In attempts to revive their struggling economies, Pacific island states, including VanuatuVanuatu and FijiFiji, cautiously reopened their borders in 2022 as the COVID pandemic faded. Both countries had fared well in terms of the incidenceIncidence of COVID-19COVID-19 by closing their borders, but the pandemicPandemic revealed basic problems in healthcare systemsHealth care systems that proved difficult to resolve with limited fiscal space and growing skilled labour shortagesLabour shortages. TourismTourism, the core of island economies, quickly revived and returned to a familiar pattern centred on urban resorts and later cruises, rather than towards a more sustainable structure supporting a blue economy. Here too, expansion was frustrated by labour shortagesLabour shortages, fragmented and costly supply chains, and cyclone damage. DiversificationDiversification of small island economies was even more challenging. Loss of skilled health workersHealth worker and tradespeople was accompanied by a wider loss of labour, coinciding with the expansion of the Pacific AustraliaAustralia Labour Mobility (PALM) scheme attracting workers to Australia for longer periods. A brain and skill drain was intensified. Both the restructuring of the health sector and economic growthEconomic growth were thus constrained and diverted by global factors linked to risk, inflationInflation, strategic issuesStrategic issues, and regional labour supplyRegional labour supply and demand.