Global financial crisis and economic downturn : challenges and opportunities for the small island countries in the Pacific

Abstract

The American financial crisis, which began in late 2007 and spread to the rest of the world, did not spare the remote, small islands in the Pacific. With the decline in economic activities in the advanced countries, the American

financial crisis soon became a global economic crisis, triggering a world- wide recession since then. Following the onset of global recession, Pacific

island counties have been experiencing the impact in varying degrees. The global crisis has posed challenges with both short- and long-term implications. While the short-term challenges are thought to be dealt with by fiscal and monetary policies, which have only a limited scope, the long-run challenges can be looked upon as opportunities for renewing efforts towards sustained growth as well as minimizing the impacts of similar future uncertainties. This paper, which deals with six major countries in the South Pacific region, namely Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu, seeks to examine policy options, including regional economic integration.