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. In 2010, Fiji's economy grew by 0.1%. For 2011, the government forecasts a 2.7% growth rate. The government’s year-end 2011 inflation forecast is 7.0%.

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 that led to sugar price reductions of 36%. The European Union promised a large amount of financial aid to assist the ailing sugar industry, but, post-coup, has clarified that the aid will only be forthcoming if Fiji improves its human rights situation and moves quickly toward democracy. In 2010, the Fiji Government began implementing industry reforms, but cane and sugar production levels continue to decline.

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 the World Trade Organization (WTO) General Agreement on Tariffs and Trade. The income from garments plummeted by 47% in 2005 with the end of the ATC quotas. Garments now account for around 9% 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. During January to September 2010, fish was the leading domestic export. Gold from Fiji’s only gold mine is also an important export industry and is expected to continue its positive performance with rising gold prices.

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 before decreasing in 2009. Water exports in the first three quarters of 2010 (January-September) totaled around U.S. $47.98 million (F$87.3 million).

In recent years, growth in Fiji has been largely driven by a strong tourism industry. Tourism has expanded since the early 1980s and is the leading economic activity in the islands. Tourist arrivals grew by 16.3% in 2010. 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 2010 more than 53,000, or around 8.4%, of the tourists were American. Fiji's gross earnings from tourism from January to November 2010 totaled $399.9 million (F$727.7 million), more than the combined revenues of the country’s top five exports (fish, water, garments, timber, and gold). 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 and current account deficit. The trade deficit in 2010 was expected to decrease by 15% to $738.9 million (F$1.3 billion) compared with 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.

Sources:
CIA World Factbook (September 2009)
U.S. Dept. of State Country Background Notes (July 2011)