Westpac Fiji projects the Fijian economy to rebound by 2.3 per cent in 2021 and further pick up momentum in 2022 by 12.2 per cent.
An economic update released by the bank also states that Westpac Fiji expects recovery across of sectors of the economy with major rebounds anticipated for accommodation and food services, net taxes, transport and storage, construction and real estate activities sector.
However this projection is based on the fact that with vaccine rollout now in progress domestically there is a possibility of joining the travel bubble with Australia and New Zealand which brings some possibility of borders reopening towards the last two months of the year.
According to the bank Fiji’s success on the health front over the past year, along with the vaccine rollout now, has enabled the economy to carry on domestic activity and spending, which has managed to keep the economy somewhat afloat.
However it said the recent detection of new COVID-19 cases in the community, and the resulting lockdowns in certain areas, posed significant downside risk to the outlook.
Despite a forecast of economic expansion by about 2.3 per cent in 2021 and increase by 12.2 per cent in 2022, it also notes that output is not expected to return to pre–COVID levels by year end or even next year.
According to the bank the key dynamics shaping the outlook are the anticipated re-opening of borders towards the end of the year, and a tailwind from ongoing fiscal and monetary policy stimulus.
Meanwhile it continued to say that government’s total revenue collection for the past eight months (August 20 to March 21) stood at $1236.2 million, while total expenditure amounted to $2056.7m, resulting in a net deficit of $820.5m or 8.3 per cent of GDP.
It says that total revenues for the past eight months has been above the forecast which is attributed to the higher than expected collections from both tax and nontax revenues.
According to Westpac Fiji while overall collections are on track compared with the national budget, it is important to note that total revenue collections are down by 40.9 per cent compared with the first eight month collections in the same period last financial year (August 2019 to March 2020), adding that Government’s total expenditure in the same period was down by 7.0 per cent.
“With total government expenditure budgeted at around $3674.6m in FY2020-2021 and revenues projected at $1673.6m, the net deficit is set at around $2,001.0m or around 20.2 per cent of GDP.
“At this stage, it looks like the actual deficit might come out lower than projected. The 2021/22 National Budget is scheduled for June 2021 and would play a vital role in the recovery of the Fijian economy. It would be interesting to see what policies and packages the Government has in place to make the travel and tourism industry more attractive in Fiji following the already discounted departure tax last year and the attractive packages with Fiji Airways.
