Political upheavals bad news for Pacific economies - UN

Political instability, poor governance and corruption are contributing to the poor economic performances of developing Pacific island countries, according to a United Nations report.

A report by the UN's Economic and Social Commission for Asia and the Pacific said the slow economic growth in smaller Pacific countries was mainly due to the absence of an investor-friendly environment.

"Political instability and poor governance are major contributors to the poor climate for investment, as are corruption and law and order problems."

The commission's executive secretary, Kim Hak Su, said economic growth in the Pacific had been averaging less than 5 per cent.

The report identified insufficient attention to rural development as continuing to undermine the reduction of poverty in the sub-region comprising of Papua New Guinea, Solomon Islands, Vanuatu, Fiji, Samoa, the Cook Islands and Tonga.

Policies to ensure sustainable development and prevent the over-exploitation of natural resources were urgently needed, the report said.

GDP growth continued at a modest pace in the sub-region, with higher prices for commodity exports including oil in the case of Papua New Guinea and increased tourism supporting positive growth.

In some cases improved economic management had resulted in reduced budget deficits and lower public debt with improved inflation performance. But a continued rise in oil prices this year could jeopardise progress.

"The outlook for 2005 is for a slow-down in economic growth as commodity prices decline, but for a slight pick-up in inflation."

The report said the rapid ageing of the populations in developing countries across the Asia-Pacific region and the rising share of women in the older age groups posed increasing challenges for governments.