Westpac Fiji ECONOMIC UPDATE. 03 November

Transcription

1 Westpac Fiji ECONOMIC UPDATE 3 November

2 Outline Global Economy Domestic Economy Overview of Fiji Economy Sectoral Performances Consumption & Investment Activities Fiscal Policy Trade & Foreign Exchange Earners Tourism Earnings & Personal Remittances Financial & Monetary Aggregates Summary Twin Objectives

3 GLOBAL ECONOMY Weaker growth prospects Risks prevail Deceleration in China US monetary policy normalisation Implications of Brexit to the rest of the world Commodity price volatility

4 WORLD GDP GROWTH % f 217f World output Advanced Economies Emerging and Developing Economies Source: IMF World Economic Outlook October 216

5 PACIFIC ISLANDS GROWTH OUTOOK % 14. Papua New Guinea Solomon Islands Vanuatu Samoa Fiji e 216f 217f Source: IMF World Economic Outlook October 216

6 COMMODITIES

7 COMMODITIES World Market Sugar Prices (New York) cents/lb EU Sugar Price(USc) WM Sugar Price (USc) FJ Price F 6 u 5 t 4 22/1 FJ$46.44cents/pound u 3 r e 2 s 1 WM 22/1 US$ 22.46cents/pound Sources: Bloomberg and Fiji Sugar Corporation Index FAO Food Price Index 3 MOM 2.9% YOY 1.% Sep-8 Sep-9 Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Source: Global Food Price Monitor September, 216 $/oz 4, 3, 2, 1, Gold Prices (End of Month) 22/1 FJ$2,594.8/oz 22/1 US$ 1,254.8/oz Source: Bloomberg F u t u r e s

8 BRENT CRUDE OIL PRICES (ACTUALS AND FUTURES) US$/barrel Futures (as at 22/1/16) Oil price as at 22 October 216 Futures (as at 21/7/15) Futures (as at 15/9/16) Source: Bloomberg

9 OVERVIEW OF THE FIJIAN ECONOMY

10 GDP GROWTH Fiji is set for its 7 th consecutive year of economic growth despite natural disasters this year % 6. Actual Oct-15 Forecast May-16 Forecast Gene 29 Mick 21 Tomas Evan p 215e 216f Winston 217f 218f Sources: Fiji Bureau of Statistics & Macroeconomic

11 TRANS FISH WH & RETAIL FORESTRY PUB ADMIN FINANCIAL AGRI ACCOMMO EDU CONS INFO & COM MINING PROF HEALTH WATER REAL EST ADMIN MAN OTHER SER Source: Macroeconomic Committee ELECT ARTS 216 CONTRIBUTION TO GROWTH +3.5% +2.4% % The services category is dominating economic activity, followed by the industrial and primary sectors Services % Primary Industry

12 SECTOR PERFORMANCES & EXPECTATIONS

13 Sectoral performances (annual percent change, unless specified otherwise) Sector Tourism Visitor Arrivals Cum. to Sept: +4.2 T/Earnings Cum. to Jun: +3.9 Forecast: +8. Gold Cum. to Sept: Forecast: +1. Electricity Production Consumption Cum. to Sept: +3.5 Cum to Aug: +.3 Cement Production Cum. to Sept: Garment Production Exports Timber Pinewood Intake Woodchip Production Forecast:+5. Forecast:+7. Cum. to Aug: -38. Cum. to Aug: Mahogany Production Cum. to Sept: Sources: Fiji Bureau of Statistics, Vatukoula Gold Mine Limited, Fiji Electricity Authority, Tropik wood Industries Limited, Fiji Hardwood Corporation Limited, Bureau of Statistics and Macroeconomic Committee

14 Sources: Fiji Sugar Corporation, Fiji Bureau of Statistics, Fisheries Companies and Macroeconomic Committee Sectoral performances are generally positive (annual percent change, unless specified otherwise) Sector Sugar Production (cane) Jun- 1 Oct: (99,556 tonnes) Forecast: Production (sugar) Jun- 1 Oct: -4.2 (11,195 tonnes) Forecast: TCTS (ratio) Sugar Exports Forecast: Fish Production (Industry Source) Cum. to Jun: Total Fish Exports Forecast: +2.

