ECONOMY
Its per capita GDP of $474 ranks Solomon Islands as a lesser developed nation, and more than 75% of its labor force is engaged in subsistence farming and fishing. Until 1998, when world prices for tropical timber fell steeply, timber was Solomon Islands main export product, and, in recent years, Solomon Islands forests were dangerously overexploited. Other important cash crops and exports include copra and palm oil. In 1998 Ross Mining of Australia began producing gold at Gold Ridge on Guadalcanal. Minerals exploration in other areas continued. However in the wake of the ethnic violence in June 2000, exports of palm oil and gold ceased while exports of timber fell. Exports are just now beginning to recover.
Exploitation of Solomon Islands' rich fisheries offers the best prospect for further export and domestic economic expansion. However, a Japanese joint venture, Solomon Taiyo Ltd., which operated the only fish cannery in the country, closed in mid-2000 as a result of the ethnic disturbances. Though the plant has reopened under local management, the export of tuna has not resumed. Negotiations are underway which may lead to the eventual reopening of the Gold Ridge mine and the major oil-palm plantation.
Tourism,
particularly diving, is an important service industry for Solomon
Islands. Growth in that industry is hampered, however, by lack
of infrastructure and transportation limitations.
Solomon
Islands was particularly hard hit by the Asian economic crisis
even before the ethnic violence of June 2000. The Asian Development
Bank estimates that the crash of the market for tropical timber
reduced Solomon Island's GDP by between 15%-25%. About one-half
of all jobs in the timber industry were lost. The government has
said it will reform timber harvesting policies with the aim of
resuming logging on a more sustainable basis.
The Solomon
Islands government was insolvent by 2002. Since the RAMSI intervention
in 2003, the government has recast its budget, taken a hard look
at priorities, and is now seeking to address the overhanging debt
burden. Much work remains to be done.
Principal
aid donors are Australia, New Zealand, the European Union, Japan,
and the Republic of China.
Economy
GDP (2005): $262 million.
Annual growth rate (2005): 4.7%.
Per capita income (2005): $474.
Avg. inflation rate (2005): 7.4%.
Natural resources: Forests, fish, agricultural land, marine products, gold.
Agriculture: Products--copra, cocoa, palm oil, palm kernels and subsistence crops of yams, taro, bananas, pineapple.
Industry: Types--fish canning, sawmilling, boats, rattan and wood furniture, fiberglass products, shell jewelry, tobacco, beer, clothing, soap, nails, handicrafts.
Trade (2004): Exports--$95.8 million: timber, fish, cocoa, copra, palm oil. Major markets--China 28.2%, South Korea 15.7%, Thailand 15.7%, Japan 9.7%, Philippines 5.1%, Vietnam 3.1%. Imports--$84 million: mineral fuels, food, machinery & transport equipment, and basic manufactures. Major suppliers--Australia 25.3%, Singapore 23.8%, New Zealand 5.3%, India 4.8%, Japan 3.9%.
Exchange rate (2005 average): Solomon Islands $1=about U.S.$0.13.
