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Fiji’s Economic Recovery, Question of How Many Visitors

Between 2012 and 2019, Fiji’s inbound tourism was strong. This was highlighted in the ANZ Research Pacific Insight report co authored by ANZ’s International Economists Kishti Sen and Tom Kenny
09 Dec 2020 11:30
Fiji’s Economic Recovery, Question of How Many Visitors

Between 2012 and 2019, Fiji’s inbound tourism was strong.

This was highlighted in the ANZ Research Pacific Insight report co authored by ANZ’s International Economists Kishti Sen and Tom Kenny released yesterday.

The report added that it was helped by solid economic conditions, particularly income growth in key source markets including Australia and New Zealand.

 

Tourism Contribution To Fiji’s Gross Domestic Product (GDP) And Regional Growth
The co-authored said “Growth in overseas arrivals averaged five per cent per year.

“So much so, that tourism became the main driver of Fiji’s economy last decade.”

“Tourism revenue flowed directly into sectors such as accommodation and food services, retail and transport, but then also fed through to other supporting industries yielding material secondary benefits to the economy.”

“Once you add the stimulus from employment and taxes collected, the tourism sector’s total contribution to GDP is 1.7 times its direct contribution to GDP and equates to about 40 per cent of the nation’s output.1″

“However, tourism has been one of the sectors hardest hit by the COVID-19 pandemic. Fiji’s economy is now under severe pressure from COVID-19 induced border shutdown.”

“With closed borders, the country’s key international tourism industry has been decimated, with visitor arrivals virtually collapsing to zero since April 2020.”

“Businesses in the tourism region on the west coast of Viti Levu (the largest island) are experiencing negative cash flows and struggling to meet commitments.”

“This has resulted in the loss of many thousands of jobs and the unemployment rate has shot up to 21.5 per cent from seven per cent in 2019.”

 

When Can Tourism Recover?
“A profitable tourism industry is important for Fiji, given the sizeable contribution of tourism to GDP.”

“The return of tourists in some capacity in 2021, either through safe travel corridors or once immunisation against COVID-19 is complete, would be welcome.”

“With good news on vaccine development, it is conceivable that borders could open to all visitors at some stage in 2021.”

“However, the timing remains uncertain.”

“We think the possible dates for open borders are:
1. end of quarter 1 or earlier (perhaps an optimistic scenario),
2. end of quarter 2, which is a more realistic, and
3.late or end of quarter 3, lifting of restrictions.

Under the optimistic first scenario, Fiji could get 675k overseas arrivals (75 per cent of 2019 visitors), resulting in a 23.8 per cent rebound in GDP (Figure 1 and 2).

The more realistic scenario could draw 487k visitors, yielding a bounce of 19.8 per cent in GDP.

If border restrictions remain deep into next year, then a more modest 220k leisure travellers could arrive in Fiji, resulting in a 7.8 per cent lift in GDP. If borders remain shut for all of 2021, then we estimate tourism’s contribution to GDP would fall by −3.5 per cent.

Note that Fiji received about 140k overseas visitors in quarter 1, 2020 (i.e before the pandemic set in).

ANZ Review Figure 02

Mid-2021 Border Opening Could Boost GDP By FJ$1,836m
An end of quarter 1 date for border opening could see tourism making a contribution of FJ$2,614m to GDP (+23.8 per cent).

A more realistic timeline of end of quarter 2 border reopening, which is our baseline case, could potentially see about 490k overseas arrivals adding FJ$1,836m to GDP (+19.8 per cent).

If borders remain shut well into 2021, then we see a more modest contribution of FJ$860m (+9.3 per cent), Figure 3.

 

Commentary
“Any lifting of Fiji’s international travel restrictions will be determined by Fiji’s Government, and we presume vaccination of the majority of the population will be a prerequisite.”

“Alternatively, the Government might consider accepting “safe travel or quarantine-free travel”, presumably if they are satisfied it wouldn’t harm the health and wellbeing of its citizens.”

“In this analysis, we have quantified the economic impact of tourism restarting under alternative scenarios for when quarantine restrictions are lifted and inbound tourism returns.Our base-case scenario suggests Fiji could have just under 500k overseas visitors in 2021, which, in turn, would contribute +19.8ppt to GDP growth.”

 

Feedback: maraia.vula@fijisun.com.fj


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