Household consumption also chimed in

Fiji’s economy has performed remarkably well since the last recession in 2009 highlights an ANZ Bank report released today.

The report says this was achieved despite facing strong headwinds from the global financial crisis, which decimated private investment, and frequent natural disasters.

It says public demand and tourism were the key drivers of growth throughout Fiji’s long period of economic expansion.

This was joined by private investment including hotels, offices and residential building from the middle of this decade.

Household consumption also chimed in, driven by falling unemployment, rising private remittances and ‘one-off’ superannuation withdrawals it says.

All in all, Fiji’s economy grew by 3.1% a year over 2010 to 2018 (inclusive), which is 1.2% higher than the average annual growth recorded for the previous 30 years.

The report says despite impressive recent growth, we see activity moderating to 2.8% in 2019 and 2.5% in 2020.

The report anticipates fiscal repair to be new order of the government.

Hence, after several years of budget deficits, it believes the government will begin to unwind some of the stimulus and reduce expenditure (both recurrent and capital).

It says the latter will allow it to return to a position of fiscal strength before the next economic shock.

The report says liquidity management, however, will be crucial in steering the economy away from recession.

While liquidity, at FJD300m, is not currently a hindrance to growth, further falls could push interest rates higher.

It says this will act as a significant handbrake and could derail the economic expansion.