Friday, May 24, 2024
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Economy to grow by 6pc for 2023: Prasad

The Ministry of Finance has indicated that Fiji’s economy is forecasted to expand by six per cent in 2023 and another 3.8 per cent next year.

This is when it rebounds to the same level of the real Gross Domestic Product as in 2019.

This was highlighted by the Minister for Finance, Prof Biman Prasad in the Ministry’s ‘Medium Term Fiscal Strategy’ paper provided to Parliament earlier this month.

Prof Prasad said while economic recovery in the domestic economy has been strong; there are a number of risks that has to be managed carefully in the immediate to medium term.

He said, although a broad-based growth is expected over the next two years, the main catalyst will be still be the rebound in tourism activity as it gradually returns to the pre-pandemic level by 2024.

“Sustaining tourism and overall economic growth beyond 2024 will prove challenging. Fiji had benefited from the “first mover advantage” in 2022 due to a higher vaccination rate and earlier opening of borders relative to competitor countries, although these benefits are expected to wane throughout this year.”

The Minister highlighted that two years prior to the pandemic, there was a consecutive slowdown of visitor arrivals owing to high taxation and the rising cost of holidaying in Fiji.

He said whilst some of these issues have been subsequently dealt with through a reduction in tourism-related taxes and duties, the current high inflationary environment has eroded these benefits.

“The tourism industry needs to position itself as a high-quality destination and attract high-yielding guests to create a differentiated market from South-East Asia and possibly other Pacific destinations with a greater focus on staycation packages, sports, eco-tourism and business & conference markets. From a policy perspective, continued and

sustainable growth post-2024 requires structural reforms that support a private sector and export-led growth.”

“Secondly, the broad-based deceleration in the global economy and monetary policy tightening across most of the globe will bring in additional challenges,” Prof Prasad said.

He said that the global inflation rose to a 9.5 per cent last year, which is expected to decelerate to 4.1 per cent by next year.

“These global price developments are expected to pass through to Fiji and keep inflation relatively elevated this year, albeit lower than last year, and may warrant a continuation of fiscal support for the poor and vulnerable.”

Prof Prasad added that Fiji is currently in the cyclone season, and we need to watch out for any major natural disaster which will have impact on the infrastructure, economy, livelihoods and lives of Fijians.

Ilaitia Ravuwai
Ilaitia Ravuwai
Journalist | news@fijilive.com

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