CURRENT ECONOMIC CONDITIONS

Transcription

1 Presentation to the FIA CURRENT ECONOMIC CONDITIONS 5 October 2017

2 Global economic outlook Has improved

3 Global Economy Consolidating Healthy Growth Trajectory Global growth (%) Source: 2017 July IMF World Economic Outlook Sources: International Monetary Fund

4 TRADING PARTNER GROWTH OUTLOOK 4.0 % e 2017f 2018f Fiji United States Australia New Zealand Japan Eurozone Source: August Consensus/Asia Pacific Consensus Forecast

5 PACIFIC ISLANDS AVERAGE GROWTH RATE ( ) % Fiji Papua New Guinea Samoa Solomon Islands Vanuatu Fiji Papua New Guinea Samoa Solomon Islands Vanuatu Sources: IMF s Regional Economic Outlook- April 2017

6 FIJI GDP GROWTH % Actual May-17 Forecast r 2015P 2016P 2017f 2018f 2019f Gene Mick Tomas Evan Winston Sources: Fiji Bureau of Statistics & Macroeconomic Committee

7 2016 GROWTH LOWER THAN EXPECTED +2.0% +0.4% 2016P Forecast 2016P Forecast ARTS HEALTH OTHER SER REAL EST ADMIN EDU PROF INFO & COM ACCOMMO FINANCIAL PUB ADMIN WH & RETAIL TRANS Services ELECT MAN WATER MINING CONS AGRI FORESTRY FISH Industry Primary Source: Fiji Bureau of Statistics and Macroeconomic Committee

8 Sector Performances so far Generally positive

9 2017 SECTOR CONTRIBUTION TO GROWTH +3.8% % Primary Industry AGRI FISH FORESTRY MAN CONS ELECT MINING WATER % Services FINANCIAL WH & RETAIL TRANS ACCOMMO INFO & COM PUB ADMIN EDU PROF ADMIN REAL EST OTHER SER HEALTH ARTS Source: Macroeconomic Committee

10 Aggregate Demand Continues to be Buoyant

11 Consumption spending is firm Partial Indicators Annual percent change (unless otherwise specified) Partial Indicators (latest) Net Value Added Tax (VAT) New Consumption lending o/w Wholesale, Retail, Hotels & Restaurants o/w Private Individuals New Vehicle Registrations Secondhand Vehicle Registrations Jan-Jul: Jan-Aug: Jan-Aug: Jan-Aug: Jan-Aug Jan-Aug:-31.9 Consumption activity in the short to MT is expected to be supported by the National Budget - lower VAT, low interest rates, market stability and confidence Source: Industry contacts

12 Investment remains strong Partial Indicators Annual percent change (unless otherwise specified) Partial Indicators (Latest) New Investment Lending Real Estate Jan-Aug Jan-Aug: Building and Construction Domestic Cement Sales Domestic Cement Production Estimated Value of Work put-in-place -1.0 Jan-Aug: Jan-Aug: Jan-Jul: (Q1 2017) The strong growth in investments continues to be driven by some large local projects in the hotel and wholesale & retail sectors Source: Industry contacts

13 INVESTMENT Share of Nominal GDP % Government Private & Public Enterprises Change in Inventories r 2013r 2014r 2015p 2016e 2017f 1.6 Source: Fiji Bureau of Statistics

14 BUSINESS EXPECTATIONS SURVEY - June 2017 % (Net) Overall Business Confidence Next 6 months Next 12 months Jun.13 Dec.13 Jun.14 Dec.14 Jun.15 Dec.15 Jun.16 Dec.16 Jun.17 Source: Reserve Bank of Fiji

15 External balances expected to remain stable 2,500 Trade Balance* Service, Primary & Secondary Income Current Account* 2,000 1,500 1,000 1, ,597 1,794 1,794 1,870 1, ,000-1,797-1,885-1, ,288-2,367-2,445-2,542 Current Account Deficit (F$M) -2,000-2,500-3, p 2015p 2016e 2017f 2018f 2019f Sources: Reserve Bank of Fiji and Fiji Bureau of Statistics; *: excluding aircraft

