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Economist Agrees With Growth Forecast

Economist Agrees With Growth Forecast
University of the South Pacific School of Economics Senior Lecturer Rup Singh
July 14
11:00 2018

This is an informative publication, sponsored by The Fiji Sun, Fiji Bureau of Statistics and HFC Bank. All views expressed or implied are purely of the Financial Markets Analyst at the HFC Bank, Shoran Devi.

Economic Indicators are usually the vo­luminous set of statistics on the gen­eral state of an economy.

It provides measurement for evaluating the health of an economy, the latest business cy­cles, how consumers are spending and gen­erally faring and to indicate the overall eco­nomic conditions.

Various economic indicators are released periodically and are of much importance to varied users.

The Australian National University’s Devel­opment Policy Centre and the University of the South Pacific’s School of Economics host­ed the 2018 Pacific Update Forum last week.

Much was deliberated on the general socio-economic conditions of Fiji and the neigh­bouring Pacific Island nations.

In the state of domestic economy presenta­tion by the Governor of the Reserve Bank, Ariff Ali highlighted that the forecast by the Macroeconomic Committee, which has sen­ior officials from other policy making agen­cies is consistent with forecast by various other agencies.

These ageancies are such as Fiji Revenue and Customs Service, Fijian Bureau of Sta­tistics Investment Fiji and relevant Govern­ment Ministries such as Ministry of Econo­my, Ministry of Industry, Trade and Tourism, Ministry for Infrastructure and the Prime Minister’s Office,

Growth forecast

The growth forecast by the Macroeconomic committee for 2018 is 3.2 per cent.

However, the growth forecast by Interna­tional Monetary Fund for 2018 is 3.5 per cent while Asian Development Bank has it mar­ginally higher at 3.6 per cent.

Moody’s Rating Agency projects growth in 2018 to be similar to the Macroeconomic Com­mittee.

However, ANZ anticipates the economy to grow at a slightly better pace of 3.3 per cent.

USP’s academic, Dr Rup Singh projects the economy to grow better than the Macroeco­nomic Committee’s projections for both 2018 and 2019.

It is important to highlight that the growth projections are consistent and centres around a narrow range of 3.2 – 3.6 per cent.

Fiji’s historical growth since independence is 2.8 per cent.

However, if we exclude the high growth immediately after independence and take the average growth since 1980, the average growth rate fall to around two per cent.

In this regard, it would be worthy to note the following chart which shows that Fiji has performed remarkably well in this decade, especially if one takes into consideration the number of natural disasters that has hit Fiji.

Discussions also focussed on debt sustain­ability.

It was highlighted that debt should not be looked into isolation but against various benchmarks and across countries.

The IMF and World Bank has developed various benchmarks and Fiji’s debt assessed against these benchmarks reveals that cur­rent debt levels are not at critical levels but is actually sustainable.

In particular, Fiji fares well in the area of external debt ratios.

When comparing Fiji with countries of similar sovereign rating, Moody’s Rating Agency concluded that Fiji’s debt is below its peers in three of the four areas.

On the question of whether the growth in the economy was translated in more employ­ment, the Governor highlighted that labour market indicators supported more jobs and a reduction in unemployment rate.

Feedback: maraia.vula@fijisun.com.fj

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