By Pesi Fonua

Tonga's economy and those of its neighbouring Pacific countries grew by less than 2% in 2008, compared to a 5.1 % growth rate of the region combined.

A contrasting image of Pacific Islands' economies was reported in the Pacific Economic Survey 2009, published by AusAID and launched by Bob McMullan, the Australian Parliamentary Secretary for AusAID at the Sixth Conference of the Pacific Community, in Tonga on October 14.

The survey showed that the combined real Gross Domestic Product (GDP) of Pacific Islands countries and Timor-Leste grew by 5.1% during 2008, the highest level of economic growth for the region this decade. But in real terms the high regional economic growth rate applied to only four island countries: Timor-Leste, Papau New Guinea, Solomon Islands and Vanuatu, while the rest of the island countries, including Tonga, grew by less than 2%.

Bob explained that the survey presented evidence-based analysis of the economic situation in the islands as of today, a snap shot of the economy of the region.

He said that the second half of the survey it looked at ways of building Pacific island economies to be resilient when they face shock.

The 2009 Pacific Economic Survey focused on external factors, trade, labour mobility and energy prices, which affect governments endeavours to provide development and prosperity for the region.

Global recession

He said that the current recession shows that the world economies are more interlinked than it had ever been. "The story of the economies of the 21st Century is more interconnectness. There is no country so remote that is not affected by the global financial crisis.

"Economic history tells us that no country succeed in lifting its people out of poverty in no other way than participating in the global economy, there is no history of being successful in isolation."

Bob gave an example of the tragic economic history of Burma. "It started the last century as being the richest country in South East Asia, but it has successfully closed itself off to become the poorest country in South East Asia. It is a good example not to turn inward when times get tough.

"But it is very important that we all resist that temptation, because it is closes the door on the pathway of poverty."

Niche food markets

Bob gave examples of the advantages of having an interconnected economy.

He said that the fuel price spike during the 2008 caused an upward turn in food prices. "The market for meat from Vanuatu and the squash from Tonga, taking advantage of the opportunity of the demand for niche food that are produced in the region, particularly with the demand for food in Asia for food from the region."

On the issue of labour mobility Bob believed that the 21st century would be a century with a great movement of people, and nothing will stop that. "The demand for labour in the developed world outstrips the demand, and the supply of labour in the developing countries has out stripped their demand. The solution is obvious, the people will move to where there is work, and the role of governments is to get the framework right for the mutual advantage to both countries, "one is to facilitate the movement, the other is to focus on skills."

Bob said that the opportunity for the developing world is to develop the skills of its work force, "to give every child an opportunity to get jobs, and participate in the world labour market, and to send back remittances." He said that the Survey is a resource document, "making it available for policy making - to see the opportunity in the problems we face."