Fiji’s central bank says economy will recover in 2021
17 May, 2020, 9:21 am
The Reserve Bank of Fiji says the island nation’s economy will recover in 2021 on account of “expansionary policies” it had put in place in response to the impact of COVID-19.
While noting the general weakness of Fiji’s economy, which has been hit hard by the global coronavirus pandemic, the RBF said it had lowered its Overnight Policy Rate to 0.25 per cent and recalibrated an existing lending facility to support businesses facing financing difficulties.
This was to “cushion the impact of a deep and prolonged recession”.
“Similarly, Government announced fiscal stimulus initiatives by increasing funding to priority sectors and offering tax concessions to businesses. In light of these expansionary policies, the Fijian economy is expected to recover in 2021. However, the expected recovery is dependent on the resumption of global travel and trade, lifting of local restrictions and effectiveness of policy responses,” the RBF said in its March 2020 Quarterly Economic Review released this week.
It said the contraction this year was expected as all major trading partners were braced for recession with the exception of China and India.
“The halt in tourism activity and its negative effects on other key sectors are expected to hinder growth during the year.
“While efforts have been made to ensure supply chains are not affected, weak domestic demand and softening business confidence will be a drag on economic activity going forward.
“In addition, anaemic labour market conditions – reflected in reduced working hours and job losses, especially in tourism and related sectors – suggest weak consumer spending in the short to medium term.”
The stalling of large construction projects and slowdown in Government capital projects will also set back the construction, real estate and investment activities this year.
“Furthermore, tax revenue collections by Government are anticipated to fall significantly this year given the weak domestic and global economy.”