Modest economy growth in 2008: ADB
www.fijilive.com Tuesday March 27, 2007
ADB regional director based in Suva, Sirpa Jarvenpaa said this is predicated much on the recovery of the tourism numbers between six to eight per cent in 2008.
She made the comments while releasing the Asian Development Outlook, the ADB's annual economic publication.
Jarvenpaa said while Fiji's foreign reserves will continue to be under pressure, the tight fiscal and monetary policies are expected to contribute to financial stability.
"But to generate the necessary level of growth for sustainable employment expansion against the subdued growth achieved over the last five years at 3.4 percent and 3.4 per cent in 2006, development challenges call for major structural changes. Particularly to attract more private sector investment.
Jarvenpaa said Fiji faced many economic challenges even before the 2006 coup and 2007 looks as if it would be a difficult year.
She said the 3.4 per cent growth last year was achieved on the back of agriculture, particularly sugar production, forestry, fisheries sectors and expansion in construction, and growth in services stimulated by consumption demand particularly in electricity and water sectors.
"Growth was achieved despite a decline in the tourism sector and the closure of the country's gold mine."
Jarvenpaa said economic performance in 2006 was affected by the continuing loss of preferential access in textile export markets reflecting in a steep decline in clothing industry in 2006 where production was reduced by 25 per cent.
"Imports grew by 12.7 per cent in US dollar terms in 2006 and exports fell by 1.8 per cent.
"While the surplus on services and transports increased primarily due to the personal remittances this was insufficient to offset the widening trade gap."
Jarvenpaa said exports remained weak last year and current account deficit widened, placing pressure on the reserves.
On private sector investment levels, Jarvenpaa said this remained low at the equivalent of eight per cent of Gross Domestic Product (GDP).
She said private investment should comprise the largest share of total investment that should exceed 25 per cent of GDP to generate the necessary level of growth.