KPMG Report Discusses Sustainable Economic Growth in Island Economies

Small island economies are currently grappling with global uncertainty, marked by slowing growth, demographic changes, and increasing vulnerabilities to economic and environmental shocks. Against this backdrop, the report provides insights into how these jurisdictions can strategically respond, identifying both risks and significant opportunities.

The report's findings are based on thorough academic research led by Professor Matthew Agarwala of The Bennett Institute for Innovation and Policy Acceleration. It analyzes 12 jurisdictions, including the Crown Dependencies. Despite the unique contexts of each island economy, the research highlights six common challenges: economic concentration, climate and environmental risks, inflationary pressures, demographic change, data gaps, and limited global influence. These challenges create complexity for decision-makers and underscore the need for coordinated, forward-looking strategies.

To tackle these issues, the report outlines ten priority actions categorized under three themes: strategic priorities, resilient foundations, and global visibility and collective action.

A crucial message of the report is the recommendation to move beyond traditional economic output measures. It emphasizes the importance of managing a diverse portfolio of assets, which includes natural, human, social, institutional, physical, and knowledge capital.

Additionally, the report stresses the importance of regional collaboration in fostering growth. Many island jurisdictions face challenges in alone financing resilient infrastructure, enhancing data systems, and attracting capital. By collaborating—sharing expertise, aligning strategies, and pooling resources—the report suggests that these islands can improve their global competitiveness and draw long-term investments.