Collective PME

#KYR: Fiji - Economy

By The Cove September 10, 2021


The Know your Region’ series is designed to support unit and individual professional military education on the South East Asian region. It’s important for all serving members of our military to have a foundational knowledge of the countries and issues in the Indo-Pacific.

If you want to learn about other facets of Fiji, here are the other KYR: Fiji pages: Diplomacy, Information, Military, The Vuvale Partnership.

FIJI– ECONOMICS

On this page:

  • Summary
  • Economy and GDP
  • Trade Policies and trade with Australia

Summary

Fiji has the second largest economy in the Pacific Islands Forum, with its economy largely sustained by tourism and agriculture. Impacts to its economy have included natural disasters such as cyclones and earthquakes. In 2016, Cyclone Winston had a devastating impact upon the country and its economy, and caused damage to homes, agricultural land and infrastructure. The damage was estimated at to be at 28% of Fiji’s GDP. Past political coups have also impacted the economy and this year, noting Fiji’s reliance on tourism, Fiji’s economy has been severely impacted by the COVID-19 pandemic.

Economy and GDP

Tourism is Fiji’s biggest source of revenue accounting for nearly 40% of its GDP. Since Cyclone Winston devastated the country, its economic recovery has been slow but consistent, supported by financial aid from countries across the Pacific region including Australia, Europe and the US. Two more cyclones in 2020 also had an impact on the country’s economy.

Fiji was ranked 150 in the world based upon its GDP at the end of 2019. In 2020, the impact of COVID-19 on tourism contributed towards an economic decline of 19%, compared to 2019. Fiji’s revenue decreased by FJD$2.8 million (US$1.3 million) in the first quarter of this year, and currently one third of the workforce is unemployed. For more information on current and forecasted revenue from Fiji’s tourism, look here.

This GDP Annual Growth line graph demonstrates the dramatic decline:

Source: World Bank.Org

The nature of COVID-19 has demonstrated that economic recovery predictions can change quickly. Some organisations have predicted Fiji and its regional Pacific nations may be on a slow path to recovery this year and onwards, depending on its control of the pandemic and the return of tourism as can be seen here: Pacific to Return to Positive growth in 2021 – Asian Development Bank. Others see financial aid from bigger nations – including Australia - as the more significant means of economic recovery to avoid a decade of economic and fiscal struggle. Regardless of external analysis, there have been three national budgets delivered since April 2020, adjusting the country’s economic and financial needs to address the impact of the pandemic on the nation’s people, seeking to protect them and support economic recovery.

Agriculture is Fiji’s second largest economic contributor with both subsistence and commercial farming: the former producing cocoa, tropical fruit and fish; the latter producing sugar cane. According to the World Bank, in 2020 agriculture contributed to 14.89% of Fiji’s GDP. The economy is also supported by light-industry for local and regional use such as the construction of small boats. Since the pandemic, initiatives have been established to support those impacted by tourism to find new means of income as well as supporting the economy of their village community. This explainer gives some details:

 

Fiji has a 20-year national development policy. The strategic intent is to reduce government debt and improve current social and economic standards of living. This includes, but is not limited to, improving women’s place in society and supporting their empowerment, expanding the rural economy, providing education for all Fijian children, and improving food and nutrition availability and standards. This video explains the World Bank’s Work Plan for Fiji up to 2024:

 

For more information on Fiji’s GDP and economy, see the resources below:

Trade and investment

Historically, Fiji’s primary sources of trade were sandalwood, coconut oil, sea cucumbers and shipping. For a period of 200 years after their arrival in Fiji, European, Indian and British explorers and missionaries depleted the country of these resources. Today, Fiji’s most significant exports include bottled water, refined petroleum, fish, raw sugar and gold. Australia is among the main countries to whom Fiji exports its goods; others include the United States, New Zealand and Japan.

Over 50% of Fiji’s imports are sourced from Singapore. Imports include fuel, natural gas, vehicles, wheat, meat, rice, cane sugar and telecommunications equipment. Other importers include Australia, France, New Zealand and China.

For more information on Fiji’s trade and investment, see the information below:

Trade with Australia

Fiji and Australia share a strong bilateral relationship. Australia is one of Fiji’s largest trade and investment partners, with Australia importing gold and clothing from Fiji as well as Australians supporting its tourism and services industries. Fiji is Australia’s 11th largest market trader with Australia exporting mainly wheat, meat, paper, propane and butane to Fiji.

For more information on Fiji’s trade with Australia, see the following resources:

Foreign Investment and aid

Australian support to Fiji assists its economic stability, and includes targeted support to the nation’s health services, support to education, as well as humanitarian and fiscal aid following natural disasters. After Cyclone Winston, Australia pledged AU$15 million to help Fiji recover from the worst cyclone it has experienced to-date. This money helped to provide care to those without homes, medical infrastructure and supplies and clean water. The ADF also contributed recovery support post-cyclone.

China has provided Fiji financial assistance since the 1970s, and their bi-lateral relationship has grown considerably since 2009. Fiji signed an MoU with China in 2018 as part of the One Belt One Road Initiative and to support Fiji’s economic growth.

Other countries which have provided investment and/or aid to Fiji are New Zealand, France, the European Union and the USA.

For more information on foreign investment and aid, see the following articles:

  1. Fiji Foreign Aid Data
  2. Tropical Cyclone Winston: Australia’s Humanitarian Assistance
  3. Cyclone Winston: Australia Pledges Another $10 Million in Aid for Fiji Victims
  4. China, Fiji ink MoU on Belt and Road Initiative cooperation
  5. Fijian Ministers at the Second Belt and Road Forum
  6. Why China is challenging Australia for influence over the Pacific Islands
  7. 2019 Investment Climate Statements
  8. Which country gives the most aid to Pacific Island nations?

Discussion Questions:

  1. Fiji’s economy is heavily reliant on tourism, which has been decimated by the COVID-19 pandemic. Australia is suffering a similar affect in its tourism industry. How can the two nations work together to boost these industries once the pandemic eases? Should Fiji look to diversify its economy to be more resilient in a time of crisis? How can Australia assist in this?
  2. Recent natural and humanitarian disasters have heavily impacted the Fijian economy, and as such it will continue to rely in foreign aid to support its economy. Should Australia do more to assist Fiji in terms of aid provision? What might this look like? What risks are there from not increasing this support?
  3. Fiji is currently undertaking a 20-year economic development plan to improve standards of living across the nation. Should Australia place any conditions on its continued provision of foreign aid to Fiji?
  4. What does the impact of the future economic state (post-COVID-19) have for Fiji to protect its interests in the region (overfishing, weather events)? How can the ADF assist and build resilience with the economic constraints outlined?

Portrait

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The Cove

The home of the Australian Profession of Arms.

The views expressed in this article are those of the author and do not necessarily reflect the position of the Australian Army, the Department of Defence or the Australian Government.



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