Labour is concerned that the Fijian economy continues to rely heavily on tourism and consumption-led growth to the neglect of the primary sectors.
The Reserve Bank’s January 2024 review notes that while the economy had recovered to its pre-Covid levels led by a vibrant tourism sector, it warned that risks to the domestic outlook “tilted downside” owing to a weak primary and natural resources sector and slow investment levels.
Ariff Ali, Governor of the RBF, pictured above - image courtesy of Fiji Times
It warned growth in tourism and consumption could decline in the near future due to constraints on hotel capacity and higher prices.
Equally worrying is Fiji’s growing balance of payments deficit with the latest data showing the merchandise trade deficit widening by 5.4% to $3.7b in the year to October 2023 as imports continued to outpace exports (RBF).
The January RBF review noted a marked decline in production in the primary and natural resources sector:
Cane production down 4.5%
Sugar down10.4%
Sawn timber down 24%
Woodchips down 23%
Mahogany down 16.4%
Gold down 12.7%
Mineral water down 9%
These are quite substantial declines indicating largely government’s continued neglect of the agricultural and primary resources sector.
The Covid crisis (2020/21) starkly underscored the folly of relying too heavily on tourism and consumption based growth. It seems that the lessons have still not been driven home.
Meanwhile, inflation remained high at 5.1% (although independent economists put it higher at around 13% at least) due to the budgetary increase in VAT (15%) and tariffs, and higher prices for imports.
In a statement issued a week ago, Reserve Bank Governor Ariff Ali warned that 2024 could be “ a challenging year”.
“The Fijian economy is projected to decelerate as the substantial growth in tourism and consumption will taper off.
“In addition, the continued loss of skilled and semi-skilled workers and their families (around five percent of the population) will adversely affect productivity and translate to lower domestic demand at the same time,” Mr Ali said.
The RBF statement does not support Finance Minister Prasad's assessment of the economy.
The Minister needs to understand that the Bank is looking ahead and not reviewing how the economy fared in 2022/23. It is not political propaganda but a well reasoned forecast.