Standing amid the smoking ruins of our economy, RBF Governor Savenaca Narube is putting on a very brave face.
The years 2007 and 2008 promise to be the worst two years in our economy’s coup blighted record. Previous coups have seen the economy take a hit and then bounce back. In 2000, the hit was smaller than in 1987 and the bounce-back of 2 per cent growth in 2001 reversed the 1.7 per cent contraction in 2000.
When Mahendra Chaudhry took the reins it was clear that he thought this experience would be repeated. Instead the economy shrank by 4.4 per cent and. even on the illegal regime’s own estimates, the bounce-back will not even recover half of what has been lost.
Savenaca Narube is trying to tell us we will get growth of 1.7 per cent, less than the forecast 2.2 per cent, but still growth. ANZ senior economist, Jasmine Robinson, has said 1 percent is possible, but no-one in the business community expects it to be that good.
Narube’s optimism suggests that he has the Chodopu$$ tentacles pulling at every part of his anatomy. There is nothing in any of the information put out by the RBF to indicate anything other than despair.
Try these few samples from the June RBF Economic Bulletin:
“lending for investment purposes by commercial banks and imports of investment goods continued its downward trend.”
“the results of the Business Expectations Survey and Fiji Employers’ Federation Expectations Survey, which point to a decline on capacity utilisation and planned investment in building and machinery.”
The increase in the number new taxpayers coming into FIRCA’s system declined dramatically to equate to “an annualised decline of around 11.0 percent.”
“Commercial banks’ annual credit growth slowed to 4.7 percent in April, compared with 12.4 percent in the corresponding period last year. The slowdown is largely attributed to lower lending to the building and construction sector and borrowing by private Individuals.”
In short, nobody is investing and for one obvious reason: the State apparatus in the hands of thieves with no respect for law or the rights of anyone.
Are there any bright spots? Well job vacancies have increased, but all this means is that the flow of skilled people emigrating to escape the disaster that is the Fiji economy has increased.
By contrast, remittances from people who have left Fiji and are working overseas dropped by 20 per cent last year. People are still sending money home to help out family but no-one would dream of investing in a house or a business in Fiji at the moment. Local business people are trying to think of ways of escaping and taking their savings with them.
What Mahendra Pal Chaudhry hasn’t factored into his calculations is his own incompetence. He is a cunning and ruthless politician but he is no economic manager. He doesn’t understand business and he no doubt thinks he can ignore advice from economists if it doesn’t suit his political machinations.
A good example of the incompetence of his economic management of the economic management is the imposition of a new export tax on the only growing export Fiji has, mineral water. At a time when export income is desperately needed to avoid devaluation, this can only serve to dampen growth in exports.
If you increase the cost of anything, you are generally going to sell less of it. It may surprise Fiji’s economic genius, Mahendra Chaudhry, but Fiji is not the only source of mineral water in the world.