Fiji’s economic prospect

remains optimistic: report

MEDIUM-term prospects for the

Fiji economy will hinge largely

on the deepening of current market liberalisation, as well as on

re-establishing business confidence by

devising an acceptable long-term solution

to the political uncertainties of the country, according to the Asian Development Outlook 1990 issued by the Asian Development Bank (ADB).

The report said the Fiji economy staged a sharp recovery in 1989 and its prospects over the short term remained optimistic. The recovery stemmed partly from rapid policy responses to the near collapse of the economy following the

political instability of 1987.

Despite the efforts which have gone

into developing a light manufacturing

base and one aimed at the export market, the report said that the sugar and tourism industries remained the backbone of the economy. “Over the medium term, both industries could face some difficulties,” it said. “The expansion of the sugar industry is

seriously limited by the possibility of

both yield and planted area increases.”

In addition, the recent high prices on the world market which sugar has been receiving are unlikely to be sustained (and since the report was compiled, world sugar prices have declined from more than USl6tf a pound to just over USl3tf a pound. The ADB said the contribution of the sugar industry cannot be expected to be so vital as it has been in recent years. As for tourism, that industry could face constraints because of limited airline seat capacity and

availability of skilled personnel.

There would also be problems for export-oriented manufacturing sector: this would face major adjustment problems resulting from the loss of privileged market access by the

mid-19905. The ADB believes that the future of the Fiji garments industry is clouded by the prospect of losing preferential market access to Australia by 1995. It also notes: “A worrisome evolution has been slow growth in industrial investment in the rest of the economy, reflecting the lack of business confidence in spite of recent achievements.”

On the agricultural front, the report expects that sugar production will rise as better extraction methods are brought into operation, while copra, coconut oil and cocoa production should continue to recover from drought and cyclone

damage in previous years. The forestry

sector is expected to perform well in 1990 and 1991 as pine harvesting and processing are stepped up. But the

industry will suffer significant

competition from other softwood producers, including Chile, New Zealand and Australia.

Despite the longer term outlook,

export manufacturing stimulated by

foreign investment will grow by 8.5 per cent in 1990 and 7 per cent in 1991, with garment, furniture and footwear companies continuing to be attracted to Fiji by low wages and investment. But there could soon be shortages of skilled labour and factory space the ADB said the construction of new industrial facilities has been slow while the investment climate remained very uncertain.

Meanwhile, the Fiji Government is seeking F 5266 million (U 55173.85 million) in capital investment from aid donors and international financial organisations in order to fund 41 projects of which 16 are in the economic sector, 17 infrastructure and utilities, with others being for social welfare and human resources. □