The Fiji economy is estimated to have expanded by 3.6 percent in 2006, underpinned by growth in the finance, insurance, real estate & business services; wholesale & retail trade and hotels & restaurants; manufacturing; building and construction; community, social & personal services and electricity & water sectors.
For 2007, the economy is forecast to contract by 3.9 percent. The projected contraction is largely underpinned by a decline in the community, social & personal services sector as a result of lower Government expenditure this year. In addition, the completion of several large construction projects and the decline in tourist arrivals mean that the building and construction and wholesale and retail trade, hotels & restaurants and transport & communication sectors are also expected to drive this year’s economic decline. In addition, activity within the financial, insurance, real estate & business services sector has also been subdued. Furthermore, while Westech Gold Fiji Limited (WGFL) has taken over the operations at the Vatukoula mine, no gold production is envisaged for 2007.
Recent economic data support the weak economic outlook for 2007. The Business Expectation Surveys (BES) conducted by the Bank in June indicate below average trading conditions for the economy in the short and medium-term. Consumption activity has also remained weak as suggested by the performance of partial indicators. Net Value Added Tax (VAT) collections, cumulative to October 2007 were lower by 8.0 percent on an annual basis, while lending for consumption purposes and currency in circulation also slowed.