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Don’t Despair If You Are Feeling The Impact Of An Economic Slowdown

The fact is, Fiji is part of a world economic slowdown. Every country, big and small, is affected and feeling it.
03 Oct 2019 15:00
Don’t Despair If You Are Feeling The Impact Of An Economic Slowdown
Overall spending is down. It affects investment, production and employment. Belt tightening or austerity measures will inevitably be rolled out, if it is not already happening.

Editorial:

If you are feeling a business slowdown, you are not alone.

We are not an island to ourselves.

The fact is, Fiji is part of a world economic slowdown. Every country, big and small, is affected and feeling it.

Overall spending is down. It affects investment, production and employment. Belt-tightening or austerity measures will inevitably be rolled out if it is not already happening.

Our largest development partner in the region, Australia, is going through worrying times.

The National Australia Bank has forecast economic growth of just 0.2 percentage points, bringing the annual pace of growth to 12 per cent – the slowest pace in almost two decades, according to ABC News.

A check on Australian retail sales shows that the recent tax offsets and interest rate cuts have not yet had any impact on the tills the nation’s retailers.

The National Australia Bank chief economist Alan Oster said: “It’s a struggle. You’ve got a very unusual situation where the private part of the economy is actually going backwards. It’s not that the consumer is basically bust…they are not, they’ve got lots of assets. But they are worried about their cash flow, and that says to me it’s not going to get better anytime soon.”

While Australian Reserve Governor Philip Lowe and Treasurer Josh Frydenberg agree the fundamentals of the economy are strong Mr Lowe, however, conceded later that economic growth in Australia over the first six months of this year “has been lower than earlier expected.”

He said this was caused by household consumption weighed down by a protracted period of low-income growth and declining housing price and turnover.

Across the Tasman, our second big development partner in the region, New Zealand is facing challenges too. Prime Minister Jacinda Ardern said economic slowdown there was caused by global conditions. Kiwibank predicted  the NZ GDP (Growth Domestic Product) could drop from 2.6 per cent to 2 per cent

Around the globe, the slowdown continues, media reports say.

The New York Times says world commerce is deteriorating rapidly, a perilous development that threatens the health of the global economy.

A global recession remains unlikely, even as growth slows, most economists say. But the dangers are clearly mounting, threatening to spread from the factory floor to households in major economies.

The New York Times says the World Trade Organisation predicts that world trade in merchandise is now expected to expand by only 1.2 per cent during 2019, in what would be the weakest year since 2009, when it plunged by nearly 13 per cent in the midst of the worst global financial crisis since the Great Depression.

The WTO has warned that intensifying trade conflicts, like the one between the United States and China, posed a direct threat to jobs and livelihood while discouraging companies from expanding and moving.

Media reports say China’s growth rate is the slowest in years. Exports and imports there are down. India, formerly the fastest growing economy in the world, manufacturing growth is only 0.6 per cent, the slowest growth since 2012, and auto sales are down 41 per cent from year-ago levels.

In the world’s third-largest economy, Japan, exports are down -8.2 per cent in August (negative for nine months in a row) and down -12.1 per cent to China. The pattern is replicated right across Asia including South Korea.

Countries in South America, North America, Europe and of course the Pacific, are going through a similar experience.

Feedback: nemani.delaibatiki@fijisun.com.fj

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