SUVA, July 30 (Xinhua) -- The economic damage caused by COVID-19 will continue to affect Fiji's economy into 2021, the Asian Development Bank (ADB) said on Thursday.
According to Fiji Broadcasting Corporation (FBC), the ADB said in its Pacific Economic Monitor launched on Thursday that the impact of COVID-19 on Fiji's tourism industry and its related sectors is projected to result in negative 16 percentage points to the Gross Domestic Product (GDP) in 2020.
However, the value addition from health sector spending, a result of the vigorous health check campaigns during the lockdown period, and increased activity in the information and communication sector are projected to add 1 percentage point to GDP.
The ADB said that Fiji's tourism industry is projected to return to pre-COVID-19 levels only by 2023, provided a vaccine is identified or borders reopened this year.
Fiji's tourism industry employs approximately 150,000 people directly and indirectly. But this year's visitor arrivals to Fiji are forecast to decline by 75 percent with the flow-on effects bringing tourism dependent sectors to a standstill. This has culminated in a spike in unemployment as many businesses including hotels and resorts across the nation have scaled back or shut down operations. The tourism industry, which has already laid off more than 40,000 people, has been at a grinding halt for the past months, and more lay-offs are likely before things improve this year.
A 3.7-billion-Fijian-dollar (about 1.7 billion U.S. dollars) stimulus budget is expected to generate a net deficit of 20.2 percent of GDP, pushing debt to 83.4 percent of GDP, the ADB said, adding that the higher fiscal deficit is on account of lower revenues due to lower rates on taxes, customs, and excise duties on a broad range of items.
Public debt will likely increase to the equivalent of 65.6 percent of GDP in 2020 from 49.3 percent at the end of 2019 -- a significant increase on the 47.1 percent estimated in the initial 2020 budget.
On Thursday, the Reserve Bank of Fiji (RBF), the island nation's central bank, also said that its overnight policy rate (OPR) remained unchanged at 0.25 percent due to current weak global economic environment.
The Fijian economy is expected to contract by 21.7 percent in 2020 mainly due to poor tourism activity and its knock-on effects to the rest of the economy. Enditem