Economic damage from COVID-19 to continue into 2021
July 31, 2020 8:50 am
The impact of COVID-19 on Fiji’s tourism industry and its related sectors is projected to result in negative 16 percentage points to GDP in 2020. [File Photo]
The impact of COVID-19 on Fiji’s tourism industry and its related sectors is projected to result in negative 16 percentage points to GDP in 2020.
However, the value addition from health sector spending, a result of the vigorous health check campaigns during the lockdown period, and increased activity in the information and communication sector are projected to add one percentage point to GDP.
The Asian Development Bank in its Pacific Economic Monitor launched today, says the economic damage is expected to continue into 2021.
It says the tourism industry is projected to return to pre-COVID-19 levels only by 2023, provided a vaccine is identified or borders reopened this year.
The Economic Monitor states this is a stark contrast to an economic expansion of 2.5% in 2020 projected by the ADB prior to the pandemic.
It also says the $3.7 billion stimulus budget is expected to generate a net deficit of 20.2% of GDP, pushing debt to 83.4% of GDP.
It says the higher fiscal deficit is on account of lower revenues due to lower rates on taxes, customs, and excise duties on a broad range of items.
Public debt will likely increase to the equivalent of 65.6% of GDP in 2020 from 49.3% at the end of 2019 – a significant increase on the 47.1% estimated in the initial 2020 budget.