Economy of the Solomon Islands
Encyclopedia
A per capita GDP
of $340 ranks Solomon Islands
as a lesser developed nation. Over 75% of its labour 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.
Exploitation of Solomon Islands rich fisheries offers the best prospect for further export and domestic economic expansion. However, a Japan
ese 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.
Tourism, particularly diving, is an important service industry for Solomon Islands. Growth in that industry is hampered, however, by lack of infrastructure
, transportation limitations and security concerns.
Solomon Islands was particularly hard hit by the Asian financial 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.
Since 2000 the Government of Solomon Islands
has become increasingly insolvent. It has exhausted its borrowing capacity; in 2001 the deficit reached 8% of GDP. It is unable to meet bi-weekly payrolls and has become extraordinarily dependent on funds from foreign aid accounts, which provided an estimated 50% of government expenditure in 2001. Principal aid donors are Australia
$247 Million per year (2006), New Zealand
$14 Million per year (2004), the European Union
, Japan
$40 Million per year (2005), and the Republic of China
(Taiwan) At least $20 Million per year .
The Solomon Islands are a member of the WTO.
Economy - overview:
GDP:
purchasing power parity
- $800 million (2002 est.)
GDP - real growth rate:
5.8% (2003 est.)
Foreign Government Aid as a % of GDP:
40.125% (2006 est.)
GDP - per capita:
purchasing power parity - $1,700 (2002 est.)
GDP - composition by sector:
agriculture
:
42%
industry
:
11%
services:
47% (2000 est.)
Including receiving Aid as a sector of GDP:
agriculture: 25%
industry: 6.5%
services: 28% (2000 est.)
receiving aid from other countries: 40.5%
Population below poverty line:
NA%
Household income or consumption by percentage share:
lowest 10%:
NA%
highest 10%:
NA%
Inflation
rate (consumer prices):
10% (1999 est.)
Labor force:
26,842
Labor force - by occupation:
agriculture 75%, industry 5%, services 20% (2000 est.)
Unemployment rate:
NA%
Budget
:
revenues:
$49.7 million
expenditures:
$75.1 million, including capital expenditures of $0 (2003)
Industries:
fish (tuna
), mining, timber
Industrial production growth rate:
NA%
Agriculture - products:
cocoa, bean
s, coconut
s, palm kernels, rice
, potato
es, vegetables, fruit; cattle, pigs; timber; fish
Exports:
$142 million (f.o.b., 1998 est.)
Exports - commodities:
timber, fish, palm oil
, cocoa, copra
Exports - partners:
Japan
50%, Spain
16%, United Kingdom
, Thailand
5% (1996)
Imports:
$160 million (c.i.f., 1998 est.)
Imports - commodities:
plant and equipment, manufactured goods, food and live animals, fuel
Imports - partners:
Australia
42%, Japan
10%, Singapore
9%, New Zealand
8%, United States
5% (1996)
Debt - external:
$135 million (1997)
Economic aid - recipient:
$46.4 million (1995)
Currency
:
1 Solomon Islands dollar (SI$) = 100 cents
Exchange rates:
Solomon Islands dollars (SI$) per US$1 – 5.0745 (January 2000), 4.8381 (1999), 4.8156 (1998), 3.5664 (1997), 3.4059 (1995)
Fiscal year:
calendar year
30 GWh (1998)
Electricity - production by source:
fossil fuel:
100%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption:
28 GWh (1998)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
0 kWh (1998)
) and funded by the Renewable Energy and Energy Efficiency Partnership
(REEEP), have hatched a scheme that enables these communities to access renewable energy, such as solar, without raising substantial sums of ready cash. If the islanders were not able to pay for solar lanterns with cash, reasoned the project developers, they can pay with crops
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
of $340 ranks Solomon Islands
Solomon Islands
Solomon Islands is a sovereign state in Oceania, east of Papua New Guinea, consisting of nearly one thousand islands. It covers a land mass of . The capital, Honiara, is located on the island of Guadalcanal...
as a lesser developed nation. Over 75% of its labour 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
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
and palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
. 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.
Exploitation of Solomon Islands rich fisheries offers the best prospect for further export and domestic economic expansion. However, a Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
ese joint venture, Solomon Taiyo Ltd., which operated the only fish cannery in the country
Country
A country is a region legally identified as a distinct entity in political geography. A country may be an independent sovereign state or one that is occupied by another state, as a non-sovereign or formerly sovereign political division, or a geographic region associated with a previously...
, 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.
Tourism, particularly diving, is an important service industry for Solomon Islands. Growth in that industry is hampered, however, by lack of infrastructure
Infrastructure
Infrastructure is basic physical and organizational structures needed for the operation of a society or enterprise, or the services and facilities necessary for an economy to function...
