The economic performance of several Pacific countries is improving, but greater reforms are needed if they are to reach their full potential, according to Pacific Economic Survey 2008.

The report, released yesterday by the Australian Government, estimates that the region's combined GDP is projected to grow by 4.5 per cent in 2008, up from an average of 2.8 per cent between 2005 and 2007.

"These figures are encouraging," said Australia's Parliamentary Secretary for Pacific Island Affairs, Duncan Kerr who is launching the Survey yesterday in Port Vila, Vanuatu.

"Although some countries are performing better than others, it is particularly striking that Papua New Guinea, Vanuatu and Solomon Islands - which comprise more than 70 per cent of the Pacific's population - are now growing at about six per cent. If these levels of growth can be sustained they have a real chance to alleviate poverty."

Pacific Economic Survey 2008 credits the commodities boom for economic growth in Papua New Guinea and Timor-Leste and increased tourism for growth in Vanuatu, Samoa and Palau.

The rebounding Solomon Islands economy is more precarious, being driven in large part by substantial aid flows and unsustainable logging, while the economies of Fiji and Tonga have contracted as a result of political instability.

The smaller Pacific economies continue to rely on aid, remittances and fishing.

Australia's Parliamentary Secretary for International Development Assistance, Bob McMullan, also attending the launch, said responsible fiscal policies had reduced deficits and along with sound monetary policies had kept inflation low in most countries.

"While economic growth is occurring, we must not forget that the Pacific and Timor-Leste still have high levels of poverty and not one country is on track to meet the Millennium Development Goals.

"Poverty in the Pacific is partly the result of its remoteness and populations that are generally small. Yet as the case studies in the Survey indicate, the introduction of competition and creative government policies in the telecommunications, aviation and shipping sectors can make it easier and cheaper to reach the Pacific and create more opportunities for trade and business.

"Economic growth has been slow in the Pacific. Without faster growth and better connectivity the Pacific will be unable to halt rising poverty, create jobs and meet the aspirations of communities, especially youth. Pacific Economic Survey 2008 suggests that faster growth is possible and is starting to be seen in some countries which is good news," said Mr McMullan.

Pacific Economic Survey 2008 was launched on Monday March 31 at 10 a.m. AEST.