Report highlights Fiji’s economic impact after cyclone

 FIJI’s economic prospects will be determined by the adverse impact of Cyclone Winston on the country’s tourism sector, according to an ANZ report.

The report highlighted the economic impact of the cyclone on Fiji’s economy as the nation rebuilds from devastation left behind by the most severe tropical cyclone ever recorded in the Southern Hemisphere.

The report said tourism industry was the key source of foreign exchange revenue for the domestic economy, accounting for 37 per cent of GDP (Gross Domestic Product) and 33 per cent of employment.

“The silver lining for Fiji is that its worst affected area, Koro Island, is not amongst the top 10 travel destinations within the country,” the report said. 

“Furthermore, the disaster occurred during the seasonal lull season in tourism, suggesting seasonal employment would not be affected.

“Though we see GDP growth moderating in the near term, momentum will likely resume its pace in late 2016, supported by reconstruction efforts.”

The ANZ report said Fiji’s relatively strong macroeconomic fundamentals would help withstand the adverse impact of the storm.

“We expect damages to be highest in sectors such as agriculture, hospitality and housing.

“Reports from the sugar industry have forecast losses of around US$40 million (K119.6 million) from the storm,” it said. 

“Still, the share of agriculture in the Fijian economy is relatively small at 11 per cent compared to 70 per cent in services. 

“This suggests that the bulk of the Fijian economy is intact and could rebound quickly.” ANZ said Fiji’s GDP growth was likely to print sub 4 per cent in 2016, with potential risks to Fiji’s economic prospects that would include the stretching of government finances with debt risks that would breach the 50 per cent ratio level.

ANZ, however, said that the proactive response by the Fijian Government was positive given the risks posed.