5-Year and 20-Year National Development Plan 2.0 STRENGTHS AND ENABLING ENVIRONMENT Fiji has evolved over the years in terms of its demography, economic and social development, institutions and governance. The majority of our population are young, presenting a great opportunity for further development. Our economy has almost doubled in the last 10 years, with real per capita incomes rising every year. Trade flows have increased, and investment levels are also growing. Significant achievements have been made in social development. Fiji’s image has been transformed to that of a country of equal opportunities for all. Infrastructure is continually improving through substantial public sector investment. The business regulatory environment and the tax regime have been reformed to support commerce. Technological advancements have been made on many fronts, and the country is digitally connected. 2.1 Demography Fiji’s population was estimated at 865,611 in 2014 and is projected to exceed 1.1million in the next 20 years. With around 62 percent of the population below the age of 34, we are a young nation. The rate of outward migration has steadily declined and further declines are anticipated based on current trends. The population distribution is also changing. Urban population is rising, and 61 percent of the population is expected to live in urban areas in the next 20 years. While the majority of the urban population is between the ages of 15 and 44, rural population is dominated by the young under the age of 14 and the elderly aged 60 years and over. This offers both opportunities and challenges for the future. The national census that will be conducted this year will provide more up-to-date population statistics and demographic structure. 2.2 Economic Development GLOBAL ECONOMIC DEVELOPMENTS As a small, open economy, Fiji has both benefited and at times has been negatively affected by global economic developments. However, despite the uncertainties in the global economy, Fiji can capitalise on a number of positive global developments. Oil prices have been low, although rising slowly recently. Fiji’s major trading partners are performing relatively well. The prospects for Fiji’s exports and visitor arrivals are promising, and there are new opportunities for offshore employment and growth in remittances. Changing global economic power and the rise of emerging economies also provide new opportunities that could be tapped. DOMESTIC ECONOMY Despite the frequent occurrence of natural disasters and external shocks, the Fijian economy has been quite resilient. Economic growth has been positive since 2009. This has been one of the longest periods of uninterrupted economic growth since independence. The average growth rate from 2011 to 2015 has been close to 4 percent. Growth has been broad-based and spurred by record tourist arrivals, a booming construction industry, strong consumption, and rising manufacturing, finance and transportation sectors. Growth in the medium-term is also expected to be positive and strong. Total investment increased to an estimated 26 percent of GDP in 2015, driven largely by private sector investment. This trend is expected to continue and increase further. Both exports and imports have increased over the years. While current account deficits have posed challenges for the balance of payments, positive financial flows have supported the strong increase in foreign reserves since 2009. Foreign reserves at the end of 2016 stood at $1.92 billion, sufficient to cover 5.1 months of retained imports of goods and non-factor services. The healthy foreign reserves levels will support our future foreign exchange requirements, including requirements for the imports needed to undertake development projects. Inflation has been moderating over the recent years, underpinned by lower prices of food, clothing and footwear, communication, and education. However, temporary spikes have been prevalent due to the impacts of natural disasters. The prevailing low and stable global food and fuel prices and reduction in the VAT rate have maintained inflation at acceptable levels. MONETARY AND FISCAL POLICY The Reserve Bank of Fiji (RBF) has kept monetary policy accommodative, with its twin objectives of adequate foreign reserves and low inflation safeguarded. This has augured well for maintaining sufficient liquidity in the system and keeping interest rates low. The RBF will continue to pursue monetary and exchange-rate policies in support of external balance, economic stability and growth over the medium-term. Fiscal policy over the years has supported public investments, economic growth and social development. Capital expenditure as a proportion of total expenditure has been increased to over 40 percent. More resources have been channelled towards infrastructure, education, healthcare and provision of other social services to raise the living standards of all Fijians. Government will continue to allocate adequate budgetary resources to key priority sectors that have the capacity to deliver better economic and social returns and support higher, broad-based, inclusive and sustainable economic growth. 12