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Annual Trade Deficit Stable as Export Growth Outpaces Imports

International trade is defined as the exchange of goods, services and capital between trading partner countries and regions. It measures the change in the stock of material resources in Fiji
28 Apr 2018 11:00
Annual Trade Deficit Stable as Export Growth Outpaces Imports
Shoran Devi

International trade is defined as the exchange of goods, services and capital between trading partner countries and regions.

It measures the change in the stock of material resources in Fiji resulting from the movement of merchandise into or out of the country.

Information on imports and ex­ports are inputs to calculating this data and are used particularly in the calculation of Balance of Pay­ments and Gross Domestic Prod­uct (GDP)for the country.

Imports are foreign goods and services bought by a country whereas exports are the goods and services produced in one country and sold to another country.

When a country’s import exceeds it exports, the country is said to have a trade deficit, while a trade surplus occurs when the value of a country’s exports exceeds that of its imports.

Economic watchers are inter­ested in this statistics due to the crucial role international mer­chandise trade plays in economic development across the globe.

Trade statistics are compiled to serve the needs of many users in­cluding the policy makers, import­ers, exporters, manufacturers as well as active investors.

They use these statistics for purposes such as monitoring per­formance of import and exports as well as to monitor commodity prices.

Latest provisional data released by the Fiji Bureau of Statistics put the value of goods imported in 2017 at $4,977.5 million while the value of total exports was $2,054.2 million.

Compared to 2016, total imports increased by $138.3 million (2.9 per cent) while total exports increased by $117.6 million (6.1 per cent).

The 2017 trade deficit amounted to $2,923.3 million compared to $2,902.6 million a year earlier (2016).

Imports

Compared to 2016, the import cat­egories recording notable increas­es were:

  • Mineral products up by $207.1 million (27 per cent) to $972.9 mil­lion due to increased imports of gas oil (diesel)
  • Base metals and articles thereof increased by $22.7 million (6.8 per cent) to $356.4 million due to in­creased imports of articles of iron or steel
  • Animal or vegetable oils and fats up by $8.9 million (15.6 per cent) to $66 million due to increased im­ports of other palm oil and it frac­tions, whether or not refined, but not chemically modified
  • Vegetable products was up by $8.5 million (3.1 per cent) to $279.1 million due to increased imports of potatoes; and
  • Miscellaneous manufactured articles which increased by $6 mil­lion (4.3 per cent) to $144.6 million due to increased imports of sani­tary towels, napkins and napkin liners for babies and similar arti­cles, of any materials.

Decrease in Imports

Compared to 2016, the import cat­egories recording notable decreas­es were:

  • Vehicles, aircraft and associated transport equipment was down by $85.1 million (14.7 per cent) to $495.7 million due to decreased imports of used or re-conditioned passenger motor cars
  • Wood, cork and articles thereof and plaiting materials – dropped by $23.6 million (43.5 per cent) to $30.6 million due to decreased im­ports of other articles of wood
  • Textiles and textile articles down by $22.3 million (9.5 per cent) to $211.6 million due to decreased imports of textiles
  • Plastic, rubber and articles thereof was down by $12.2 million (4.6 per cent) to $253.8 million due to decreased imports of new pneu­matic tyres; and
  • Articles of stone, plaster ce­ment, glass and ceramic products decreased by $5.6 million (8.7 per cent) to $58.5 million due to de­creased imports of tiles, cubes and similar articles.

Import Sources

For the year 2017, Fiji’s major sources of imports were:

  • Singapore was up by $208 mil­lion (28 per cent) to $951.9 million due to increased imports of gas oil (diesel)
  • New Zealand increased by $15.2 million (1.8 per cent) to $858.1 mil­lion due to increased imports of lamb
  • China increased by $40.6 million (5.5 per cent) to $782.5 million due to increased imports of fresh fish
  • South Korea was up by $34.5 mil­lion (21.2 per cent) to $197.5 million due to increased imports of resid­ual fuel oil
  • Australia was however, down by $14.6 million (1.7 per cent) to $825.6 million due to decreased imports of wheat and meslin.

Principal commodities

Looking at the principal import commodities for Fiji, growth was recorded in the import of:

  • Mineral products by 27 per cent
  • Base metals and articles thereof by 6.8 percent
  • Vegetable products by 3.1 per­cent
  • Wood pulp, paper and paper­board by 1.3 percent
  • Live animals: animal products by 1.2 percent
  • Chemicals and allied products by 1.2 percent and
  • Prepared foodstuffs, beverages, spirits and tobacco by 0.8 per cent.

