The central bank has warned of supply chain issues, impacted trade and hiked costs of goods if the escalating Middle East crisis between US, Israel and Iran takes long.
Reserve Bank of Fiji (RBF) governor Ariff Ali said if the war went on for long, it would impact everyone.
“There will be supply chain issues. Ships must now have to take a much longer route because the Hormuz canal has been blocked,” Mr Ali told members of the private sector and business community at the State of the Economy breakfast talanoa on Wednesday.
“Food prices will rise. As soon as oil prices rise (which had increased by 17 per cent), then all other prices will increase because transportation costs will go up.
“What this also means is that this will impact trade, growth is going to be slowed down, and inflation will be up,” he said.
Mr Ali said those were challenges that they saw coming, particularly if the world economy slowed down.
“If this takes long, it’s going to impact all of us, and right now, things are still unfolding.”
He said the best thing at present was for tourism stakeholders to execute a campaign promoting Fiji as the safest place to be in the world now, which would boost the tourism industry and in turn our foreign reserves.
Minister for Finance Esrom Immanuel said the war would cause downside risks to economic growth, and for Fiji, there would be fiscal vulnerabilities going forward.
He said these posed concerns for Fiji because it imported most of the goods, including the major import of fuel.
“So, there is concern about energy security, stability in our trade routes as well, and there will be price pressures on us going forward,” Mr Immanuel said.
“We haven’t analysed in detail the financial ramification, but we are certain that it will affect Fiji,” he added.
Meanwhile, apart from the war’s impact on trade, economies and inflation, Mr Ali said the crisis could also impact on the psychology of human beings.
