30 years of recession ahead for Fiji and Solomons

APIA - Political unrest in Fiji and the Solomon Islands will cost their economies hundreds of millions of dollars and plunge them into recession for several years, says a report to the South Pacific Forum Secretariat.

In a worst-case scenario, a continuing crisis and full economic sanctions could cost Fiji over $NZ4.17 billion and 40,000 jobs and plunge the country into recession for five years.

A similar scenario in the Solomons could cost over $440.5 million, 6800 jobs and a seven-to-10-year recession.

Even under the best scenario of immediate resolution and a return to normal international relations, the report said that Fiji would lose $1 billion and face two years of recession.

Both nations had strong trading relationships with their nearest developed neighbours, meaning actual and threatened sanctions could have an immense impact.

The report was delivered at a meeting of South Pacific Forum Foreign Ministers which ended on Friday. It said the poor and vulnerable would be the victims in both countries.

Under the first scenario, major industries would not be irreparably damaged, but recovery to previous levels would take some years and high unemployment would persist. The loss of skilled workers from Fiji would slow its recovery.

The Solomons faced a deeper recession and a longer recovery, reflecting its relatively poor economic performance.

Under the second scenario involving continuing crises but no increase in sanction levels, restrictions on business activities would be disastrous and employment would suffer.

The almost complete loss of Fiji's garment industry and serious short-term damage to the tourism and sugar industries would result. Major industries in the Solomons would collapse and significant foreign investment would be withdrawn.

Under the third, worst-case scenario, unemployment would reach extremely high levels as trade and domestic business activity stopped and development assistance was removed. Both countries would face a long, hard path to recovery.

- REUTERS