, transportation limitations and security concerns.
Solomon Islands was particularly hard hit by the Asian financial crisis even before the ethnic violence of June 2000. The Asian Development Bank
Asian Development Bank
The Asian Development Bank is a regional development bank established on 22 August 1966 to facilitate economic development of countries in Asia...
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.
Since 2000 the Government of Solomon Islands
Politics of the Solomon Islands
Politics of Solomon Islands takes place in a framework of a parliamentary representative democratic monarchy within the Commonwealth, whereby the Prime Minister is the head of government, and of a multi-party system. Solomon Islands is an independent country and Commonwealth Realm. Executive...
has become increasingly insolvent. It has exhausted its borrowing capacity; in 2001 the deficit reached 8% of GDP. It is unable to meet bi-weekly payrolls and has become extraordinarily dependent on funds from foreign aid accounts, which provided an estimated 50% of government expenditure in 2001. Principal aid donors are Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
$247 Million per year (2006), New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
$14 Million per year (2004), the European Union
European Union
The European Union is an economic and political union of 27 independent member states which are located primarily in Europe. The EU traces its origins from the European Coal and Steel Community and the European Economic Community , formed by six countries in 1958...
, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
$40 Million per year (2005), and the Republic of China
Republic of China
The Republic of China , commonly known as Taiwan , is a unitary sovereign state located in East Asia. Originally based in mainland China, the Republic of China currently governs the island of Taiwan , which forms over 99% of its current territory, as well as Penghu, Kinmen, Matsu and other minor...
(Taiwan) At least $20 Million per year .
The Solomon Islands are a member of the WTO.
Economy - overview:
GDP:
purchasing power parity
Purchasing power parity
In economics, purchasing power parity is a condition between countries where an amount of money has the same purchasing power in different countries. The prices of the goods between the countries would only reflect the exchange rates...
- $800 million (2002 est.)
GDP - real growth rate:
5.8% (2003 est.)
Foreign Government Aid as a % of GDP:
40.125% (2006 est.)
GDP - per capita:
purchasing power parity - $1,700 (2002 est.)
GDP - composition by sector:
agriculture
Agriculture
Agriculture is the cultivation of animals, plants, fungi and other life forms for food, fiber, and other products used to sustain life. Agriculture was the key implement in the rise of sedentary human civilization, whereby farming of domesticated species created food surpluses that nurtured the...
:
42%
industry
Industry
Industry refers to the production of an economic good or service within an economy.-Industrial sectors:There are four key industrial economic sectors: the primary sector, largely raw material extraction industries such as mining and farming; the secondary sector, involving refining, construction,...
:
11%
services:
47% (2000 est.)
Including receiving Aid as a sector of GDP:
agriculture: 25%
industry: 6.5%
services: 28% (2000 est.)
receiving aid from other countries: 40.5%
Population below poverty line:
NA%
Household income or consumption by percentage share:
lowest 10%:
NA%
highest 10%:
NA%
Inflation
Inflation
In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a...
rate (consumer prices):
10% (1999 est.)
Labor force:
26,842
Labor force - by occupation:
agriculture 75%, industry 5%, services 20% (2000 est.)
Unemployment rate:
NA%
Budget
Budget
A budget is a financial plan and a list of all planned expenses and revenues. It is a plan for saving, borrowing and spending. A budget is an important concept in microeconomics, which uses a budget line to illustrate the trade-offs between two or more goods...
:
revenues:
$49.7 million
expenditures:
$75.1 million, including capital expenditures of $0 (2003)
Industries:
fish (tuna
Tuna
Tuna is a salt water fish from the family Scombridae, mostly in the genus Thunnus. Tuna are fast swimmers, and some species are capable of speeds of . Unlike most fish, which have white flesh, the muscle tissue of tuna ranges from pink to dark red. The red coloration derives from myoglobin, an...
), mining, timber
Industrial production growth rate:
NA%
Agriculture - products:
cocoa, bean
Bean
Bean is a common name for large plant seeds of several genera of the family Fabaceae used for human food or animal feed....
s, coconut
Coconut
The coconut palm, Cocos nucifera, is a member of the family Arecaceae . It is the only accepted species in the genus Cocos. The term coconut can refer to the entire coconut palm, the seed, or the fruit, which is not a botanical nut. The spelling cocoanut is an old-fashioned form of the word...
s, palm kernels, rice
Rice
Rice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
, potato
Potato
The potato is a starchy, tuberous crop from the perennial Solanum tuberosum of the Solanaceae family . The word potato may refer to the plant itself as well as the edible tuber. In the region of the Andes, there are some other closely related cultivated potato species...
es, vegetables, fruit; cattle, pigs; timber; fish
Exports:
$142 million (f.o.b., 1998 est.)
