Floods will drag down economy: RBF

Flood damage will drag down Fiji’s growth forecast for the year, but reconstruction work should provide a boost, says Reserve Bank of Fiji Governor Barry Whiteside.

Whiteside said the slow recovery in agriculture and sugar sectors because of the floods will impact the economy.

He said external sector developments remain stable, as higher travel and gold receipts combined with modest outflows for imports, dividends and other related payments, continue to support a comfortable level of foreign reserves.

He said inflation is expected to moderate towards 3.5 per cent by year-end despite the recent surges in food prices due to the floods.

He said underlying measures of inflation had subsided to below three per cent in February, implying an easing of inflationary pressures over the medium term.

“However, a higher inflation outcome is still possible due to higher crude oil prices, given the existing geo-political tensions in the Middle East, and the impact of the recent flood,” he said.

Besides, he said, given the persistent concerns for the fragility of the global economy and slower trading partner economies’ growth and their impact on the domestic economic outlook, the current stimulatory monetary policy stance remains justified to support domestic demand and growth in the local economy.

By Ropate Valemei