Report highlights sectors that will lead growth in 2023
1 February, 2023, 8:06 pm
A recent report from Westpac expects the economy to progress through 2023 with a forecast of an increase in the growth profile for the economy with real GDP growth of 7.2 per cent.
In the latest issue of the Westpac Wave, the bank’s senior economist Krishal Prasad said the increase in the growth profile would be led by sectors such as accommodation & food services, transport & storage, finance & insurance, construction and manufacturing.
With the new government’s growth mindset and with no major policy reversals anticipated, Mr Prasad said the economy was expected to continue its recovery and work towards leveling off to 2019 levels in the medium term.
For 2024, on the back of tourism activity returning to pre-pandemic levels earlier than expected and moderation in inflationary pressures, combined with the further rebuilding of business and consumer confidence, the senior economist forecasts a baseline growth of 5.0 per cent for the economy.
While inflation remains one of the biggest challenges facing the global economy because of the ongoing Russia-Ukraine war, the economic report says Fiji is no exception since it is an import-dependent economy.
It said consumer prices had been on the rise since February 2022, and as at December 2022, it stood at 3.6 per cent, mainly driven by the increase in food and energy costs.
According to the report while central banks across the globe are responding by tightening monetary policy by raising interest rates, Fiji has maintained a low interest rate environment.
It said the challenge had been addressed through fiscal policy measures instead, given that inflation in Fiji was supply-driven.
The report highlights that ensuring a sustained return to low inflation will remain ‘item number one’ on the agenda for policymakers and markets for some time, which will eventually filter into domestic outcomes in Fiji.
Overall, Mr Prasad said while the Fijian economy was on track for another year of growth, challenges and risks remain.
He said longer-term prospects aside, the reality on the ground would see another challenging year for the global economy in 2023 as the full impact of last year’s rapid monetary policy re-tightening comes through.