Solomon Islands is likely to fetch lower prices in the world market for its major exports.
This was said in Parliament this week by the Finance Minister Snyder Rini when he introduced the CNURA Government's second national budget.Speaking on the global financial crisis, he said that the IMF has predicted a sharp downturn in world economic growth and key countries such as the United States, Japan, and the European countries are predicted to experience negative growth in 2009.
Mr. Rini said that while the financial system in Solomon Islands remains strong, we are not immune to the negative impacts of the world wide turmoil.
He said that the crisis has provoked falls in prices of Solomon Islands' major exports. Copra, fish, palm oil and cocoa are expected to fetch lower prices in 2009.
The Finance Minister said that this will in tern harm export receipts and potentially slow down economic growth.
As the single largest importer of Solomon Islands exports, any harm the crisis inflicts on China will have serious repercussions on the Solomon Islands Economy.
"A fall in demand for our logs from China could reduce growth, employment, government revenues and a serious worsening of the trade deficit.
On the other hand he said there is a positive outcome of the global crisis, and that is the fall in world fuel and food prices.
Mr. Rini said that the reduction in the global prices of fuel is slowly filtering into Solomon Islands and is already benefiting consumers.
However, the Finance Minister said that it was unfortunate that falls in world rice prices are not being matched by similar reduction in prices in the country.
Source: National Express