The Terms of Trade is a ratio of two price indexes which are export prices and import prices.  It measures the amount of import goods an economy can purchase per unit of export goods.  A rise in the index means that Fiji can buy more imports from the same amount of exports.

In September quarter of 2015, the international merchandise terms of trade index fell by 0.3 per cent.  Export prices for goods fell by 0.2 per cent and import prices for goods rose by 0.1 per cent.

Forecast

For year 2016, economic growth is expected to decrease to 202 per cent of GDP compared to 2015 due to Cyclone Winston.

Imports for 2016 when compared to 2015, will increase because of damages borne by our infrastructure that is estimated at a resounding $135 million and these needs to be rebuilt and repaired which includes, roads, bridges, power supplies and so on.

As for exports, we can expect a decrease in agricultural products for 2016 when compared to 2015.

This is because of the destruction that our agriculture sector suffered which is at the time of writing estimated at $200 million inclusive of $80 million for the sugar industry.

After looking at the estimations above, we can expect an increase in our trade balance deficit for 2016.

There is a concern in further growth slowdown due to the natural disaster that has passed and global growth for 2016 and 2017 has been revised down to 3.4% and 3.6% respectively.

nThis 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 Treasurer at the HFC Bank, Peter Fuata.