THE recent floods in the western side will pose a severe test to our economy, which recently had shown signs of recovery.
The ANZ Pacific monthly released yesterday added that the floods, one of the worst ever had resulted in about $21million worth of damage to the sugar industry.
It said the 2.1 per cent growth in 2011 was because of the strong performance of the sugar and tourism sectors.
And while the labour market remained subdued in 2011 as total taxpayer numbers declined by 44.4 per cent, the report expected a positive outlook for employment during the year.
Government treasury bill sales rose to $F138m in quarter four 2011 from $F80m in quarter three, while sales of corporate promissory note increased to $F20m from $F5m in the same period.
The review also mentioned the comments of IMF Deputy Managing Director Ming Zhu who argued for cautious spending to ensure the region's economies can weather any further turbulence.
In the region, the review said data had been choppy of late, with trade, tourism and remittance numbers mixed.
"Credit growth looks reasonably robust (outside of Tonga) and inflation has eased in the countries reporting this month.
"Pacific currencies have performed well against AUD and NZD recently but commodity prices relevant for the region have trended lower," the review said.