Fiji - Economy

Fiji is one of the more developed of the Pacific island economies, although it remains a developing country with a large subsistence agriculture sector. Fiji's sugar sector remains a significant industry and a major export, but crops and one of the sugar mills suffered damage during Cyclone Winston in 2016. The sector also faces the complete withdrawal of European Union preferential prices in 2017. Fiji’s trade imbalance continues to widen with increased imports and sluggish performance of domestic exports. The return to parliamentary democracy and successful elections in September 2014 improved investor confidence, but increasing bureaucratic regulation, new taxes and lack of consultation with relevant stakeholders brought four consecutive years of decline for Fiji on the World Bank Ease of Doing Business index. Private sector investment in 2016 exceeded 20% of GDP, compared to 13% in 2013. For many years sugar and textile exports drove Fiji's economy. However, neither industry is competing effectively in globalized markets. Fiji's sugar industry suffers from quality concerns, poor administration, and the phasing out of a preferential price agreement with the European Union. Since 2006, sugar price reductions totaled 36%. The European Union has promised a large amount of financial aid to assist the ailing sugar industry, but, post-coup, clarified that the aid would only be forthcoming if Fiji improves its human rights situation and moves quickly to democracy.

In 2005, the textile industry in Fiji markedly declined following the end of the quota system under the Agreement on Textiles and Clothing (ATC) and the full integration of textiles into World Trade Organization (WTO) General Agreement on Trade and Tariffs. The income from garments plummeted by 47% in 2005 with the end of the ATC quotas. Garments now account for approximately 9.4% of Fiji's exports and sugar approximately 20.9%. Other important export crops include coconuts and ginger, although production levels of both are declining. Fiji has extensive mahogany timber reserves, which are being exploited. Fishing is an important export and local food source. Gold is also an important, albeit troubled, export industry for Fiji.

The most important manufacturing activities are the processing of sugar and fish. From 2000 the export of still mineral water, mainly to the United States, had expanded rapidly. By the end of 2009, water exports totaled around U.S. $41.95 million, a decrease of 27.1% from 2008.

Economic growth in 2010 was downgraded from 1.8% to 0.1%. For 2011, the Fiji Government forecast a 1.3% economic growth rate.

In recent years, growth in Fiji has been largely driven by a strong tourism industry. Tourism expanded rapidly since the early 1980s and is the leading economic activity in the islands. In the first 6 months of 2010, tourist arrivals grew by 21.6%, recovering from a setback in 2007 after the 2006 coup and flooding in 2009. About 45% of Fiji's visitors come from Australia, with large contingents also coming from New Zealand, the United States, the United Kingdom, and the Pacific Islands. In 2009, more than 51,000, or around 10%, of the tourists were American, a number that had steadily increased since the start of regularly scheduled nonstop air service from Los Angeles. Fiji's gross earnings from tourism in 2009 were about $423.4 million (F$816.5 million), an amount more than double the revenue from its two largest goods exports (sugar and garments). Gross earnings from tourism continue to be Fiji's major source of foreign currency.

Although tourism revenues yield a services surplus, Fiji runs a persistently large trade deficit. The trade deficit in the first half of 2010 decreased by 14% to $388.2 million (F$748.8 million) compared with the same period in 2009. Australia accounts for between 25% and 35% of Fiji's foods trade, with New Zealand, Singapore, the United States, the United Kingdom, and Japan varying year-by-year between 5% and 20% each. Since the 1960s, Fiji has had a high rate of emigration, particularly of Indo-Fijians in search of better economic opportunities. This has been particularly true of persons with education and skills. The economic and political uncertainties following the coups have added to the outward flow by persons of all ethnic groups. Indigenous Fijians also have begun to emigrate in large numbers, often to seek employment as home health care workers. Remittances from overseas workers, which grew 14% from January to May in 2010 compared with the same period in 2009, are second only to tourism as a source of foreign exchange earnings.