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. Until recently, the tallest
building in Fiji was the 14-story Reserve
Bank of Fiji Building in Suva, which opened
in 1984. As of November 2005, the 17 story
Suva Central commercial center is now
the tallest building in Fiji.
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