Academic describes forecasts as highly optimistic
THE new report released by ANZ has been described as a highly optimistic forecast by an academic, especially the GDP forecast for 2021.
University of the South Pacific’s School of Accounting, Finance and Economics head Dr Neelesh Gounder said moreover, the forecast for the revival of the tourism industry (by any standard) by end of 2021 was also extremely optimistic, given the issues surrounding the COVID-19 vaccines.
ANZ Research’s Pacific Economic Outlook on Fiji forecasts that with the return of international tourists and support from the non-tourism economy such as construction, agriculture and service sectors which is underwritten by remittances and government spending, GDP could rebound partially this year by 4.9 per cent.
The authors of the report further believe that activity can return to pre-COVID levels in 2022 when international tourism once again becomes the key driver of growth, with a forecast of 15.4 per cent lift in GDP for 2022.
The report also highlighted the fact that foreign currency flows are more or less in balance, yielding a comfortable buffer of foreign reserves which in turn is providing good support to the currency peg.
According to the ANZ economists this is 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 on the back of stronger key trading partner currencies.”
Meanwhile Dr Gounder said while foreign remittance had held up and supported domestic consumption, economic and political confidence were other core factors towards reviving growth.
“Moreover, regaining business and investor confidence to drive investment and economic growth in the short to medium term will continue to pose a challenge,” he said.
Meanwhile the report also stated that despite the loss of tourism revenue there was some light at the end of the tunnel.
“We are optimistic that some tourism can return from late this year before it once again becomes a key driver of growth from 2022. We are also hopeful that the non-tourism economy would continue to support GDP and employment this year.”