The Reserve Bank of Fiji says if the second wave of the COVID-19 is not contained soon, it will weaken the already fragile finances of many businesses.

In its latest Economic review, the RBF says the continuation of the virus will also further dampen consumption activity.

VAT collections have already declined for April, going down by 21.5 percent, while new consumption lending declining by 20.6 percent.

New vehicle registrations went down by 2.6 percent and electricity consumption was at minus seven percent as all recorded annual contractions.

Second-hand vehicle registrations continues to gain ground as it once again was up and this time by 152 percent.

There was a massive 96.4 percent decline in visitor arrivals prior to the latest lockdown as international travel remains severely restricted.

The RBF’s Job Advertisement Survey results in the year to April confirm the very weak hiring sentiments as the total number of job vacancies plunged by a significant 66.2 percent.

This was as a result of reduced recruitment intentions being noted in all sectoral categories except for mining and quarrying.

Furthermore, the recent pandemic shock will further impair fiscal revenue collections and increase expenditure commitments of the Government.

In the first nine months of the current fiscal year, the Government recorded a net deficit of $905 million, which is -9.7 percent of GDP as expenditure $2,256m outweighed revenue of $1,351.0m.

The contraction in revenue of -39.1 percent or by $868m was substantial compared to the fall in expenditure of -11.2% or $283.5m.

In the year to February, the trade deficit narrowed by 25.9 percent to $354.4 million as a result of a higher decline in total imports.

In May, foreign reserves reached a historical high, surpassing the three billion-dollar mark and currently stands at $3,134m, sufficient to cover 9.7 months of retained imports.

The RBF again says an economic contraction is likely for this year, while the 2022 forecast looks uncertain.