15 EXPECTATIONS FOR GENERAL BUSINESS CONDITIONS Weaker expectations but still positive % Next 3 months Next 12 months Jun.12 Dec.12 Jun.13 Dec.13 Jun.14 Dec.14 Jun.15 Dec.15 Jun.16

16 CONSUMPTION & INVESTMENT

17 Consumption spending remained mixed (annual percent change, unless specified otherwise) Partial Indicators Net VAT Domestic VAT Import VAT Jan-Jul: -26.3* Jan-Jul: Jan-Jul: New Consumption Lending Jan-Sept: New Vehicle Registration Jan-Sept: Second Hand Vehicle Registration Jan-Sept: +1.7 Electricity Consumption Jan-Aug: +.3 Imports of Consumption Goods Forecast: Personal Remittances Jan-Sept: +7.4 PAYE Collections Jan-Jul: +3.7 Job Advertisements (FT) Jan-Sept: +7.2 * due to the change in the VAT rate from 15% to 9%. consumption activity is expected to pick-up further inline with higher anticipated retailing activity post cyclone and FNPF handouts as well as loan packages provided by the banks. Sources: Fiji Revenue & Customs Authority, Land Transport Authority, Fiji Electricity Authority, Reserve Bank of Fiji, Fiji Bureau of Statistics and Macroeconomic Committee

18 Investment spending is also mixed (annual percent change, unless specified otherwise) Partial Indicators New Investment Lending Jan-Sept: Domestic Cement Sales Jan-Sept: +1. Completion Certificates Issued Value Number Jan-Jun: Building Permits Issued Value Number Jan-Jun: Value of Work Put-in-Place Jan-Jun: +1.3 Imports of Investment Goods (Excluding Aircraft) Forecast: Sources: Reserve Bank of Fiji, Fiji Bureau of Statistics, Basic Industries Ltd, Tengy Cement Company (Fiji) Ltd, Ministry of Finance, 215 National Budget Estimate and Budget Supplement, Bureau of Statistics and Macroeconomic Committee

19 Source: Reserve Bank of Fiji RBF RETAIL SALES SURVEY Annual Percent Change Stronger retail sale prospects for 216 % Dec-15 Jun f

20 % 3 Government Target: 25% INVESTMENT Share of Nominal GDP 2 Government Private & Public Enterprises Change in Inventories p 215e Source: Fiji Bureau of Statistics

21 EXPECTATIONS ON INVESTMENT ACTIVITY Improved short term expectations, but medium term expectations remain unchanged for buildings and softened for plant & machinery % Next 3 months Investment (Buildings) Next 12 months % Investment (Plant & Machinery) Next 3 months Next 12 months Jun.12 Dec.12 Jun.13 Dec.13 Jun.14 Dec.14 Jun.15 Dec.15 Jun.16 Jun.12 Dec.12 Jun.13 Dec.13 Jun.14 Dec.14 Jun.15 Dec.15 Jun.16

22 FISCAL POLICY

23 GOVERNMENT BALANCE % of GDP 2. Underlying Deficit (Excluding Asset Sales) Net Deficit /15 15/16 16/17 17/18 (t) 18/19 (t) Sources: Ministry of Economy, National Budget Supplement

24 GOVERNMENT DEBT % of GDP Domestic External Total Public Debt /15 15/16 Sep-16 16/17(b) 17/18(t) 18/19(t) Sources: Ministry of Economy, National Budget Supplement

25 LABOUR MARKET

26 JOB ADVERTISEMENTS SURVEY No. 12, JAN-SEPT 18.7% 1, 8, 2.5% 7.2% 6, 4, 2, Source: The Fiji Times

27 TRADE AND FOREIGN EXCHANGE EARNERS

28 OET EXPORT RECEIPTS: JAN-SEP (+5.1%) 216 ($645.8m) vs 215 ($614.2m) Total Reexports** Sugar Jan-Sep 216 Jan-Sep Fish 1.6 Gold 8.7 Other Exports* 72.3 Mineral Water 8.9 TCF 45.3 Timber F$M *Other Exports Includes: Ginger, Copra, Merchant Goods and other exports ** Total Re-exports includes: Mineral fuel and Others Source: OET

29 OET IMPORT PAYMENTS: JAN-SEP(+13.%) 216 ($2,615.9m) vs 215 ($2,315.8m) Other Imports Food,Beverages & Tobacco Machinery & Elec. Equip Transport Equipment Duty Free Goods Mineral Fuels Chemicals TCF Raw Materials Government Imports Merchanted Goods Jan- Sep 216 Jan- Sep F$M Source: OET

30 TRADE BALANCE OET F$M Export Imports Trade Bal Jan-Sep 4, 3, , 1, , -2, -3, (Jan-Sep) Source: OET

31 MAJOR FOREIGN EXCHANGE EARNERS $M 2, ,5 1,56 1, Tourism Receipts Remittances Mineral Water Sugar Gold Fish Garments Timber Sources: FBOS and

