Economic growth in the Pacific is projected to moderate to 3.4 percent in 2026 and 3.2 percent in 2027, according to the Asian Development Outlook (ADO) April 2026, ADB’s flagship economic publication.
“There is an unprecedented need for the Pacific to build resilience against the economic impacts of the Middle East conflict,” said ADB Director General for the Pacific Emma Veve.
“Higher oil prices, prolonged international commodity price spikes, and trade uncertainty in particular will weigh on subregional growth momentum.”
The ADO’s regional forecasts are informed by assumptions finalised on 10 March under exceptionally high uncertainty, envisaging an early stabilisation scenario for the conflict in the Middle East. Evidence since then points to a higher likelihood of more persistent disruptions.
ADO April 2026 includes a section that assesses the impact of the conflict on economies in the region under alternative scenarios. The adverse effects of the current Middle East crisis on both growth and inflation are likely to intensify if the duration and severity of the conflict increase.
The ADB report projects inflation in the Pacific to pick up to 4.2 percent in 2026 then moderate to 3.5 percent in 2027. Growth in Papua New Guinea (PNG), the subregion’s largest economy, is forecast to ease to 3.6 percent in 2026 and 3.4 percent in 2027 dictated by mixed performances across the resource and non‑resource sectors.
Mining is likely to remain a key growth driver in both 2026 and 2027, with higher production anticipated at Porgera and Lihir. Structural challenges—particularly power shortages, security, efficiency of public capital spending, and skilled human resources—continue to weigh on the outlook, amplified by inflationary pressures from the conflict in the Middle East.
In Fiji, the subregion’s second-largest economy, growth is projected to moderate from 3.0 percent in 2025 to 2.9 percent in 2026 and further to 2.7 percent in 2027 as visitor arrivals slow and investors exercise caution ahead of the general elections. Non-communicable diseases continue to strain Fiji’s health system and threaten productivity. Increased health investment and reform, especially in primary care, are needed to strengthen longterm health outcomes and system resilience.
The ADO April 2026 projects growth in Solomon Islands to moderate to 3.0 percent in 2026 from 3.6 percent in 2025 as mining eases, while higher oil prices associated with the Middle East conflict are likely to dampen economic activity and put upward pressure on inflation.
Growth in Vanuatu is projected to increase to 4.7 percent in 2026 before moderating to 3.9 percent in 2027. Continued post-earthquake reconstruction of public infrastructure and private assets, together with the public investment program, is expected to sustain construction and related services.
In the Central Pacific, growth is expected to ease in Kiribati (to 3.1 percent in 2026 and further to 2.6 percent in 2027) and in Tuvalu (to 2.5 percent in 2026 and 2.4 percent in 2027) as the pace of fiscal expansion slows. Growth in Nauru is projected to remain stable at 2.5 percent in both 2026 and 2027, supported by development partner assistance.
Growth in North Pacific economies of the Marshall Islands and Palau is projected to follow divergent paths, while economic growth in the Federated States of Micronesia (FSM) is expected to remain stable. In the Marshall Islands, growth is projected to increase to 3.7 percent in 2026 from 3.0 percent in 2025, before moderating to 2.8 percent in 2027. In the FSM growth is forecast to remain at 1.0 percent in both 2026 and 2027, while in Palau growth is expected to decelerate to 6.0 percent in 2026 and further to 3.7 percent in 2027.
Across the South Pacific economies of the Cook Islands, Niue, Samoa, and Tonga, growth is moderating as tourism normalises and major projects wind down. Inflation has generally eased but remains vulnerable to external shocks, particularly those affecting energy and import prices.
Growth is projected to moderate to 2.7 percent in 2026 and rise to 3.0 percent in 2027 in the Cook Islands, and to 3.2 percent in 2026 and 3.0 percent in 2027 in Samoa.
Meanwhile, growth is expected to remain stable at 2.5 percent in both 2026 and 2027 in Niue, and at 2.3 percent over the same period in Tonga.
