Notwithstanding the continued weakness of the global economy and the sanctions imposed by many countries including UK, US, Australia and New Zealand since the military take over on December 5, 2006, Fiji’s economic outlook remains bright.
That was the verdict of a recent Survey conducted by Reserve Bank of Fiji (RBF), which placed economic growth at 3.2% for the current financial year.
This forecast was a part of the presentation of RBF Governor Barry Whiteside to a business delegation visiting Fiji last month (Indian Newslink August 15, 2013).
The ‘June Business Expectations Survey’ attributed economic resilience, robust consumption and higher levels of investment for the upward revision of economic growth forecast.
“Overall, growth is expected to be broad based and all sectors, except the mining & quarrying sector, are forecast to contribute positively. Consumption demand remains strong as reflected by partial indicators. While the Net Value-Added Tax collections increased by 18.4% in the first half of the year, lending for consumption purposes more than doubled in the year to July. Additionally, imports of consumption goods rose by 25.1% in the year to May,” the Survey said.
According to RBF, Fiji enjoys a favourable investment climate, supported by increased business and investor confidence. The overall sentiments for general business conditions have improved for the short to medium term, compared to the December 2012 Survey. Improved sentiments were noted for production, employment, domestic sales and investment.
“Sturdy consumption and investment demand is supported by favourable remittance inflows, record low lending rates, high bank liquidity, lower tax rates and increased optimism in the domestic economy. Nonetheless, sectoral performances remain mixed and certain sectors continue to perform below potential and face supply constraints,” the Survey said.
It noted that since commencement of the sugar crushing season two months ago, the mills had crushed about 700,000 tonnes of cane to produce about 74,000 tonnes of sugar. The industry has overcome its teething problems and has shown improvement in milling efficiency, the Survey added.
“Industry liaison also indicates improved production in mahogany, woodchips and garments. Moreover, electricity production, an indicator of overall economic activity, rose by 6.7% in the first seven months of the year.”
However, a few sectors including gold and fishing were sectors causing concern.
Gold production continues to perform poorly and declined by 26.6% in the year to June but additional capital expenditure at the Vatukoula mine should boost output over the medium term.
“Industry liaison reveals that the fishing industry is facing unfavourable weather conditions resulting in declining fish stocks within Fiji’s exclusive economic zone as well as the Pacific region in the first four months of the year, though this is expected to improve in the second half of the year. Competition from fishing fleets in international waters outside Fiji’s exclusive zone is also impacting detrimentally on the supply to local processors,” the Survey said.
RBF said that employment prospects continued to improve over the year, quoting cumulative statistics of jobs advertised. The Bank said that jobs advertised rose by 12.9%, led by the wholesale, retail, trade, restaurants and hotels and the construction and manufacturing sectors.