GDP expected to rebound partially, says report
FIJI’S GDP could rebound partially this year by 4.9 per cent with the return of international tourists and support from the non-tourism economy such as construction, agriculture as well as service sectors which was underwritten by remittances and government spending.
This was according to ANZ Bank’s Pacific Economic Outlook for April 2021.
“We estimate GDP fell by 16.8 per cent in 2020,” stated the report.
“However, COVID-19 containment measures have been highly successful, with Fiji going 350 consecutive days without a case in the community.
“And with vaccinations underway, we think there is good chance that international borders could open before the end of this year.
“Further, we believe activity can return to pre-COVID levels in 2022 when international tourism once again becomes the key driver of growth.
“A 15.4 per cent lift in GDP is forecast for 2022.”
Foreign currency flows were stated to be more or less in balance, yielding a comfortable buffer of foreign reserves which in turn was providing good support to the currency peg.
The report stated this was quite remarkable, given the substantial reduction in tourism receipts last year.
“We expect foreign reserves to retain a sufficient buffer, meaning the official FJD/USD rate will continue to be influenced by the ebbs and flows of the AUD and NZD.
“We are forecasting the FJD/ USD to push above $US0.50 ($F1.03) on the back of stronger key trading partner currencies.”
Risks to the outlook were said to be balanced, such as there being a risk that vaccine supply was limited and international borders don’t open this year.
“If this eventuates, we won’t have a bounce in GDP.
“On the upside, if a safe travel corridor can be established, then the recovery in tourism could come through faster than we have forecast.”