Pacific ministers confront ‘triple shock’ as global tensions threaten region

Pacific finance ministers are gathering in the Republic of the Marshall Islands this week as global instability fuels what leaders describe as a “triple shock” of fuel insecurity, rising import costs and food vulnerability across the region.

The Forum Economic Ministers Meeting (FEMM) in Majuro comes as Pacific leaders assess how escalating tensions in the Middle East could affect inflation and economic stability in island nations heavily reliant on imported goods and energy.

According to the World Bank’s latest Pacific Economic Update, regional growth is forecast to average 2.8 per cent in 2026, down from 3.2 per cent.

Higher fuel and freight costs are adding pressure on household budgets, businesses and governments across the Pacific, with prices rising in several countries.

In Tonga, fuel costs have increased for a third consecutive month, according to the Tonga Competent Authority.

Diesel has climbed above NZ$3.60 per litre in Tongatapu, while prices in the outer island of Niuafo’ou have reached about NZ$4.40 per litre.

Trainees from Fiji, Tuvalu and Vanuatu learn to install and maintain solar panels. Photo/350 Pacific

In Fiji, diesel prices have risen by 114 per cent in the three months to June, according to the Fiji Competition and Consumer Commission.

Prime Minister Sitiveni Rabuka has urged people to conserve fuel and electricity and consider solar lighting to ease demand.

Pacific families are being hit far harder than in New Zealand, according to ChildFund New Zealand analysis.

Fuel shortages in Tonga have created long queues and price hikes at local gas stations. Photo/PMN News

The organisation says higher fuel costs are driving up food, transport and basic goods, cutting household purchasing power by up to 12 per cent, compared with one to two per cent in Aotearoa.

Josie Pagani, ChildFund New Zealand chief executive, says the impact goes beyond fuel prices.

“Fuel is a base cost. When it rises, everything rises with it,” she says in a statement. “In New Zealand, families feel it at the pump. In the Pacific, families feel it on the table.”

A regional response

Economic cooperation is expected to be a major theme at the meeting, with ministers reviewing the Pacific Roadmap for Economic Development, designed to strengthen resilience and collective responses to future shocks.

Pacific Islands Forum (PIF) Secretary General Baron Waqa says ministers are focused on advancing collective solutions to strengthen economic security and resilience.

Desna Solofa, PIF Deputy Secretary General, says global shocks have exposed the region’s vulnerability, warning the scale of the challenges requires a more coordinated response.

“Business as usual will not deliver the resilience, growth and sustainability our region now demands.”

Ayako Yamaguchi-Eliou, Secretary – Ministry of Finance, Banking & Postal Services of the Republic of the Marshall Islands and Chair of the 2026 Forum Economic Officials Meeting. Photo/PIF

Meeting chair Ayako Yamaguchi-Eliou says regional unity will be critical, adding that shared experience and collective action will help Pacific countries navigate increasingly complex global challenges.

“Our strength lies not only in our individual nations, but in our collective commitment to one another.”

A major milestone during the meeting will be the inaugural council meeting of the Pacific Resilience Facility on 25 June, a Pacific-owned financing mechanism designed to support resilience investments and preparedness for future shocks.

The treaty entered into force in May after ratification from 10 Forum member countries, including New Zealand.

Outcomes from Majuro are expected to help shape broader economic discussions at the 55th Pacific Islands Forum Leaders Meeting in August.