The Asian Development Bank says while Fiji is earmarked to record one of the highest growth rates in the Pacific in 2023, fiscal and monetary tightening in major tourism source markets in response to high inflation may adversely affect the tourism sector.
This is highlighted in the Pacific Economic Monitor, which also indicates that real discretionary income in the coming months may jeopardize Fiji’s revenue recovery.
The report said of the key tourism source markets, Australia and the United States are reportedly facing an economic slowdown, while New Zealand entered a technical recession in the second quarter of the year amid a high inflation environment.
ADB said that all central banks have indicated further tightening should inflation remain above target- To sustain tourism recovery, price competitiveness against similar destinations and household disposable incomes in key markets will be important factors in supporting tourism moving forward.
The report added that while economic recovery is supported by the strong rebound in the tourism industry, risks are titled to the downside with the slowdown in major tourist source markets, fiscal consolidation is necessary to support public investment in key areas such as health, education and water.
“The new revenue measures are critical but need to be balanced out with a strong social protection system to ensure that the most vulnerable people are protected and that the tourism price competitive edge is somewhat protected”
“With 24.1 per cent of Fijians living below the poverty line pre-pandemic, raising taxes at a time when the economy has not fully recovered or income levels restored needs to be carefully monitored,” the report further highlighted.