32 TOURISM EARNINGS & PERSONAL REMITTANCES

33 PERSONAL REMITTANCES Personal remittances slowing driven largely by personal receipts F$M Jan-Sep 23% 11% F$M Gifts, Maintenance & Donations Personal Receipts Immigrant Transfers % % p 216f 217f 5-5 Sep-14 Nov-14 Jan-15 Mar-15May-15 Jul-15 Sep-15 Nov-15 Jan-16 Mar-16May-16 Jul-16 Sep-16. Sources: OET & Macroeconomic Technical Committee

34 TOURISM EARNINGS F$M 1,8 Jan-Jun 8% 5% 1,6 11% 1,4 1,2 1, 8 1.6% 3.9% p 216f 217f Sources: Fiji Bureau of Statistics and Macroeconomic Committee

35 MONETARY & FINANCIAL INDICATORS

36 BROAD MONEY & CREDIT Monetary conditions remain favourable but credit growth slowing % 3 Broad Money Domestic Credit Net Foreign Assets (RHS) % Domestic Credit Private Sector Credit Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16-1 Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Source: Reserve Bank of Fiji

37 COMMERCIAL BANKS NEW LENDING, SEPT Slow growth due to reduced new investment related lending F$M 2, 1,5 Total Y-O-Y (rhs) % F$M 2, 1,5 Others Professional & Business Services Electricity, Gas & Water Building & Construction Transport & Storage Real & Estate Manufacturing Private Individuals Wholesale, Retail, Hotels & Restaurants , 5 1, From March 214 HFC lending is included in Commercial Banks Source: Reserve Bank of Fiji

38 BANKS NEW INVESTMENT & CONSUMPTION LOANS, SEPT Credit growth remains positive, but annual slowing is investment-related F$M Building & Construction % 4 Real Estate Y-o-Y (rhs) F$M Private Individuals (Others) WRHR Y-o-Y (rhs) % From March 214 HFC lending is included in Commercial Banks Source: Reserve Bank of Fiji

39 BANKS LIQUIDITY Ample liquidity exists and interest rates at historical lows INTEREST RATES F$M Oct-9 Oct-1 Oct-11 Oct-12 Oct-13 Oct-14 Oct-15 Oct-16 As at 21 October, 216 % Outstanding Lending Savings Deposit Time Deposit Sep-8 Sep-9 Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 % 12. New Lending New Time Deposit Sep-8 Sep-9 Sep-1 Sep-11 Sep-12 Sep-13 Sep-14 Sep-15 Sep-16 Source: Reserve Bank of Fiji

40 MOVEMENTS IN F$ AGAINST BASKET CURRENCIES CHANGE IN VALUE OF FJD AUD NZD JPY USD EUR 3 th September MONTHLY % CHANGE ANNUAL % CHANGE % CHANGE FROM 1 st JAN TO 3 th SEP % CHANGE FROM 15 th APR 9* TO 3 th SEP * 15 th April 9 was the last devaluation of the FJD Source: Reserve Bank of Fiji

41 REER/NEER (Monthly Average) Index REER NEER Sep-8 Mar-9 Sep-9 Mar-1 Sep-1 Mar-11 Sep-11 Mar-12 Sep-12 Mar-13 Sep-13 Mar-14 Sep-14 Mar-15 Sep-15 Mar-16 Sep-16 Source: Reserve Bank of Fiji

42 TWIN OBJECTIVES

43 INFLATION Headline Inflation Contribution to Inflation % Monthly % Change Headline % 5.6% Alcoholic Beverages, Tobacco & Narcotics Food & Nonalcoholic Beverages Education.1 Restaraunts & Hotels -.1 Others* -.6 Housing, Water, Elec., Gas & other Fuels *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

44 FOREIGN RESERVES F$M 2,5 MORI 7. 2, 1,5 Benchmark MORI Cover Retained Imports Cover ,944 1, , /9/ Source: Reserve Bank of Fiji

45 SUMMARY Domestic economic prospects remain firm against the subdued global outlook Opportunities exist for various sectors Labour market conditions remain positive. Private sector optimism persists Supportive fiscal and monetary policy stances Inflation rose due to TC Winston and Floods. Expected to be 3.5% by year-end. Foreign reserves are currently comfortable at $1,981 (5.5 MORI) and expected to remain comfortable for the rest of 216.

46 THANK YOU