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Country Report Country Report Fiji June 2004 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2004 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author’s and the publisher’s ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Fiji 1 Contents Fiji 2 Summary 2 The region The region 3 Outlook for 2004-05 4 The political scene 5 Economic policy and the domestic economy 7 Political structure 8 Economic structure 8 Annual indicators 9 Quarterly indicators 10 Outlook for 2004-05 12 The political scene 14 Economic policy 15 The domestic economy 17 Foreign trade and payments List of figures 11 Fiji: gross domestic product 11 Fiji: consumer price inflation Country Report June 2004 www.eiu.com © The Economist Intelligence Unit Limited 2004 2 Fiji Fiji June 2004 Summary Outlook for 2004-05 Tense relations between the prime minister, Laisenia Qarase, and the leader of the Indian-dominated Fiji Labour Party, Mahendra Chaudhry, will continue to mar the political outlook. More trials related to the 2000 coup could re-ignite nationalist sentiment, and strong investor confidence could easily evaporate. Visitor arrivals in 2004 are expected to break the record set in 2003. The political scene Political tensions have delayed progress on plans to rescue the ailing sugar industry and land lease reform. Concern is growing about the failing health of the elderly president and whether the vice-president will be in a position to succeed him. Economic policy A delegation from Fiji has appeared before the World Trade Organisation’s dispute panel to contest challenges to subsidies on sugar exports to the EU. A parliamentary select committee on sugar has been established. The Reserve Bank of Fiji (the central bank) lifted the official interest rate from 1.25% to 1.75% in May. The domestic economy Heavy rains have damaged crops and infrastructure. The textile sector is seeks the renewal of preferential trade terms with Australia. Tourist arrivals rose strongly in the first quarter of 2004. The region Outlook for 2004-05 Pacific island governments are under mounting pressure to increase their anti- terrorism efforts. Despite their many problems, most island economies are forecast to expand in 2004. Financial aid will remain crucial. The prospects for the regional tourism industry are bright. The political scene A meeting of the Pacific Islands Forum (PIF, the main political organisation in the region) in April resulted in agreement on a “Pacific Plan”. But apart from a mandate empowering the PIF secretary-general to initiate a speedy response to a crisis, the plan does little more than reaffirm existing priorities. Economic policy and the Tourism is growing steadily, although the performance of airlines in the region domestic economy has been mixed. Kava producers have been lobbying for the ban on kava exports to Europe to be lifted. Trade officials have met to discuss implementation of the Pacific Agreement on Closer Economic Relations. Editors: Kate Allard (editor); Graham Richardson (consulting editor) Editorial closing date: June 15th 2004 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report June 2004 www.eiu.com © The Economist Intelligence Unit Limited 2004 Fiji 3 The region Outlook for 2004-05 Pressure mounts for anti- Pacific island governments are under mounting pressure from countries such as terrorism action Australia and the US to increase their anti-terrorism efforts, amid fears that an island nation could fall victim to an attack similar to the night-club bombing in Bali, Indonesia, in October 2002. The Fiji-based Pacific Islands Forum (PIF, the main political organisation in the region) is co-ordinating the creation of a regional network of crime-fighting agencies intended to thwart the entry into the region of international criminal organisations that could serve as platforms for supporting international terrorism. The PIF’s 16 member governments (from 14 Melanesian, Polynesian and Micronesian independent states, together with New Zealand and Australia) have given the PIF secretariat fresh policy directives to enable it to respond more quickly and effectively when dealing with regional emergencies and to boost economic co-operation between members. Most island economies will Whereas the Solomon Islands, devastated by communal violence and expand in 2004 corruption, have been helped on the road to recovery by an Australian-led intervention force, the small, once wealthy phosphate-mining state of Nauru is now reduced to penury as a result of the squandering by its political leaders of investment assets valued at more than A$2bn (US$1.5bn). Depopulation caused by migration means that the Cook Islands and Niue face severe labour shortages, while the collapse of Tonga’s national airline in April, with admitted losses of around US$10m, poses a significant risk to an already fragile economy. According to a report by the Economic and Social Commission for Asia and the Pacific (ESCAP), many island governments are struggling to face up to and deal with rising poverty in the region and the impact of a steady erosion in traditional systems of social support. Nevertheless, all six countries (Fiji, Papua New Guinea, Samoa, Solomon Islands, Tonga and Vanuatu) covered by ESCAP reported stronger economic growth rates in 2003 than in 2002, and most of the region’s main economies will expand further in 2004. ESCAP will follow the Asian Development Bank (ADB) by shifting its regional office from Vanuatu to Fiji. Financial aid will remain Island governments are now resigned to the fact that future flows of aid will be crucial conditional on the implementation of reforms to their governmental and economic systems. In addition, having previously been reluctant to recognise the threat, the island governments are preparing to fight the creeping advance of HIV/AIDS into their region. Australia is doubling its annual economic aid to the region, with most of the extra money allocated to improving governance and rehabilitating the economy in the Solomon Islands, as well as improving the law-and-order situation and governance in Papua New Guinea (PNG). Funds also include A$20m (US$15m) over four years for the development in Fiji of a regional police academy to train 900 police personnel a year. However, an Australian think-tank, the Australian Strategic Policy Institute, stated in its Country Report June 2004 www.eiu.com © The Economist Intelligence Unit Limited 2004 4 Fiji annual assessment of the region that the Australian government should ask hard questions about the long-term viability of some Pacific island nations as independent states. The prospects for the tourism Riding on perceptions of the region as being one of safety, peace and freedom industry are generally bright from Severe Acute Respiratory Syndrome (SARS), the regional tourism industry is enjoying something of a boom, and important new resort/hotel projects under way in Fiji, the Cook Islands, French Polynesia and Samoa will boost capacity significantly. By the end of 2004 rival island destinations will be able to analyse the impact on their respective tourism industries of the introduction of cut-price flights from Australia and New Zealand. Concern is growing about greatly reduced tuna catches in Fiji, Tonga and Samoa. Intense debate on the cause of the slump!climate change, overfishing, still little-understood natural weather and ocean-temperature cycles, or a combination of all of these!will continue. The political scene There are few surprises in the A meeting of the PIF’s 16 government leaders in Auckland, New Zealand in PIF’s new “Pacific Plan” April agreed on a “Pacific Plan” to achieve closer political and economic co-operation between PIF members and to intensify the efforts of the Fiji-based PIF secretariat in implementing leaders’ wishes.
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