Tough year ahead for Fiji: Economist
Wednesday, March 28, 2007 - www.fijitimes.com
THE Fiji economy is expected to contract by an estimated 2 per cent this year, according to a leading bank's senior economist.
ANZ Senior Economist Jasmine Robinson said the modest decline in growth was expected to be led by the tourism sector.
"Investment prospects are likely to remain uncertain until the interim Government provides greater clarity over macroeconomic policy and investment directions," Ms Robinson said.
"Recent downgrades to the outlook by major ratings agencies will weigh on investment decision. However, the revised budget goes some way in identifying measures to improve the business climate."
She said the persistent problems in two top major export groups sugar and garments were likely to remain unchanged as the garment sector continues to face stiff competition from the Asian manufacturing bases.
Sugar restructuring will need to feature more prominently as the industry adjusts to the phased reduction in the European Union sugar subsidies, she said.
"One bright spot will be tourism where recovery in visitor numbers will likely follow the calmer security situation. We expect a modest pick up in economic activity in 2008 led by recovery in tourist related activity," she said.
"However, the Fiji tourism sector would benefit from an added injection of support today to continue to uplift is international profile." She said further reforms were needed for a number of industries but guidelines should be considered to format this in a move to assist foreign investors and "get out of this weak position."
Fiji Chamber of Commerce acting president Swani Maharaj said Ms Robinson missed a vital point Fiji had learnt to bounce back on its feet after three previous coups.
"I'm not a doctor of gloom and doom," he said.
"I enjoy a positive outlook. I have faith in the interim Finance minister (Mahendra Chaudhry), who has introduced measures which will turn the economy around by November."
Mr Maharaj said the level of commitment from the people and the government was evident and promising.
He said if the EPA negotiations with the EU over the sugar trade did not materialise in Fiji's favour, the fall back plan would be to cut imports and prevent substandard items being dumped locally.
"For those migrating, there should be tighter control in paying out money," Mr Maharaj said.
"It shouldn't be paid in lump sum, but on a piecemeal basis for such cases.
"And foreigners who want to invest in Fiji need to borrow a maximum of 40 per cent locally, not like Natadola and Momi Bay where they borrowed everything they needed locally."