SUNBIZ

RBF: Winston impact expected to lower growth forecast this year

The Reserve Bank of Fiji says the impact of Tropical Cyclone Winston is expected to lower the current growth forecast of 3.5 per cent for this year. Governor Barry Whiteside
02 Mar 2016 13:02
RBF: Winston impact expected to lower growth forecast this year

The Reserve Bank of Fiji says the impact of Tropical Cyclone Winston is expected to lower the current growth forecast of 3.5 per cent for this year.

Governor Barry Whiteside said this was notwithstanding the impetus from rehabilitation activities.

Mr Whiteside highlighted that the recent natural disaster shock would exacerbate the impact of already weak global conditions on the domestic economy.

He said latest data and indicators point to slower growth in major advanced and emerging market economies despite lower oil prices and interest rates.

Financial sector volatility and geopolitical risks have also added to global uncertainty, while long-term inflation expectations remained quite weak.

Noting this, RBF agreed to maintain the Overnight Policy Rate at 0.5 per cent and work closely with stakeholders to help rebuild the economy following the recent devastation by Cyclone Winston

The RBF has highlighted that 2016 year-end inflation is expected to be below three per cent.

This is given the current low global commodity prices, especially for oil, soft trading partner inflation expectations and taking into account the fuller effects of the lower VAT and temporary hikes in prices of affected market items following the cyclone.

Foreign reserves are currently comfortable at $2,019 million, sufficient to cover 5.7 months of retained imports of goods and non-factor services.

However, the foreign reserves are expected to be slightly dented by a higher demand for imports to support the recovery as well as a more subdued growth in exports.

Nevertheless, remittances and tourism inflows are expected to hold up.

Mr Whiteside said: “The dual objectives of the Bank remain stable at this time.

“The RBF will continue to vigilantly monitor latest developments and risks to the global and domestic economic outlook and align monetary policy accordingly.”

 

Rehabilitation Facility

Moreover, the Reserve Bank has reintroduced its Natural Disaster Rehabilitation Facility (NDRF) to support national relief efforts following the devastation by TC Winston.

The facility provides funding for businesses faced with either production loss requiring replacement of stock or damaged inventory, or asset loss which may include repairs for damage to business premises as a result of the TC.

The funding is also extended to homeowners for repairs and reconstruction.

The facility is available through the commercial banks, Fiji Development Bank and licensed credit institutions (LCIs).

NDRF loans are limited to $0.5 million per business and approval is left to the discretion of the respective financial institutions.

Fiji Sun Instagram
Subscribe-to-Newspaper
error: