MORE families will be pushed into poverty as repercussions of the US and Isreali war against Iran escalates in the Middle East and hit Fijians where it hurts most – in the pocket.
Former Reserve Bank of Fiji governor Savenaca Narube said Fiji, as a group of small islands in the middle of the vast Pacific Ocean heavily dependent on tourism, would feel the economic impact of this crisis through lower investment, less visitor arrivals, higher fuel prices and higher freight costs.
“The rise in the already high cost of living will push more families into poverty,” Mr Narube told this newspaper.
“The crisis underlines the critical importance of diversifying our economy by raising the production of our natural resources for local consumption and exports.”
The war, now into its fourth day and causing widespread damage and casualties across the Middle East, is already pushing up the price of oil in international markets, crippling air travel in the region and choking a major global supply chain route, the Strait of Hormuz in the Persian Gulf where some 20 per cent of the world’s oil supply is transported through.
While the military attack on Iran took many by surprise, its inflationary impact is not and is expected to push up the cost of production, food prices, transportation and the cost of doing business in Fiji in the coming months.
In its February Economic Review, RBF said it expected annual headline inflation “to gradually rise over the course of 2026 as the effects of the lower VAT rate adjustments and the bus fare subsidy continue to unwind.”
“Inflation is projected to be between 2.5 – 3.0 per cent at the end of this year, assuming no major shocks,” RBF Governor Ali said in the February Economic Review.
With the war breaking out after this review period, inflation is expected to be higher.
