Rebalancing of economy needed in Fiji: ADB

Transcript

The Asian Development Bank says Fiji needs to rebalance its economy away from consumer-driven growth which it says is not sustainable in the medium term.

The ADB in its flagship report for the year says business and consumer confidence in Fiji continues to strengthen as clear progress is made towards elections.

A principal economist with the bank, Emma Veve, told Sally Round, growth is projected to increase to 3 percent in 2015 from 2.8 percent this year.

EMMA VEVE: In Fiji trying to lift the productive sectors to create sustainable growth. I think the growth we've seen in recent years in Fiji has largely been consumption driven growth with a significant pick up in private sector investment last year. But what we need to see is growth that's coming out of the tourism sector, the agricultural sector, the mining sector and this needs government attention to a whole raft of policies to remove some of the blockages to growth in these sectors.

SALLY ROUND: The government has lowered taxes and that has led to the consumer based recovering that Fiji has seen, is a lot of it to do with confidence in the elections do you think?

EV: I think there's very strong signs of confidence in the election and the private sector investment we saw during 2013 as significant milestones towards the elections were achieved, such as the constitution, the creation of political parties and so forth.  We expect to see that private sector growth continue through this year and would hope more of it will become foreign direct investment rather than just the domestic private sector. Fiji is an economy with a lot of potential, there's any number of sectors that people can invest in, it's got a good educated English speaking workforce so it's a good investment destination.

SR: If this election is deemed free and fair and a success do you expect growth to exceed the levels that you've predicted here?

EV: No, look our growth forecasts are based on the expectation of a free and fair election that will be accepted universally. We see signs of that and we are confident it will happen, what we need to see is the policies that the elected government puts in place and just how supportive of sustained growth those policies are. So I think our forecast for this year while slightly lower than last year reflects the fact that growth was so strong last year and was driven by a number of very specific factors coming through last year's budget.

Emma Veve of the Asian Development Bank.

The bank warns a risk to growth is Fiji's large public debt which was equal to 48 percent of gross domestic product in 2013. Meanwhile the ratings agency Moody's has given Fiji a sovereign credit rating of B1 with a stable outlook. It says Fiji's economy is experiencing robust growth on the back of an upturn in business confidence and investment, which have been spurred by an improving political outlook.