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Economy of Fiji

From Academic Kids

Endowed with forest, mineral, and fish resources, Fiji is one of the most developed of the Pacific island economies, though it remains a developing country with a large subsistence agriculture sector. Agriculture accounts for 18 percent of Gross Domestic Product, although it employs some 70 percent of the workforce as of 2001. Sugar exports and a growing tourist industry are the major sources of foreign exchange. Sugar cane processing makes up one-third of industrial activity; coconuts, ginger, and copra are also significant. A major aim of the Fijian government is to achieve self-sufficiency in rice production. Cattle farming, fishing, and forestry (especially pine trees) are being encouraged in order to diversify the economy; the leading manufacturing industries involve the processing of primary products. On 14 April 2005, the Cabinet approved Prime Minister Laisenia Qarase's proposal to develop a biofuels industry. Under the plan, ethanol is to be developed as a complement to the sugar industry, with the hope of alleviating Fiji's dependence on imported fossil fuels such as petrol.

The country's tallest building is the 14-story Reserve Bank of Fiji Building in Suva.

Contents

Tourism

Tourism has expanded rapidly since the early 1980s and is the leading economic activity in the islands. More than 409,000 people visited Fiji in 1999 (excluding cruise ship passengers). About one-quarter came from Australia, with large contingents also coming from New Zealand, Japan, the United States and United Kingdom Over 62,000 of the tourists were American, a number that has steadily increased since the start of regularly scheduled nonstop air service from Los Angeles. Tourism earned more than $300 million in foreign exchange for Fiji in 1998, an amount exceeding the revenue from its two largest goods exports (sugar and garments). The effects of the Asian financial crisis led to a sharp drop in the number of Asian tourists visiting Fiji in 1997 and 1998, which contributed to a substantial drop in gross domestic product. Positive growth returned in 1999, however, aided by a 20% devaluation of the Fijian dollar.

Trade

Fiji runs a persistently large trade deficit. Imports in 1998 accounted for US$721 million, and exports for US$510 million, resulting in a US$116 million deficit. Tourism revenue yields a services surplus, however, which keeps the current account of its balance of payments roughly in balance ($13 million in 1998). Australia accounts for between 35% and 45% of Fiji's trade, with New Zealand, the United States, the United Kingdom, and Japan varying year-by-year between 5% and 15% each.

Foodstuffs, machinery, mineral fuels, beverages, tobacco, and manufactured goods are the principal imports. The two largest exports are sugar and garments, which each accounted for approximately one-quarter of export revenue in 1998 (roughly $122 million each). The sugar industry suffered in 1997 due to low world prices and rent disputes between farmers and landowners, and again in 1998 from drought, but recovered in 1999. The Fijian garment industry has developed rapidly since the introduction of tax exemptions in 1988. The industry's output has increased nearly ten-fold since that time. Fish, lumber, molasses, coconut oil and ginger are also important exports, although the last two are in decline. Forestry became important as an export trade in the mid-1980s, when the pine plantations planted in the 1950s and 1960s began to mature. Gold and silver are also exported.

Economic problems

Since 1987, when the country was destabilized by two military coups, Fiji has suffered a very high rate of emigration, particularly of skilled and professional personnel. More than 70,000 people left the country in the aftermath of the coups, some 90 percent of whom were Indo-Fijians. With the continuing expiration of land leases and ongoing instability in the aftermath of another coup in 2000, a further outflow of skilled workers has taken place.

Low investment rates and uncertain property rights are long-term problems (by law, five sixths of the land is owned communally by indigenous Fijians and may be leased to others, but many of the leases are now expiring). In recent times, the government has been reviewing investment laws and relaxing work permit requirements, in order to encourage foreign investment.

