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Economic progress will be slow without changes

By Rachna Lal

SUVA, Fiji (FijiSUN, Feb. 23, 2012) - The International Monetary Fund says Fiji’s economic growth is unlikely to exceed two per cent unless structural reforms are accelerated.

The revelation was made in the IMF’s Staff Report on 2011 Article IV consultations released yesterday.

The report noted Fiji’s economy is growing at a very slow pace and overshadows all other economic concerns.

It indicated that while growth should improve in 2011 and beyond, it seemed unlikely, given political and economic constraints, however structural reforms are essential.

"Medium-term prospects appear to be relatively weak unless structural reforms can be accelerated.

"Growth should slow in 2012, as the natural bounce-back from 2009 to 2010 fades.

"While trend growth could improve modestly thereafter, moving to a significantly higher level of potential growth would require an improved business and political climate and a more aggressive structural-reform effort.

"While there are new mining and other projects on the horizon, some of these have not yet been confirmed and will take time to produce results," the report said.

It stated that after averaging nearly 2.75 per cent during the 1990s as well as the first five years of the new millennium, Fiji’s economic growth dropped to under 0.25 per cent over the last five years.

"In 2010, while developing Asia roared ahead at 9.5 per cent growth, Fiji contracted by 0.25 per cent, worse even than other Pacific islands.

"Against this background, policies to promote investment and growth are the focus of this year’s Article IV consultation," the report said.

IMF predicts that commodity prices are now falling and the one-off factors would soon drop out.

"Inflation should start 2012 at around six per cent and fall toward 3.5 per cent over the medium term, reflecting the anaemic growth outlook, projected small declines in oil prices, and tightly controlled public wages.

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