 25 percent of total merchandise imports — leaving their economies acutely sensitive to any sustained spike in global fuel prices. The World Bank cautioned that if disruptions in fuel and shipping markets persist, economic growth could be further eroded over the next six to nine months.

Fiscal resilience is also deteriorating. The report flags mounting concern over the erosion of government financial buffers, as successive waves of external shocks continue to drain public resources and narrow the room for policy manoeuvre.

In response, the World Bank is urging Pacific governments to sharpen public financial management practices and direct relief measures toward the most vulnerable segments of the population. It also issued a pointed warning against broad-based subsidies, cautioning that such instruments risk placing unsustainable additional demands on already constrained fiscal space.

MENAFN12052026000045017169ID1111103126