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Fiji economic survey: Low growth the new normal?

Author

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  • Neelesh Gounder

Abstract

This article reviews the performance of the Fijian economy from 2015 to 2019. After several years of decent growth (around 5%), GDP growth fell to as low as 0.5% in 2019. Earlier hopes that a ‘new normal’ of GDP growth of around 5% per annum had been established have faded. The principal reason for this, it is argued, is a lack of business confidence, which is associated with the 2018 elections, but more fundamentally with a lack of faith in Fiji's political system [Correction added on 22 April 2021, after first online publication: ‘principle’ has been changed to ‘principal’]. At the same time, the government has also been forced to embark on a course of fiscal consolidation, as announced in the 2019–2020 National Budget, due to disappointing revenue collections and undisciplined expenditure in earlier years. The banking sector is hamstrung by a lack of liquidity. This article is written to understand the Fijian economy pre‐COVID‐19, but with the sharp downturn in economic growth in particular due to the impact of the COVID‐19 virus on tourism—Fiji's most important sector—and no room for fiscal expansion, growth prospects in Fiji are currently not bright. An improved medium‐term outlook will require greater confidence (both political and economic) to increase investment, both foreign and domestic. Reforms to reduce the costs of doing business will also help.

Suggested Citation

  • Neelesh Gounder, 2020. "Fiji economic survey: Low growth the new normal?," Asia and the Pacific Policy Studies, Wiley Blackwell, vol. 7(2), pages 145-157, May.
    • Handle: RePEc:bla:asiaps:v:7:y:2020:i:2:p:145-157
    DOI: 10.1002/app5.307
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    References listed on IDEAS

    as
    1. Alesina, Alberto & Perotti, Roberto, 1996. "Income distribution, political instability, and investment," European Economic Review, Elsevier, vol. 40(6), pages 1203-1228, June.
    2. Neelesh Gounder & Parmendra Sharma, 2012. "Determinants of bank net interest margins in Fiji, a small island developing state," Applied Financial Economics, Taylor & Francis Journals, vol. 22(19), pages 1647-1654, October.
    3. repec:wbk:wbpubs:32436 is not listed on IDEAS
    4. repec:wbk:wbpubs:30438 is not listed on IDEAS
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