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UNCERTAINTIES DELAYING ECONOMIC RECOVERY IN THE PACIFIC, ADB REPORT SAYS

UNCERTAINTIES DELAYING ECONOMIC RECOVERY IN THE PACIFIC, ADB REPORT SAYS
Minister for Agriculture, Rural and Maritime Development and National Disaster Management and Meteorological Services, Inia Seruiratu (middle) with delegates at the 34th Session of the Food and Agricultural Organisation (FAO) Asia-Pacific Regional Conference at Sofitel Fiji Resort and Spa, Denarau, Nadi on April 12, 2018 . Photo: Waisea Nasokia
April 13
10:02 2018

 

Growth in the Pacific is expected to remain weak in 2018, as economic and political uncertainties, fiscal challenges, and natural disasters hold back some of the region’s larger economies.

The outlook projects a slow recovery, with growth picking up only in 2019, says a new Asian Development Bank (ADB) report launched yesterday.

The Asian Development Outlook (ADO) 2018, ADB’s flagship annual economic publication, projects that Pacific economies will, on average, grow 2.2 per cent in 2018—the same rate as last year.

“Several Pacific countries face heightened economic uncertainty and the impacts of extreme weather events and disasters, highlighting the need to build resilience across the region,” said Carmela Locsin, Director General of ADB’s Pacific Department.

“Climate-proofing infrastructure, maintaining fiscal buffers, and investing in education to expand economic opportunities are all vital for more resilient economies in the Pacific.”

Meanwhile, the report said that there was a steep growth slowdown in Fiji in the wake of Cyclone Winston in 2016, but reconstruction spending, improved agricultural output, and tourism growth spurred recovery.

The report also highlighted that with most cyclone reconstruction ending soon, economic growth is expected to decelerate slightly from 3.9 per cent in 2017 to 3.6 per cent in 2018 and 3.3 per cent in 2019—with tourism, construction, and agriculture likely to be the main contributors.

Reserve Bank of Fiji Governor, Ariff Ali commenting on the report, said ADB’s outlook is not far out from the Macroeconomic Committee’s forecast for 2017 of 4.2 per cent this was revised up from 3.8 per cent in October last year.

“Similarly, the growth forecast for 2018 by the Macroeconomic Committee stands at 3.6 per cent, an upward revision from an earlier forecast of 3.0 per cent while the economy is expected to grow further by 3.2 per cent in 2019 and 2020.”

Mr Ali said for 2018, the major sectors that are expected to drive growth include the public administration and defence; manufacturing, wholesale and retail trade; construction and the financial sectors.

“The Macroeconomic Committee is responsible to forecast Fiji’s GDP is made up of a number of institutions including the RBF, Ministry of Economy, Fiji Revenue & Customs Services, Investment Fiji, Ministry of Industry & Trade, Fiji Bureau of Statistics, Ministry of Infrastructure & Transport and the PM’s Office.

“Under the current system, there are 21 sectors and approximately 170 sub sectors of the economy that the Committee forecasts directly – line by line.

“The Committee carries out two rounds of forecasts in a year.

“This type of extensive forecasting is not done by any other institution in Fiji.

“The Committee is currently in its first round of forecasting for this year thus, the above forecasts are currently under review and are expected to be firmed up by May.”

Mr Ali said the two recent Tropical Cyclones (Josie and Keni) and the series of floods have impacted the country.

“While the exact impact of these natural disasters is currently being investigated, it is expected that there have been substantial damages to infrastructure, agriculture and housing in the affected areas.

“Business operations were affected due to power and water outages, road closures and flooding.

“Given the devastation, the projected economic performance for 2018 is now expected to be downgraded.

“However, rebuilding works post these natural disasters is expected to provide some economic stimulus going forward. In addition, there is also optimism with robust recovery noted in timber and mining and partial indicators for both consumption and investment growing strongly.”

He noted the revised forecasts will be released in May.

Mr Ali said, however, Fiji is expected to grow for the ninth consecutive year in 2018, that will be a record since we achieved independence in 1970.

“That said, it is important to note that Fiji’s economic performance can be affected by both domestic and external shocks.

“Being a small state island economy, Fiji is prone to the high risks of natural disasters.

“The effects of natural disasters in Fiji have far reaching implications on sectors such as agriculture, housing, transport, infrastructure, tourism and primary industries.

“In addition, global economic conditions and volatility in commodity prices including for that of food and fuel also affects us.

“Therefore, prudent macroeconomic management, sound fiscal stewardship along with steadfast implementation of structural reforms will enhance resilience and mitigate the effects of these external shocks on our economy.”

Feedback: maraia.vula@fijisun.com.fj

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