Blog by Dr Thomas Munthali, Commonwealth Secretariat’s Head of Economic Policy and Small States.
The year 2025 marked a defining moment for the global economy — and an especially consequential one for small and vulnerable states. As the world grappled with geopolitical tensions, trade fragmentation, energy transitions and tightening fiscal and financial conditions, uncertainty became the new normal. For small states, already navigating narrow economic bases and heightened exposure to external shocks, the stakes could not have been higher.
Yet 2025 was not defined by pressure alone. It was also a year that underscored the enduring strength of the Commonwealth family and the tangible value of working together.
The World Economic Outlook, October 2025, projected global growth to slow down from 3.3 percent in 2024 to 3.2 percent in 2025 and 3.1 percent in 2026, with advanced economies growing around 1.5 percent and emerging market and developing economies that include most small states growing at just above 4 percent.
External price pressures for food, energy and other essential imports remained elevated across many markets in 2025, intensifying fiscal pressures and balance-of-payments risks for small, import-dependent economies. At the same time, tourism-reliant small states — particularly in the Caribbean and Pacific — experienced a gradual recovery. Yet for many, this rebound started from a weakened base, with activity still falling short of pre-pandemic trends and underscoring the uneven and fragile nature of the recovery.
Public debt and financial pressures
Public debt already exceeds 70% of GDP in many Commonwealth Small States. This along with the limited fiscal and monetary policy space, shallow domestic capital markets, and constrained sovereign borrowing options make it increasingly difficult to finance adaptation, resilient infrastructure, and social protection. For example, 11 out of the 18 Indo-Pacific SIDS, fall within critical debt categories, creating a cycle where climate shocks trigger macro-fiscal vulnerabilities. These pressures are compounded by a decline in the Official Development Finance for the SIDS, which fell to US $3.6 billion in 2023, a 16% decline from 2022. Further 86% of climate finance remains project-based, limiting institutional durability, long-term planning, and systemic resilience.
In this environment, building economic resilience and securing sustainable prosperity is not optional — it is essential. And it is precisely against this backdrop that the Commonwealth Secretariat’s Strategic Plan 2025–2030 has come into sharp focus: a fit-for-purpose, results-driven framework designed at scaling-up on what is working and bringing new practical innovations that deliver impact for member countries.
From solidarity to solutions
The 2025 Commonwealth Small States Bulletin, to be launched at the Commonwealth Investment Network Summit, reflects on more than a year of economic turbulence. It tells a story of solidarity translated into action — of collective expertise, partnership and trust producing real-world outcomes for small states.
Across the Commonwealth, targeted interventions supported in the period 2024-25 are making transformational difference on the ground. They demonstrate how innovation, adaptability and resilience can thrive even in constrained environments when countries are backed by the right mix of technical assistance, policy support and peer learning. These initiatives span critical areas — from strengthening macroeconomic management and debt sustainability, to enhancing climate resilience, boosting trade competitiveness and improving public sector performance.
The power of partnership
Fiji illustrates the power of partnership on the frontlines of climate change. Facing rising sea levels, coastal erosion and complex climate finance barriers, the country has worked with the Commonwealth Climate Finance Access Hub, supported by the United Kingdom and Australia, to strengthen access to funding for community-led climate adaptation and mobility. From 2023 to 2025, a Commonwealth National Climate Finance Adviser embedded within the Ministry of Environment helped mobilise over USD 8 million, with more in the pipeline. Fiji’s experience shows how targeted technical support, strong national leadership and partnerships can unlock finance and deliver practical, dignified outcomes — a model with clear potential across Commonwealth small states.
Looking ahead: Accelerating what works
The lessons highlighted in the 2025 Commonwealth Small States Bulletin clearly point to the road ahead. Small states need investments and partnerships that recognise their unique circumstances and unlock their potential. They need support that is agile, scalable and grounded in delivery.
The theme of the forthcoming Commonwealth Heads of Government Meeting (CHOGM) in November 2026 in Antigua and Barbuda hence resonates well: “Accelerating Partnerships and Investments for a Prosperous Commonwealth.”
The interventions highlighted in the Bulletin offer a glimpse of what that acceleration can look like in practice. They show how targeted investments, backed by strong partnerships, can translate into resilience, opportunity and shared prosperity — not just for individual countries, but for the Commonwealth as a whole.
A call to build on momentum
The message of the 2025 Commonwealth Small States Bulletin is ultimately one of momentum. Even in a year marked by global uncertainty, progress is possible when countries work together with purpose and resolve. The task now is to build on what works — scaling successful interventions, mobilising investment and strengthening partnerships that deliver lasting impact.
As the Commonwealth looks ahead to CHOGM 2026, the experiences of small states in 2025 offer both inspiration and direction. They remind us that prosperity is accelerated not in isolation, but through collaboration — and that the Commonwealth family is strongest when it moves forward together.
