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The Reserve Bank of Fiji (RBF) has confirmed Fiji's sure path to an economic recession, as all sectors of the economy brace for the harsh impact of the current coronavirus pandemic.
“Following almost a decade of positive economic growth, the domestic economy is now forecast to fall into a recession. The magnitude of the contraction depends on how long the pandemic lasts and the extent of local contagion,” RBF stated in its March Economic Review, released Tuesday.
“The main transmission will be through the tourism industry and cessation of economic activity due to appropriate precautionary measures taken by the Government and the general population. The halt in tourism activity and the general decline in incomes and consumption appetite will also negatively affect Government revenue and have spillover effects to all other sectors in the economy.”
A recession is generally defined as two successive quarters (6 months) of economic decline and weak GDP growth.
Fiji's predicament mirrors the trend in most countries around the world, with the pandemic sparing no one including the global economy, which itself is on life support in the form of financial response packages doled out by all affected governments as well as the world's bilateral and multilateral financial institutions.
This week, the International Monetary Fund (IMF), whose membership of189 countries includes Fiji, issued a bleak prognosis on the health of the world's economy after virtual meetings with leaders of the G-20.
“It is now clear that we have entered a recession as bad or worse than in 2009. We do project recovery in 2021,” said IMF's managing director Kristalina Georgieva in a telecast press briefing.
“In fact, there may be a sizeable rebound, but only if we succeed with containing the virus everywhere and prevent liquidity problems from becoming a solvency issue.”
The IMF, she said, had so far received 81 requests - an unprecedented number - from member countries for emergency funding.
Fiji's economy, initially forecast to grow by one percent this year, is now estimated to contract by 4.3 percent as a result of the coronavirus pandemic.
SOURCE: ISLANDS BUSINESS/PACNEWS
Pacific Islands News Association
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International News Safety Institute (INSI)
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