The second wave highly contagious Delta variant in Fiji has thwarted all chances of an economic recovery this year.

The Reserve Bank of Fiji in its revised growth projections for 2020-2023 says the localised lockdowns in Viti Levu, restrictions on certain economic activity and movement of people, and the mandatory “COVID19-safe” operational requirements for many businesses have further curtailed economic activity and raised the cost of doing business.

RBF Governor, Ariff Ali says the high unemployment and under-employment situation has worsened from last year.

Ali adds the Government finances have taken another hit, thereby further suppressing domestic demand.

Given these developments, the economy is forecast to contract further by 4.1 percent this year, driven by the services and industrial sectors, which are expected to more than offset the positive contributions from the primary sector.

The latest assessment by the Macroeconomic Committee shows the economy is estimated to have contracted by 15.7 percent last year, lower than the 19.0 percent contraction estimated earlier.

Ali says from next year, economic recovery is expected on the assumption that the current outbreak is controlled, herd immunity is achieved through vaccination, and borders re-open towards the latter part of 2022.

Hence, growth is expected to rebound to 6.2 percent in 2022 and accelerate to eight percent in 2023.

According to Ali, while the economic recovery from next year is contingent on the resumption of tourism activity, visitor arrivals are not expected to return to pre-pandemic levels for some time.

However, since the current outbreak has yet to peak and there remains considerable uncertainty on its future evolution and impact on Fijian lives and the economy, Ali says the economic outlook could deteriorate further.

Therefore, he says the balance of risk to the current economic outlook is heavily tilted to the downside.

These include further delays in controlling the recent outbreak of the virus locally, inability to achieve herd immunity, the persistence of the virus globally (especially amongst our major trading partners), and further delays in the resumption of tourism activity.

The Governor says the ongoing threats from natural disasters and the recent upswing in commodity prices constitute other downside risks.

He adds given the economy’s precarious outlook, economic recovery is critically dependent on the successful containment of the outbreak in the near term and the re-opening of borders for international tourism as local conditions allow.

In this regard, a large part depends on achieving herd immunity by ramping up our current vaccination efforts.

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