However, decreases were record­ed in the imports of:

  • Vehicles, and parts and accesso­ries thereof by 28.6 per cent
  • Textiles and textile articles by 9.5 per cent
  • Plastic, rubber and articles thereof by 4.6 per cent and
  • Machinery, mechanical & elec­trical appliance by 0.1 percent.

Domestic Exports

Compared to 2016, the domestic export categories recording nota­ble increases were:

  • Prepared foodstuffs, beverages, spirits and tobacco – increased by $148.4 million (33.2 per cent) to $595.1 million due to increased ex­ports of sugar
  • Chemicals and allied products was up by $6.9 million (27.9 per cent) to $31.7 million due to in­creased exports of other paints and varnishes and
  • Vehicles, aircraft and associated transport equipment – was up by $5.2 million (172.2 per cent) to $8.3 million due to increased exports of lead acid for motor vehicles.

However, export categories re­cording notable decreases were:

  • Wood, cork and articles thereof amd plaiting materials – was down by $37.1 million (58.0 per cent) to $26.8 million due to decreased ex­ports of woodchips
  • Live animals: animal products – decreased by $19.7 million (17.4 per cent) to $93.9 million due to decreased exports of albacore or long finned tunas
  • Textiles and textile articles was down by $11.9 million (10.9 per cent) to $97.2 million due to de­creased exports of articles of tex­tiles
  • Pearls, precious, semi-precious stones and metals was down by $8.4 million (6.5 per cent) to $120.9 million due to decreased exports of gold
  • Mineral products decreased by $6.8 million (24.0 per cent) to $21.7 million due to decreased exports of other Portland cement.

Export Destinations

For the year 2017, Fiji’s major do­mestic export destinations were:

  • United States of America, up $35.3 million (12.3 per cent) to $323.4 million due to increased ex­ports of mineral water
  • United Kingdom, up $33.2 mil­lion (47.1 per cent) to $103.8 million due to increased exports of sugar;
  • Spain, up $72.5 million (4,628.5 per cent) to $74 million due to in­creased exports of sugar
  • New Zealand, up $0.9 million (1.4 per cent) to $66.4 million due to in­creased exports of kava.
  • Australia, down $11.8 million (4.5 per cent) to $247.5 million due to decreased exports of gold

Looking at the principal export commodities for Fiji, growth was recorded in the export of:

  • Molasses by 243.2 per cent;
  • Aluminium ores (bauxite) by 106.6 per cent
  • Sugar by 89.2 per cent
  • Corned meat of bovine animals by 50.7 per cent
  • Kava by 37.9 per cent
  • Folding cartons, boxes and cases by 26.0 per cent
  • Fruits and vegetables by 23.9 per cent
  • Uncooked pasta by 23.5 per cent
  • Mineral water by 13.6 per cent
  • Biscuits (except sweet biscuits) 12.7 per cent
  • Coral and similar materials by 5.7 per cent

However, decreases were record­ed in the exports of

  • Ginger by 62.2 per cent
  • Timber, cork and wood by 58.0 per cent
  • Coconut oil by 21.5 per cent
  • Fish by 17 per cent
  • Sweet biscuits by 16.4 per cent
  • Footwear and headgear by 14.1 per cent
  • Garments by 10.9 per cent
  • Flour by 7.8 per cent
  • Textiles yarn & made up articles by 6 per cent
  • Gold by 2.0 percent.

Importance of international trade

The rise in the international trade is essential for the growth of globalisation.

It allows for domestic competi­tiveness, enabling domestic trad­ers to extend sales potential of the existing products in the interna­tional markets, reduce dependence on existing markets and hence in­crease sales and profits.

International trade encourages the establishment of newer indus­tries to cater for global demand and creates employment in the process.

International trade also brings about closer ties between nations.

Fiji’s growing trade flows have an important impact on our foreign reserve levels.

If foreign reserve levels decline, that means we are paying more to the rest of the world than inflow and vice versa.

In this regard, it is interesting to note that Fiji’s foreign reserves are currently at approximately $2,154.1 million which is sufficient to cover 4.9 months of retained im­ports of goods and non-factor ser­vices and are forecast to remain at comfortable levels by year-end.

While our merchandise trade deficit looks relatively large, Fiji maintains a surplus on trade in services and transfers accounts, as an offset.

Our export of services are almost one and a half times greater than our total merchandise exports and around two and half times greater than our domestic merchandise exports.

Our inward personal remittances are also larger than any single merchandise export.

Therefore, Fiji’s economy is es­sentially a services economy and service related sectors contribute about 72 per cent of GDP while ser­vice and transfers receipts mainly through strong tourism earnings, air transportation and personal remittances support our current account and foreign reserves.

Feedback: maraia.vula@fijisun.com.fj



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