15 Jun 2004

Fiji Government advised to take tough action to avoid economic decline

4:04 pm on 15 June 2004

An economist from the University of the South Pacific says the Fiji government must move now if it wants to avoid economic decline in the next two years.

Dr Sukhdev Shah says the business cycle of 5 to 7 years between troughs and peaks indicates a serious downturn in the economy.

The government has predicted growth targets of between 5 and 8 percent but Dr Shah says it would take a minor miracle for that to happen.

He says the government needs to increase investor confidence now.

"Government has to first start getting its fiscal house in order. It has to cut out spending as much as it can. Of course it will risk recession because present growth is government demand led and if the government seriously cuts the deficit that will affect growth. So there will be some kind of pain in fiscal adjustment or fiscal contraction."

Dr Shah.