Exports - commodities:
timber, fish, palm oil
Palm oil
Palm oil, coconut oil and palm kernel oil are edible plant oils derived from the fruits of palm trees. Palm oil is extracted from the pulp of the fruit of the oil palm Elaeis guineensis; palm kernel oil is derived from the kernel of the oil palm and coconut oil is derived from the kernel of the...
, cocoa, copra
Copra
Copra is the dried meat, or kernel, of the coconut. Coconut oil extracted from it has made copra an important agricultural commodity for many coconut-producing countries. It also yields coconut cake which is mainly used as feed for livestock.-Production:...
Exports - partners:
Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
50%, Spain
Spain
Spain , officially the Kingdom of Spain languages]] under the European Charter for Regional or Minority Languages. In each of these, Spain's official name is as follows:;;;;;;), is a country and member state of the European Union located in southwestern Europe on the Iberian Peninsula...
16%, United Kingdom
United Kingdom
The United Kingdom of Great Britain and Northern IrelandIn the United Kingdom and Dependencies, other languages have been officially recognised as legitimate autochthonous languages under the European Charter for Regional or Minority Languages...
, Thailand
Thailand
Thailand , officially the Kingdom of Thailand , formerly known as Siam , is a country located at the centre of the Indochina peninsula and Southeast Asia. It is bordered to the north by Burma and Laos, to the east by Laos and Cambodia, to the south by the Gulf of Thailand and Malaysia, and to the...
5% (1996)
Imports:
$160 million (c.i.f., 1998 est.)
Imports - commodities:
plant and equipment, manufactured goods, food and live animals, fuel
Imports - partners:
Australia
Australia
Australia , officially the Commonwealth of Australia, is a country in the Southern Hemisphere comprising the mainland of the Australian continent, the island of Tasmania, and numerous smaller islands in the Indian and Pacific Oceans. It is the world's sixth-largest country by total area...
42%, Japan
Japan
Japan is an island nation in East Asia. Located in the Pacific Ocean, it lies to the east of the Sea of Japan, China, North Korea, South Korea and Russia, stretching from the Sea of Okhotsk in the north to the East China Sea and Taiwan in the south...
10%, Singapore
Singapore
Singapore , officially the Republic of Singapore, is a Southeast Asian city-state off the southern tip of the Malay Peninsula, north of the equator. An island country made up of 63 islands, it is separated from Malaysia by the Straits of Johor to its north and from Indonesia's Riau Islands by the...
9%, New Zealand
New Zealand
New Zealand is an island country in the south-western Pacific Ocean comprising two main landmasses and numerous smaller islands. The country is situated some east of Australia across the Tasman Sea, and roughly south of the Pacific island nations of New Caledonia, Fiji, and Tonga...
8%, United States
United States
The United States of America is a federal constitutional republic comprising fifty states and a federal district...
5% (1996)
Debt - external:
$135 million (1997)
Economic aid - recipient:
$46.4 million (1995)
Currency
Currency
In economics, currency refers to a generally accepted medium of exchange. These are usually the coins and banknotes of a particular government, which comprise the physical aspects of a nation's money supply...
:
1 Solomon Islands dollar (SI$) = 100 cents
Exchange rates:
Solomon Islands dollars (SI$) per US$1 – 5.0745 (January 2000), 4.8381 (1999), 4.8156 (1998), 3.5664 (1997), 3.4059 (1995)
Fiscal year:
calendar year
Energy
Electricity - production:30 GWh (1998)
Electricity - production by source:
fossil fuel:
100%
hydro:
0%
nuclear:
0%
other:
0% (1998)
Electricity - consumption:
28 GWh (1998)
Electricity - exports:
0 kWh (1998)
Electricity - imports:
0 kWh (1998)
Renewable energy
A team of renewable energy developers working for the Pacific Islands Applied Geoscience Commission (SOPACSOPAC
SOPAC has the following meanings:*The Southern Pacific Railroad *The South Pacific Applied Geoscience Commission*Social OnLine Public Access Catalog*South Orange Performing Arts Center*Sydney Olympic Park Aquatic Centre...
) and funded by the Renewable Energy and Energy Efficiency Partnership
Renewable Energy and Energy Efficiency Partnership
The Renewable Energy and Energy Efficiency Partnership is a Vienna-based non-profit organisation that aims to accelerate the marketplace for renewable energy and energy efficiency with a particular emphasis on the emerging markets and developing countries.The organisation funds small-to-medium...
(REEEP), have hatched a scheme that enables these communities to access renewable energy, such as solar, without raising substantial sums of ready cash. If the islanders were not able to pay for solar lanterns with cash, reasoned the project developers, they can pay with crops