Other
islands and island groups include Taveuni
and Kadavu (the third and fourth largest
islands respectively), the Mamanuca Group
(just outside Nadi) and Yasawa Group,
which are popular tourist destinations,
the Lomaiviti Group, outside of Suva,
and the remote Lau Group. Rotuma, some
500 kilometres (310 mi) north of the archipelago,
has a special administrative status in
Fiji. Fiji, endowed with forest, mineral,
and fish resources, is one of the most
developed of the Pacific island economies,
though still with a large subsistence
sector. Fiji experienced a period of rapid
growth in the 1960s and 70s but stagnated
in the early 1980s. The coups of 1987
caused further contraction. Economic liberalisation
in the years following the coup created
a boom in the garment industry and a steady
growth rate despite growing uncertainty
of land tenure in the sugar industry.
The expiration of leases for sugar cane
farmers (along with reduced farm and factory
efficiency) has led to a decline in sugar
production despite a subsidised price.
Subsidies
for sugar have been provided by the EU
and Fiji has been the second largest beneficiary
after Mauritius. Urbanization and expansion
in the service sector have contributed
to recent GDP growth. Sugar exports and
a rapidly growing tourist industry—with
430,800 tourists in 2003 and increasing
in the subsequent years —are the
major sources of foreign exchange. Sugar
processing makes up one-third of industrial
activity. Long-term problems include low
investment and uncertain property rights.
The political turmoil in Fiji has had
a severe impact on the economy, which
shrank by 2.8% in 2000 and grew by only
1% in 2001. The tourism sector recovered
quickly, however, with visitor arrivals
reaching pre-coup levels again during
2002, which has since resulted in a modest
economic recovery. This recovery continued
into 2004 but grew by 1.7% in 2005 and
is projected to grow by 2.0% in 2006.
Although inflation is low, the policy
indicator rate of the Reserve Bank of
Fiji was raised by 1% to 3.25% in February
2006 due to fears of excessive consumption
financed by debt. Lower interest rates
have so far not produced greater investment
for exports. However, there has been a
housing boom from declining commercial
mortgage rates.
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