Islands Business - Economic downturn hits Pacific hard: McCully

AUCKLAND, NZ ----- The economic downturn has hit Pacific Island nations particularly hard because many were already dealing with challenges, New Zealand foreign minister Murray McCully says, reports National Business Review.

The recession has reduced the value of exports, trust funds and investment, caused tourism to fall, unemployment to increase and remittances sent home to drop.

“Those countries most at risk from the current economic climate are those that were already facing many countries in the Pacific,” Mr McCully said.

In his speech to the Pacific Wave Conference in Auckland yesterday he said Cabinet had approved a new mandate for NZ Aid -- which was recently reintegrated with the Ministry of Foreign Affairs and Trade (MFAT) -- to focus it on sustainable economic development.

The budget allowed for an increase of funding, from $472 million (US$300 million) to $500million (US$318 million) next year and $525 million (US$333 million), $550 (US$349 million) and $600million (US$381.5 million) in the following three years, Mr McCully said.

“The Government's expectation (is) that we will see the new mandate, reinforced by additional funding, translated into a more focused, more innovative, more successful, development programme in the Pacific.”

He said the Government would be looking for “significantly enhanced bang for its buck”.

Transport infrastructure, energy, fisheries and the environment where key aid areas, but trade remained the “key driver” for economic development in the Pacific, Mr McCully said.

New Zealand's exports to most countries in the region remain much higher than imports.

“Measurable increases in imports from the Pacific will be an important gauge of the effectiveness of New Zealand's efforts to promote sustainable economic development in the region.”

An Australia-New Zealand study on the implications of the recession on the Pacific is under way and expected to be completed before the Pacific Islands Forum in Cairns in August.