The World Bank says the potential impact of the current COVID-19 crisis poses heightened risks for the Fijian economy.
The World Bank says the potential impact of the current COVID-19 crisis poses heightened risks for the Fijian economy.
The World Bank in its latest report, titled, East Asia and Pacific in the Time of COVID-19, says Fiji’s short-term outlook is uncertain.
It says all is dependent on the length of coronavirus crisis, the severity of the disruption to the global economy, and the impact on tourism, which is the mainstay of the Fijian economy.
The report reiterates what government has been talking about and it is that the Fijian economy is particularly vulnerable to downside risks stemming from slower growth in main trading partners.
It adds that these could impact tourism, remittances, and export receipts, adding that natural disasters are a constant threat, and delays in structural reforms aimed at mobilizing private investment would also contribute to slower growth and a higher debt-to-GDP ratio.
Fiji’s poverty impact due to COVID-19, is also difficult to estimate due to this uncertainty, says the report.
In 2013, 10 percent of households had at least one member working in the tourism industry, with a further two percent and eight percent with a member working in restaurants and transportation, respectively, which has already been indirectly impacted.
The report goes on to say while workers in these sectors are not dis-proportionally poor, more than 80 percent of these jobs are formal sector salaried employment, which may be difficult to replace in a general economic downtown.
As such, a shock to the tourism industry, which would also cause ripple effects in related industries, and could significantly increase the poverty rate and deepen the poverty gap.
On a positive note, it is anticipated that new air routes and code share arrangements with Asian and Indian carriers have the potential to boost tourism from these markets if the COVID-19 crisis is contained, and more stable oil prices would benefit inflation, imports, and foreign reserves.
