The Russian invasion of Ukraine have “relatively little direct impact” on the Pacific countries, according to the latest Asian Development Bank (ADB)’s latest Pacific Economic Report. However, Pacific is also affected by surging inflation which had indirect impacts through commodity prices increase.
“Given limited economic linkages with both countries and the wider European region. However, indirect impacts—through commodity prices, global growth prospects affecting major economic partners, and exchange rate movements—are seen to be more significant.”
It said the invasion impacts commodity price shocks. For most Pacific DMCs, fuel represents a large share of total imports, although these come mostly from Asia, Australia, New Zealand, and the US.
Pacific imports a substantial amount of fuel, ranging from 6.7% in the Marshall Islands, 13.0% in Kiribati, 14.4% in the Cook Islands, 14.6% in Samoa, 20.0 % in Tuvalu, 22.0% in Fiji, and 58.2% in Nauru.
“Given the Pacific’s import dependence and extreme remoteness, relative to even its small island developing states peers in the Caribbean, international fuel price shocks generally translate into compounding impacts across most commodities. “
The Pacific is also affected by surging inflation.
“Although some controls have been set to mitigate impacts on consumers, there are already indications of significant price increases in staple food items, e.g., eggs, fish, and canned goods, in the Pacific,” the report said.