March 2, 2009

Fiji trade deficit widens, remittances down - Fiji trade deficit widens, remittances down

Fiji continues to buy more than it sells, adding to a deteriorating trade balance that has worsened by 30 per cent to $1.9 billion by November last year, the Reserve Bank of Fiji has revealed.

In its economic review for last February, the central bank said that although Fiji’s exports rose by 16.7 per cent, it was overshadowed by the 24.2 per cent growth in imports.

The review showed that the increase in export receipts was underpinned by re-exports, predominantly of mineral fuels, as well as higher earnings from sugar, fish and gold.

The increase in imports, on the other hand, was across all categories.

“Mineral fuels, food, machinery and chemical imports contributed well over 80 per cent to the growth,” the report adds.

Remittances, which has in recent years assisted the Tourism industry in propping the economy, continued its downward trend and registered a 26.7 per cent annual decline in 2008.

The Reserve Bank governor Savenaca Narube, on Friday, called on key players to avoid the blame game and focus on rebuilding the economy.

“While Fiji is isolated from the financial mess, we unfortunately cannot avoid its economic fallouts. What is happening around us is unprecedented,” he said.

“If ever a time that the country needs to work together to build our economy this is one of them. The economy is our bread and butter. It is our livelihood. It puts food on the table. It pays for our children’s education. It protects the future of our grandchildren.

“So we should all play a part in building this economy right now. We should avoid the blame game. We should focus all our energy in getting things done in a coherent and consistent fashion.

Narube also said that now is the time to take action.

“We are forever setting up committees. The only growth industry now is conferences. We study that. We review that. We review the review and so forth. What we very much lack is action. It is action that makes things happen.

“I believe that if we all implement 50 per cent of what we say we will do, we will be far better off than where we are today."
Fiji cost of living eases: RBF

Inflation eased slightly to 6.1 per cent in January this year, the Reserve Bank of Fiji reveals.

This is compared to 6.6 per cent in the previous month (December) and 7.4 per cent in January last year.

The RBF’s February-end economic review said the slight slowdown in January inflation was mainly strengthened by lower oil prices filtering into the transport and heating and lighting categories.

“Nonetheless, food remained the largest contributor to inflation, buoyed by higher charges for market items as a result of the recent flood,” the report said.

“In the months ahead, domestic price pressures are expected to mount given the supply constraints of market items,” it said, adding the supply of these products was anticipated to be restored by mid year.

The report added that the 2009 year-end inflation forecast remained unchanged at 4.5 per cent.

“Some of the upside risks to this forecast include the volatility in crude oil and wheat prices, and the higher-than-expected increase in costs of market items due to the recent flooding.

“The decline in taxi fares is nonetheless expected to mitigate some of these price pressures.”

Foreign reserves, on the other hand, stood at around $672.2 million, sufficient to cover 2.7 months of imports of goods.
Productivity ‘can lift Fiji economy’

One of the easiest way to grow the economy is to raise productivity, says Reserve Bank of Fiji governor Savenaca Narube.

However, Fiji’s rate of productivity growth is extremely disappointing, he said while speaking at the Rotaract Club of Suva’s business seminar on ‘Productivity and Ethics’ yesterday.

“My estimate is that if we raise productivity rate by one percentage point, it will raise GDP (Gross Domestic Product) by nearly twice that.”

He said productivity is firstly a way of thinking and secondly a mechanical process.

“You can have the best processes in the world but if the people behind them do not want to follow them, productivity will suffer.

“If you have the best degree from the best university but you lack the willingness to work you will not go far.”

A good frame of mind he said, is the first thing to have.

Narube added everyone thought the sub prime problem was over but all were wrong.

“The crisis has deepened and widened beyond anyone’s imagination. While Fiji is isolated from the financial mess, we unfortunately cannot avoid its economic fallout,” he said.

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