16 $M 1,800 1,600 1,400 1,200 MAJOR FOREIGN EXCHANGE EARNERS Services Commodities (f) 1683 $M (f) , Tourism Rcpts Remittances 0 Mineral Water Sugar Gold Fish Garments** Timber Sources: RBF & FIBOS

17 Labour market & financial conditions Remain optimistic and supportive of growth

18 Labour market remains upbeat No 25,000 Total (FT & FS) Cum to August 20,000 15, % 10,000 5,000 15,172 13,943 16, Sources: RBF

19 Strong reserves & credit boost money growth % Broad Money Domestic Credit Net Foreign Assets (RHS) % Domestic Credit Private Sector Credit Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Source: Reserve Bank of Fiji

20 Contribution to Bank Lending - August 2017 The 9.4 percent annual growth is largely due to corporate investment lending % Agriculture 0.0 Mining and Quarrying 0.8 Manufacturing Building and 1.2 construction Wholesale, 2.3 Retail,hotels& rests 1.5 Private Individuals 3.0 Real Estate 0.3 Transport & Storage Electricity, gas and -0.1 water Professional & 0.3 Business Services 0.0 NBFIs -0.3 Public Ent. Central and Local 0.0 Govt 0.5 Others Source: Reserve Bank of Fiji

21 Bank liquidity levels remain adequate F$M As at 2 October 2017 Oct-10 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 Oct-17

22 New bank interest rates remain low % Outstanding Lending Savings Deposit Time Deposit % New Lending New Time Deposit Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug Aug-08 Aug-09 Aug-10 Aug-11 Aug-12 Aug-13 Aug-14 Aug-15 Aug-16 Aug-17 Source: Reserve Bank of Fiji

23 Monetary Policy To maintain price stability & reserves adequacy

24 INFLATION Contribution to Inflation September % 2.0% Alcoholic Housing, Water, Transport Restaurants & Furnishings, Hhld. Food & Non- Others* Beverages, Elec., Gas & other Hotels Equip. & Routine alcoholic Tobacco & Fuels Hhld. maintenance Beverages Narcotics *Others include Health, Communication. Furnishings, Hhld., Equip. Routine Hhld. maintenance, Recreation & Culture, Clothing & Footwear and Misc. Sources: Reserve Bank of Fiji and Fiji Bureau of Statistics

25 IMPORTED & DOMESTIC INFLATION % 8.0 Domestic Imported Headline Jan-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jul-16 Aug-16 Sep-16 Oct-16 Nov-16 Dec-16 Jan-17 Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Sources: Reserve Bank of Fiji and Fiji Bureau of Statistics

26 INFLATION Headline & Core September % Monthly % Change Headline Trimmed Mean Core (excl. Food; Energy; Education and Kava) / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / / /2017 Sources: Reserve Bank of Fiji and Fiji Bureau of Statistics

27 INFLATION FORECAST % Actual September 2017 Forecast Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18 Jun-19 Dec-19 Source: Fiji Bureau of Statistics and Reserve Bank of Fiji Estimates

28 FOREIGN RESERVES F$M RBF Holdings Retained Imports Cover MORI 3, ,500 2,000 1,500 1, Benchmark MORI Cover 1, ,412 1,944 1,921 1,811 1,778 1, ,513 1, /10/ Source: Reserve Bank of Fiji

29 SUMMARY Global economy consolidating healthy growth trajectory; Domestic growth; upward bias for this year; Sectoral performances positive overall; Demand supported by positive consumer & business sentiments; adequate monetary conditions & favourable employment outlook Monetary policy objectives intact Inflation was 2.0% in September; year end forecast at 2.5%; Reserves at record high $2.4b in September; similar levels by year end; Monetary & fiscal policies continue to support growth/financial stability.

30 Thank You