9 Jun 2004

Fiji government warned of economic downturn

10:36 am on 9 June 2004

Fiji has been warned that its economic growth will drop sharply over the next two years unless the government cuts its spending and renews investor confidence.

The Fiji Times says the warning has been issued by a former International Monetary Fund economist and now lecturer at the University of the South Pacific, Dr Sukhdeo Shah.

Dr Shah says Fiji's economic outlook continues to be difficult, despite government pronouncements of 5-percent growth and now even 8-percent targets.

He says realities on the ground point to growth returning to 2 or 3-percent or even lower at the end of the current cycle in two years.

Dr Shah says Fiji's moderately good performance during the past few years is unrelated to improvements in the economic fundamentals.

He says these fundamentals have actually deteriorated as reflected in the decline in the sugar and fishing industries, uncertain state of mahogany exports and historically low levels of private investment.

Added to these factors are threats to financial stability coming from rising government spending and high debt levels.

Dr Shah says in the absence of credible reform efforts, there is no reason to believe that sustained growth is just around the corner.