THE FLAWS IN RABUKA CRITICISM OF REPORT ON ECONOMIC SLOWDOWN
HE CANNOT IGNORE THE IMPACT OF THE SLOWDOWN ON THE FIJIAN ECONOMY If he is genuinely concerned he should be talking about the potential challenges we face
There are fundamental flaws in the response by Opposition leader Sitiveni Rabuka to a Between the Lines report on the economic slowdown.
One that is glaring is his dismissal of the impact of the slowdown of the global economy.
If he is genuinely concerned, he should be talking about the potential challenges facing the Fijian economy because of the slowdown.
The weakness in the global economy has implications for Fiji’s major trading partners.
It translates into slower demand for Fijian imports.
Because Fiji is a small and open economy it is heavily dependent on imports.
This was clearly spelt out in the Government’s Economic and Fiscal Update Supplement to the 2019-2020 Budget address by the Minister for Economy Aiyaz Sayed-Khaiyum in June.
If Mr Rabuka has forgotten, the report says any volatile changes in major commodity prices (like fuel) can have a significant impact on our import bill, balance of payments and foreign reserves.
Why slowdown
The slowdown is linked to the weakening growth in major advanced economies, trade war between the United States and China, uncertainty over Brexit, looming Middle East crisis including uncertainty in internal affairs of Israel, slowing down and in some instances massive slowing down of Chinese, German, Indian, Australian, New Zealand economies, access to and supply of oil in the commodities market.
Some of Fiji’s trading partners include the United States, Australia, New Zealand, Japan, China, and India.
Trade with the US is expected to decelerate to 1.9 per cent in 2020 with the “unwinding of the fiscal stimulus”. The trade war between China and US does not appear to be easing.
The deteriorating trade relations will have an impact on the global economy.
Economic trading partners
Both Australia and New Zealand are also feeling the impact of the slowdown.
In Australia, service and manufacturing declined.
Its economy is expected to slow down from 2.8 per cent in 2018 to 2.1 per cent this year.
New Zealand is feeling a slowing down of investment and economic growth is likely to drop from 3 per cent last year to 2.5 per cent.
The Japanese economic has also lost some momentum while the Indian economy slowed due to weaker expansion in private consumption due to tighter financial conditions. Mr Rabuka said the world economy went through cyclical phases which was basic knowledge (Economics 101). He said the national debt had almost doubled in the last 13 years. He said this had led to current situation. He said one could not compare an international inter-governmental organisations such as the United Nations, with the operations of a sovereign state, or Government such as Fiji.
The UN is facing a financial crisis and could be laying off some of the 44,000 staff. The point is that member countries are also affected by the economic slowdown and may be unable to meet their commitments. ALSO READ TOMORROW: Part 2