10 May, 2021, 4:15 pm
The measures announced by the Government in response to the recent cases of COVID-19 are likely to have an immediate negative impact on economic activity, says Erik Aelbers, Head of Economics and Programming, ADB’s Pacific Sub-regional Office in Suva, Fiji.
However, he said it would be beneficial for Fiji’s economic recovery if Fiji could return to COVID-19 contained status.
Commenting in response to the ADB’s Asian Development Outlook 2021, Mr Aelbers said containing the spread of COVID-19 in Fiji was critically important from a public health perspective, but would also facilitate the return of tourism, the timing of which was the most important factor in spurring increased economic activity.
“In the ADO, ADB assumed a gradual resumption in tourism arrivals from the third quarter of 2021,” he said.
While the immediate goal must be to contain the current wave of locally-transmitted cases of COVID-19 and to rollout vaccines, Mr Aelbers says Government needs to continue to implement reforms to improve the ease of doing business and facilitate private sector investment, while considering what support it may be able to provide in the short-term to help businesses survive and maintain jobs.
He said the pandemic highlighted Fiji’s heavy dependence on the tourism sector for economic activity, jobs, and government revenue, and reemphasised the need to diversify the economy over time.
“To promote resilience to ongoing/potential future lockdowns, the government also needs to work with the private sector to enable businesses to operate with COVID-safe business practices (such as protocols for delivery services or contactless pick-up) that have been shown to maintain some business activity without compromising safety and transmission.”
According to Mr Aelbers in the immediate future, fiscal stimulus is still required to support businesses and household incomes.
“However, in the medium term, with the recovery of tourism and the economy, fiscal consolidation will be important, including by revisiting revenue policies, including tax measures, and improving the targeting and quality of public expenditure.
“The recovery of the economy and the return of tourists are inextricably linked.
“That said, Fiji has an opportunity to explore economic alternatives and strengthen its resilience to future shocks.
“Nurturing growth in the agriculture sector may lead to a more equal distribution of incomes in areas beyond Suva and tourism hubs, and may have broader positive health impacts such as helping to reduce the incidence of non-communicable diseases.”