Report: Economy expected to suffer

FIJI’S economy is expected to suffer worse than previously forecasted, the Asian Development Bank stated in its December, 2020 Pacific Economic Monitor Report.

The ADB stated the Pacific subregion was reeling as the pandemic devastated its economies.

“From the 4.3 per cent decline forecast in July, 2020, the subregional gross domestic product (GDP) forecast for 2020 has been further downgraded,” stated the ADB.

“The two largest economies in the Pacific – Papua New Guinea and Fiji – are expected to suffer worse than previously forecasted.”

The ADB stated Fiji’s fiscal deficit was expected to increase to the equivalent of 20.2 per cent of GDP in the financial year 2021 from 8.2 per cent in 2020.

“The impact of COVID-19 has been significant, with revenue as a percentage of GDP falling from 27.3 per cent in FY2019 by 0.9 percentage points in FY2020 and a further 9.5 pp projected for FY2021.

“Compared with FY2020, total revenue in FY2021 is expected to be 33.3 per cent lower (with value-added tax collections down by 8.2 per cent and Customs duties down by 44.2 per cent).

“Government debt is projected to increase from the equivalent of 49.3 per cent of GDP at the end of FY2019 to 65.6 per cent at the end of FY2020 and 83.4 per cent the end of FY2021.”

The ADB stated despite the easing of restrictions, economic costs continued to mount in Fiji.

“ADB projects the economy is likely to contract by 19.8 per cent in 2020 and may only post a minimal recovery of 1.0 per cent in 2021, assuming tourists start returning in the second half of the year.”