Fiji — a small state struggling to accelerate growth and generate jobs

Latest IMF review of the Fijian economy is out;

economy is recovering well after Tropical Cyclone Winston and is expected to record its eighth consecutive year of expansion in 2017. Growth is expected to pick up to about 4 percent in 2017, underpinned by reconstruction activities, a vibrant tourism sector, and the recovery of agriculture production. The growth momentum is projected to continue in the coming years. Inflation declined sharply in recent months as the supply of food items started to normalize and is projected to remain around 3 percent.

Risks to the economic outlook are largely related to external developments. The economy is vulnerable to natural disasters that weigh on growth. A tightening of global financial conditions could affect capital inflows. In addition, a possible growth slowdown in China could affect Fiji through its trading partners, especially Australia and New Zealand. On the domestic side, a stalling of structural reform momentum could discourage private sector development and investment.

Sustaining strong growth will depend on maintaining financial stability, rebuilding fiscal policy buffers, and boosting private sector development. Improving the business environment will propel private investment and growth as fiscal and monetary policy support is gradually withdrawn.

In Public Financial Management areas and data quality there is still a lot of work to be done- “the presentation of government budget improved somewhat” is very vague for typical IMF language.

Improving the business environment will propel private investment and growth as fiscal and monetary policy support will be gradually withdrawn.

“As that happens, we think that the private sector will play a much more important role and so the most important economic challenge is to create a condition that will allow the private sector to thrive.”

For Discussion: Compare with the ADB’s report on Fiji utilizing the growth diagnostic framework with the IMF’s assessment. Do they come up with the same conclusions in going forward?

Uni. of Adelaide & Columbia Uni NY alum; World Bank, PFM, Global Development, Public Policy, Education, Economics, book-reviews, MindMaps, @iamaniku