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There is some light at the end of the tunnel for Fiji.
This was highlighted in the ANZ Research Pacific Economic Outlook Fiji report, co-authored by ANZ’s International Economist Kishti Sen and Senior International Economist Tom Kenny.
The report was released Wednesday.
The report said: “We are optimistic that some tourism can return from late this year before it once again becomes a key driver of growth from 2022.
“We are also hopeful that the non-tourism economy would continue to support GDP and employment this year.”
The non-tourism economy, the co-authors said, was driven by strong remittances, support from construction and agriculture as well as Government spending, held up fairly well last year.
“Without a step-up in non-tourism industry sectors, the economic contraction and unemployment would have been far worse.
“We are forecasting GDP to increase by 4.9 per cent this year, before lifting by 15.4 per cent in 2022.”
ANZ Fiji Country Head Saud Minam said: “One year into COVID-19 and there seems to be no sign of this going away soon.
“We need to applaud the Government of Fiji, Ministry of Health and frontline essential workers in keeping our country safe from health issues.”
“However to bring back the economic activities it is important that we all play our part and get registered for the vaccination.”
“The only way out from this economic downturn is to open up our borders and welcome back our tourists.”
“I am happy to see reports covering some very important topics such as mental health, please help each other and look after each other in times of needs.”
Tourism could return from late 2021…
The International Monetary Fund (IMF), drawing on lessons from the historical impact of infectious diseases on tourism flows, says that it is reasonable to assume that ascending back to pre-pandemic tourism levels will take a number of years and remain subject to greater uncertainty and setbacks.
“We think international tourism to Fiji could start in H2 2021 and build momentum into 2022.”
“Optimism is rising on the back of good news on vaccine development and deployment.”
“Fiji has a relatively small population of about 660k adults and herd immunity can be achieved earlier than in Asia’s more populous tourism-dependent economies.”
“The global vaccine sharing scheme, COVAX, is slow and small, but both Australia and New Zealand have said they will help the Pacific secure vaccines.”
“The report stated the Fijian government is also liaising with other bilateral partners and serum manufacturers to get the vaccines as early as possible.”
Just this week, India donated 100k doses of Astra Zeneca vaccines to Fiji, with another 90k doses expected to arrive within weeks.
“In addition, and as discussed in Box 1, Fiji has not had any community transmission of the virus for 350 consecutive days.”
“So the concept of a travel bubble, where quarantine-free travel between countries or regions with low or no incidence of COVID-19, could be implemented before herd immunity is achieved.
“And finally, Fiji’s main markets, Australia and New Zealand, have begun their vaccination programmes.”
“Naturally, if a safe travel corridor can be implemented, then tourism could return sooner, which would be a welcome economic boost.”
…Building momentum into 2022
The Fijian Government has introduced various measures to make Fiji’s tourism sector more competitive.
These include elimination of the service turnover tax, a 50 per cent reduction in departure tax to $100 (US$50), reducing the environment and climate adaption levy from 10 per cent to 5 per cent and several thousand promotional vouchers for in-country spend by leisure travelers once the borders reopen.
“We believe there is pent up demand for overseas holidays when the borders open again.”
“Google searches for flights in Australia quickly went up as soon as there was an announcement for open domestic borders.”
“People do want to get on a plane for holidays.”
“There is also potential to draw more visitors to Fiji from Australia’s more popular overseas holiday destinations such as, Indonesia (1.4m trips in 2019), Vietnam (317k), Thailand (543k) and Malaysia (273k).”
“These are long haul flights from Australia’s east cost (where the majority of the population reside), and several of the more populous Asian destinations are not expected to reach herd immunity until late next year.”
“Fiji received 367k visitors from Australia, 206k from New Zealand, 97k from US and 17k from the UK in 2019.”
Non-tourism economy to support economic recovery
Fiji’s non-tourism economy — made up of retail and wholesale trade, manufacturing, construction, agriculture, and the information, communication and telecommunication industry — performed reasonably well in the second half of 2020, according to our survey of the nation’s private business activity over the December quarter.
The report said demand for these (largely) service providers actually improved, with fewer firms reporting a deterioration in sales or profitability in the second half of the year.
“Several factors helped prevent a deeper downturn: government income support payments, early access to superannuation savings, record money transfers from abroad, financial help for small and medium enterprises and a pivot to construction projects, in particular a boost to first home owner grants.
“In a positive sign for future conditions, fewer businesses in the non-tourism economy reported a pessimistic view of the next 12 months, and sentiment around employment and investment improved, no doubt buoyed by vaccine developments.
“Further, steps towards digitalisation of business registration process, bringing tax registrations online and plans to digitalise the building permits process is helping improve business sentiment and investment intentions.
“The construction sector is also expected to do well, driven by building construction, both new dwellings and non-dwelling buildings.
“Despite a tough operating environment in 2020, the value of building permits issued rivalled that of more normal years.”
Fast-tracked and streamlined approval process for obtaining a construction permit for commercial and industrial buildings through the Building Permits Evaluation Committee appears to be supportive of new developments.
SOURCE: FIJI SUN/ANZ/PACNEWS
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