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RBF predicts growth

Filipe Naigulevu
Wednesday, November 01, 2017

FIJI'S economy is forecasted to expand by 4.2 per cent this year supported by a strong 3.6 per cent growth outlook for next year.

The Reserve Bank of Fiji made the new growth forecasts recently, which is an upward revision from the 3.8 per cent growth projected for 2017 and 2018 earlier in April.

The 2018 growth outlook was also revised up to 3.6 per cent by the central bank of Fiji from the 3 per cent envisaged earlier.

While the baseline forecast for 2019 and 2020 is 3.2 per cent, broad based growth has also been forecasted, but only for the medium term, said the central bank.

If economic growth is achieved as forecasted, Fiji will register 10 years of consecutive economic growth, the longest period of sustained economic growth since independence in 1970.

In announcing the decision, RBF governor and chairman of the macroeconomic committee, Ariff Ali said the economy was expected to return to the pre-Severe TC Winston trend this year with expansionary 2017/2018 National Budget and associated policies expected to further boost disposable incomes.

He said continued Severe TC Winston-related rehabilitation works were projected to provide additional impetus to economic activity.

"As a result, growth will be driven largely by public administration and defence, manufacturing, construction, wholesale and retail trade and finance and insurance sectors," he said in a statement.

Despite the expanding economy and trade deficit, Mr Ali said on the external sector, the overall balance of payments was projected to remain comfortable.

He said this was due to adequate support from tourism earnings, remittances and foreign financing of private and public sector projects.

Foreign reserves, which were reported by the central bank at all high levels, were recorded at $2,409.7 million as of October 27, 2017.

This is sufficient to cover six months of retained imports of goods and non-factor services as compared with $1,921.2m reserves at the end of 2016.

"Given the spare capacity in the economy and subdued global food and commodity prices, inflationary pressures are expected to remain negligible for now," Mr Ali said.

Inflation, which has been on low levels over the recent months, is forecast at 2.5 per cent by year end.

The central bank also expected the inflation to be around the same levels at the end of 2018-20 given that no major supply side shocks affect it.

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