SUVA, Fiji (Fijilive, Feb. 2) – A New Zealand research institute says the latest coup in Fiji will be costly, particularly to the country's poor, but may be worse for the economy if it fails.

The New Zealand Institute of Economic Research (NZIER) says the military coup in December was likely to cause long-term harm to the economy, deterring visitors and prompting the departure of professional and skilled workers, if the 2000 coup was anything to go by.

It took four years for tourist numbers to properly recover, implying the loss of about 450,000 visits between 2000 and 2003.

"But this is only a relatively short-term and partial view of the economic effects of the earlier coup," the institute said in a monthly report.

Aside from the 39 per cent fall in visitor arrivals after 2000, there was also a 33 per cent fall in investment, a FJD$36.6 million [US$21.8 million] increase in private transfers abroad as Fijians left the country, and a 3.5 per cent increase in the real interest rate.

Slightly offsetting that was a nearly 10 per cent rise in government expenditure.

Wages, exports, gross domestic product and national welfare were also dented significantly.

"In other words, the effects were profound but, predictably perhaps, the poor will have suffered the most.

"Although it is too early to be certain, the effects of the 2006 coup are likely to be qualitatively similar, because the external and internal shocks are likely to be the same."

Previous research found that in Africa, abortive coups had a bigger effect on economic growth than successful ones.

"Thus, although a failure of the current coup might be preferred for other reasons, the interests of economic recovery in Fiji could conceivably be better served by a successful coup," the NZIER said.

Army Commander commodore Voreqe Bainimarama was sworn in as Fiji's leader on January 5, a month after seizing control in an armed coup. He has dissolved Parliament and banished elected Prime Minister Laisenia Qarase.

New Zealand extended sanctions against Fiji on December 6, suspending aid and banning sporting contacts and visits from Government members.


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