SUNBIZ

IMF suggests looking at internal drivers for growth, not external

he International Monetary Fund believes Fiji and the Pacific should not depend on external drivers for growth and rather look for inward drivers or from within the country. These comments
13 Aug 2014 14:53

he International Monetary Fund believes Fiji and the Pacific should not depend on external drivers for growth and rather look for inward drivers or from within the country.

These comments were made by the Project Coordinator, IMF Pacific Financial & Technical Assistance Centre, Scott Roger.

Mr Roger was speaking during the University of the South Pacific’s School of Economics-organised Fiji Economy Update 2014 at the Holiday Inn Suva yesterday.

Mr Roger made these comments based on the global growth outlook and risks which he said was mostly on the downside.

He said globally, there are geopolitical risks and potential financial/commodity price volatility in short term and danger of getting stuck in low growth in the medium term.

Implications

He said one of the implications of this for Fiji, as well as the Pacific could be external demands likely to be moderate which is not a source of strong growth.

The IMF, as well as the Reserve Bank of Fiji has already forecast our growth this year to be at around 3.8 per cent.

Mr Roger highlighted that the IMF believes the central scenario with unchanged policies is that growth will gradually re-converge to a trend rate of around 2.5 per cent.

Uncertainty

“There’s of course uncertainty about that but our best guess is about 2.5 per cent,” he said.

“After the election, beyond the election, there’s general agreement across all parties, across all sectors of society that it’d be nice if Fiji could increase its trend rate of growth for the long period,” he said.

Mr Roger stressed it was hard to deal with poverty if there is no growth.

“So an objective for everybody is to lift the sustainable rate of growth,” he said,

Mr Roger said to lift sustainable trend growth rate, structural reforms are required both to increase the efficient operation of the economy and to boost investment activity that’s needed to generate jobs, exports.”

Mr Roger suggested what’s needed is a set of measures, innovations that work primarily on the supply side of the economy rather than on the demand side.

“Macro-policies, fiscal monetary policies basically work on the demand side. We’re talking about a somewhat different set of policies,” he said.

“It includes more efficient operation of government of economic trade policies.”

Feedback : rachnal@fijisun.com.fj




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