Economy
GDP (2005): $262 million.
Annual growth rate (2005): 4.7%.
Per capita income (2005): $474.
Avg. inflation rate (2005): 7.4%.
Natural resources: Forests, fish, agricultural land, marine products, gold.
Agriculture: Products--copra, cocoa, palm oil, palm kernels and subsistence crops of yams, taro, bananas, pineapple.
Industry: Types--fish canning, sawmilling, boats, rattan and wood furniture, fiberglass products, shell jewelry, tobacco, beer, clothing, soap, nails, handicrafts.
Trade (2004): Exports--$95.8 million: timber, fish, cocoa, copra, palm oil. Major markets--China 28.2%, South Korea 15.7%, Thailand 15.7%, Japan 9.7%, Philippines 5.1%, Vietnam 3.1%. Imports--$84 million: mineral fuels, food, machinery & transport equipment, and basic manufactures. Major suppliers--Australia 25.3%, Singapore 23.8%, New Zealand 5.3%, India 4.8%, Japan 3.9%.
Exchange rate (2005 average): Solomon Islands $1=about U.S.$0.13.

GEOGRAPHY
The Solomon Islands form an archipelago in the Southwest Pacific about 1,900 kilometers (1,200 mi.) northeast of Australia. With terrain ranging from ruggedly mountainous islands to low-lying coral atolls, the Solomon Islands stretch in a 1,450-kilometer (900 mi.) chain southeast from Papua New Guinea across the Coral Sea to Vanuatu.

The main islands of Choiseul, New Georgia, Santa Isabel, Guadalcanal, Malaita, and Makira have rainforested mountain ranges of mainly volcanic origin, deep narrow valleys, and coastal belts lined with coconut palms and ringed by reefs. The smaller islands are atolls and raised coral reefs, often spectacularly beautiful. The Solomon Islands region is geologically active, and earth tremors are frequent.

The islands' ocean-equatorial climate is extremely humid throughout the year, with a mean temperature of 27° C (80° F) and few extremes of temperature or weather. June through August is the cooler period. Though seasons are not pronounced, the northwesterly winds of November through April bring more frequent rainfall and occasional squalls or cyclones. The annual rainfall is about 305 centimeters (120 in.).

More than 90% of the islands traditionally were forested, but this has come under severe pressure from current logging operations. The coastal strips are sheltered by mangrove and coconut trees. Luxuriant rainforest covers the interiors of the large islands. Soil quality ranges from extremely rich volcanic to relatively infertile limestone. More than 230 varieties of orchids and other tropical flowers brighten the landscape.

SOLOMON ISLANDS ECONOMY
Its per capita GDP of $474 ranks Solomon Islands as a lesser developed nation, and more than 75% of its labor force is engaged in subsistence farming and fishing. Until 1998, when world prices for tropical timber fell steeply, timber was Solomon Islands main export product, and, in recent years, Solomon Islands forests were dangerously overexploited. Other important cash crops and exports include copra and palm oil. In 1998 Ross Mining of Australia began producing gold at Gold Ridge on Guadalcanal. Minerals exploration in other areas continued. However in the wake of the ethnic violence in June 2000, exports of palm oil and gold ceased while exports of timber fell. Exports are just now beginning to recover.

Exploitation of Solomon Islands' rich fisheries offers the best prospect for further export and domestic economic expansion. However, a Japanese joint venture, Solomon Taiyo Ltd., which operated the only fish cannery in the country, closed in mid-2000 as a result of the ethnic disturbances. Though the plant has reopened under local management, the export of tuna has not resumed. Negotiations are underway which may lead to the eventual reopening of the Gold Ridge mine and the major oil-palm plantation.

Tourism, particularly diving, is an important service industry for Solomon Islands. Growth in that industry is hampered, however, by political instability, security issues, lack of infrastructure, and transportation limitations.

Solomon Islands was particularly hard hit by the Asian economic crisis even before the ethnic violence of June 2000. The Asian Development Bank estimates that the crash of the market for tropical timber reduced Solomon Island's GDP by between 15%-25%. About one-half of all jobs in the timber industry were lost. The government has said it will reform timber harvesting policies with the aim of resuming logging on a more sustainable basis.

The Solomon Islands Government was insolvent by 2002. Since the RAMSI intervention in 2003, the government has recast its budget, and has taken a hard look at priorities. It has consolidated and renegotiated its domestic debt and with Australian backing, is now seeking to renegotiate its foreign obligations. Much work remains to be done. Ongoing political instability continues to negatively impact economic development.

Principal aid donors are Australia, New Zealand, the European Union, Japan, and the Republic of China.