Fiji's growth slowed in 1997 because the sugar industry suffered from low world prices and rent disputes between farmers and landowners, a sensitive issue in Fijian politics, with 83.2 percent of the land held in inalienable rights by indigenous Fijians. Only 8.2 percent is freehold, with 5 percent government-owned and 3.6 percent state freehold. Drought in 1998 further damaged the sugar industry, but its recovery in 1999 contributed to robust GDP growth. Further damage to the economy (estimated at US$30 million) was wrought by a cyclone that hit the northern island of Vanua Levu in January 2003. Apart from the economic devastation, there were food shortages and outbreaks of disease due to the pollution of the water supply.

The aftermath of the political turmoil in 2000 resulted in a 10-percent shrinkage in the economy, as investor confidence plummeted and tourist numbers dropped sharply. There has been a gradual recovery since 2001, when the 1997 constitution was restored and free elections held. The possibility of a return to a racially discriminatory constitution led to fears that Fiji might forfeit its preferential arrangements with the European Union for its sugar exports, and with Australia for its clothing industry, but those fears have largely (but not entirely) subsided.

A June 2003 survey revealed a disturbingly high percentage of squatters - about one in ten Fijian citizens. An estimated 82,350 individuals in 13,725 households lived in 182 squatter settlements, with Suva and Nausori being the worst-affected areas. The number of squatter settlements had increased 14 percent since January 2001, and 73 percent since 1996. Urban migration, unemployment, the expiry of land leases, and the breakdown of nuclear and extended families were among the factors blamed for the trend. The report projected the population of squatters to grow to 90,000 in the Suva-Nausori corridor by 2006, putting increasing strain on supplies of water, electricity, sewage, and road services.

Economic Statistics

Income

Gross Domestic Product (GNP): US$1.48 billion; US$1820 per capita (2000)

Gross Domestic Product (GDP): US$1.64 billion; US$2031 per capita (2000)

purchasing power parity - US$5.9 billion; US$7300 per capita (1999 estimate)

GDP - real growth rate: 7.8% (1999 est.)

GDP - composition by sector:
agriculture: 16.5%
industry: 25.5%
services: 58% (1998 est.)

Population below poverty line: NA%

Household income or consumption by percentage share:
lowest 10%: NA%
highest 10%: NA%

Inflation rate (consumer prices)

1.1% (2000 est.)

Workforce

Labor force: 235,000

Labor force - by occupation: subsistence agriculture 67%, wage earners 18%, salary earners 15% (1987)

Unemployment rate: 6% (1997 est.)

Budget

revenues: $540.65 million
expenditures: $742.65 million, including capital expenditures of $NA (1997 est.)

Industries

tourism, sugar, clothing, copra, gold, silver, lumber, small cottage industries

Industrial production growth rate: 2.9% (1995)

Electricity

Electricity - production: 550 million kWh (1998)

Electricity - production by source:
fossil fuel: 20%
hydro: 80%
nuclear: 0%
other: 0% (1998)

Electricity - consumption: 512 million kWh (1998)

Electricity - exports: 0 kWh (1998)

Electricity - imports: 0 kWh (1998)

Agriculture

Agriculture - products: sugar cane, coconuts, cassava (tapioca), rice, sweet potatoes, bananas; cattle, pigs, horses, goats; fish

Exports

US$510 million (1998)

Exports - commodities: sugar 32%, clothing, gold, processed fish, lumber

Exports - partners: Australia 34%, United Kingdom 18%, other Pacific island countries 11%, United States 11%, New Zealand 5%, Japan 5% (1997)

Imports

US$721 million (1998)

Imports - commodities: machinery and transport equipment, petroleum products, food, chemicals

Imports - partners: Australia 45%, New Zealand 15%, Japan 7%, United States 5%, Singapore 4% (1997)

Debt and aid

Debt - external: US$136 million (2000)

Economic aid - recipient: $40.3 million (1995)

Currency

1 Fijian dollar (F$) = 100 cents

Exchange rates: Fijian dollars (F$) per US$1 - 1.9654 (January 2000), 1.9696 (1999), 1.9868 (1998), 1.4437 (1997), 1.4033 (1996), 1.4063 (1995)

Fiscal year

calendar year

See also

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