The central bank says Fiji’s economic recovery from 2021 may be higher if the coronavirus is contained this year, the planned tourism bubbles open and there is reasonable travel appetite.
In his capacity as the chairman of the Macroeconomic Committee, Reserve Bank of Fiji governor Ariff Ali yesterday said in contrast, the economic downturn may be deeper and the recovery more protracted if the virus containment stalls, the opening of travel bubbles is delayed to next year and travel appetite remains weak.
Mr Ali said given Fiji’s interconnectedness to the global economy that was deeply dependent on the movement of goods and people, the spillover of the COVID-19 pandemic had trickled down to the domestic economy.
With passenger flights still being restricted leading to decline in visitor arrivals by 75 per cent this year, the RBF says this has culminated in a spike in unemployment as many businesses have scaled back or shut down operations.
Mr Ali said the retrenchment in consumption and investment activities along with the drastic drop in external trade would place additional downward pressure on Government’s tax collections.
Against this backdrop, the RBF is projecting the economy to contract by 21.7 per cent in 2020 – described as the most severe contraction in our modern history.
Mr Ali continued to say that current forecast assumes that inbound travel to Fiji will return to some form of normalcy from the last quarter of 2020 and not revert to 2019 levels at least until 2023.
He said therefore, the recovery was expected to be gradual but contingent on resumption of international travel.
Based on these assumptions, he said the Fijian economy was forecast to rebound and grow by 14.1 per cent in 2021 and an additional 6.5 per cent in 2022.
