FIJI: MACROECONOMIC HISTORY 2006-current. Reserve Bank of Fiji PFTAC Workshop, Samoa November 2011. 2006. Buoyant domestic demand, drain on foreign reserves, widening trade deficit
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FIJI: MACROECONOMIC HISTORY2006-current
Reserve Bank of Fiji
PFTAC Workshop, Samoa
Buoyant domestic demand, drain on foreign reserves, widening trade deficit
Fairly strong demand conditions (Positive output gap, acceleration in Private Sector Credit Growth, Increase in imports)
Foreign reserves plummeted. Monetary policy tightened further. Credit ceiling adopted.
Monetary Policy Tools :
CREDIT GROWTH & LIQUIDITY
IMPORTS & FOREIGN RESERVES
FNPF Recall in 2006 : F$300m
Continuation of credit ceiling
Tighter monetary conditions led to decline in private sector credit growth
Import demand fell
Tightening of exchange control
Foreign reserves improved
Suspension of OMO and reduction of SRD ratio from 7% to 6%
Improvement in current account balance
CREDIT GROWTH & LIQUIDITY
Underpinned largely by machinery, transport & equipment,mineral fuel & manufactured goods
Oil & Commodity price shocks
Recovery in domestic demand (easy monetary conditions + exchange rate appreciation)
Deterioration in the current account balance and rapid drain in foreign reserves
CAB deteriorated further, after some adjustment in 2007…
Despite the rebound in Q2, import volume was relatively flat…
Monetary conditions was relatively easy in 2008…
REER appreciates to a new normal, suggesting that on balance there was a competitiveness loss..
Rapid drawdown in foreign reserves…
Global financial crisis and the devaluation
Very weak domestic demand
Tight monetary conditions
Substantial improvement in CAB
Demand collapses in the first 3 quarters but recover in the last quarter…
Tight monetary conditions…
Resurgence in oil & food prices + domestic structural changes (Electricity tariff and VAT)
Stagnant potential output level
Potential output stagnant after 2005…
CA sustainability still a worry..
Foreign reserves moves around 4months cover..
Immediate depreciation in the REER, representing a competitiveness boost..
Swift adjustment in the output gap after Q2 2009..
Output gap around negative territory in 2010 and expected to have moved into positive territory from Q2 2011..