Economic Recovery 11.3% Growth Projected

The economy is now on a recovery path following the last three years of consecutive economic decline.

A double-digit growth (11.3 per cent) is projected for 2022, possibly the highest-ever growth in our post-independence history.

However, fully rebuilding the economy to pre-pandemic levels will take at least three years.

This was outlined by the Attorney-General and Minister for Economy Aiyaz Sayed-Khaiyum last night while delivering a revised 2021-2022 national budget bill.

Fiji’s remarkable pace of vaccinations has enabled Government to gradually ease COVID-19 restrictions and ultimately reopen borders for international travel, helping create a wave of optimism across the country.

However, potential downside risks to the outlook remain, including uncertainties surrounding the pace of recovery for tourism, natural disasters and pandemic related economic scarring.

The resumption of the tourism industry is critical for the recovery of the overall economy, jobs and economic stability.

To improve the competitiveness of the tourism sector, Government in the last Budget reduced all major tourism-related taxes and introduced attractive tax incentives to stimulate new and re-investments in the sector.

A number of other policy measures have also been put in place to promote growth in other economic sectors with the aim of further economic diversification.

Early indications from the resumption of tourism are encouraging - in the year to February, visitor arrivals have totalled 27,516, which is a twelve-fold increase relative to the same period in 2021. Including visitors that arrived last December, there has been a seventeen-fold increase in visitor arrivals (from 2,974 to 50,742) since borders reopened for tourism.

Fiji’s overall macroeconomic fundamentals also remain strong - an important prerequisite for future growth and development.

Foreign reserves currently stand at $3,162.4 million, equivalent to cover 8.7 months of retained imports, lending stability to the exchange rate regime. Liquidity levels in the financial system are currently around $2.0 billion, helping to support the low interest rate environment.

The financial sector remains sound backed by strong capital position with adequate provisioning. 1.20 With improved confidence levels and reduced uncertainty with the pandemic, investment prospects are looking favourable.

Inflation, on the other hand, has been increasing recently with the rise in international prices and freight costs.

“The Revised FY2021-2022 Budget builds upon the better than earlier anticipated recovery in the tourism sector and the overall economy and is designed to align revenue projections with recent economic developments and recalibrate expenditures based on current performance with spending reprioritisation where needed.

“This Revised Budget also addresses some of the new challenges being faced in the post-pandemic world, including measures to mitigate inflationary pressures while at the same time restructuring the tax regime to ensure revenue adequacy and efficiency in tax collection.

“Expenditure allocation focuses on ensuring improvements in public service delivery and at the same time clamping down on inefficiencies and controlling operational expenditure.”

Fiji’s Trading Partners:

The US economy rebounded by 5.7 per cent in 2021, compared to a 3.4 per cent contraction in 2020. The growth was on account of higher personal consumption, investment and exports. The US economy is expected to grow by 4.0 per cent and 5.4 in 2022 and 2023 respectively.

The Eurozone economy rebounded by 5.2 per cent in 2021, however, prospects have been dampened by the emergence of the Omicron variant beginning late last year.

Nonetheless, countries in the region have since begun easing restrictions to avoid impinging on the economic recovery.

Energy prices and broad-based price pressures pushed inflation to a record high of 5.8 percent in February 2022, putting pressure on the European Central Bank to gradually withdraw its pandemic support into 2022.

The Eurozone is forecast to expand by 3.9 per cent in 2022 and 2.5 per cent in 2023.

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