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FIJI Post-Disaster Needs Assessment 2.1.2 Post-Disaster Economic Outlook Gross Domestic Product The macroeconomic impact of TC Winston in 2016 is expected to be substantial given the massive extent of damage incurred, especially to key sectors, such as housing, transport, manufacturing, agriculture, electricity, communications and environment. The impact of the cyclone is estimated to reduce economic growth to 1.3 percent in 2016 compared to the pre-cyclone estimate of 3.8 percent (Figure 11). However, recovery and reconstruction activities during 2016 (if started opportunely) are estimated to boost GDP back up to 2.4 percent, a decrease of 1.4 percent compared to the pre-cyclone baseline estimate. This revised growth also reflects the expected impact of TC Zena, which passed southeast of Fiji only six weeks after TC Winston, causing torrential rain and major flooding. TC Zena’s impact is expected to be felt mainly in the agriculture sector. 4.5 4.2 4.0 3.8 3.6 GDP Growth (%) 3.5 3.0 2.5 2.0 1.5 2.4 3.2 2.6 3.2 3.1 2.8 1.0 1.3 0.5 0.0 2015 2016 2017 2018 GDP Post TC Winston Baseline GDP Revised GDP with recovery & reconstruction Figure 11: Post-Disaster GDP Forecast 2015–2018 Source: Estimations by Macro Assessment Team. In the agriculture sector, the cyclone’s impact on sugar cane production is expected to be substantial in 2016, given that it hit during the planting season. Production is expected to be around 1.4 million tonnes this year, compared to 1.8 million tonnes in 2015. Total losses for the agriculture sector as a whole are estimated at around F$171.1 million in 2016, with the worst impacts felt in the Cakaudrove, Bua, Naitasiri, Lomaiviti, Ra and Tailevu Provinces. Other cash crops also suffered major damage, such as coconuts, yaqona, taro, cassava, yams, vegetables and pawpaw. Lower sugar production is expected to impact on the manufacturing subsector, while other manufacturing and commerce activities were temporarily affected by disruptions to water and electricity supply. The social sectors suffered major damage and losses as well in terms of housing damage and disruptions to education services, as a number of schools in affected areas were utilized as evacuation centres. Infrastructure sectors (water, electricity, transport and communications) sustained minimal damage in comparison. Cross-Cutting Issues, such as culture, disaster risk management (DRM) and environment, suffered extensive damage; however, their impact on GDP is difficult to ascertain given that Fiji does not measure these sectors in its national accounts. Trade and Balance of Payments The impact of TC Winston on Fiji’s balance of payment position in 2016 will be quite substantial. Total exports are now projected to decline by 1.2 percent in 2016 compared to over 17 percent growth anticipated before the cyclone. This decline is driven primarily by expected decreases in sugar, dalo, coconut oil and yaqona exports. Yaqona plantations sustained damage to both young and matured plants and the impact will likely be realized in the medium term as the plant yields to maturity after about three years. In addition, coconut oil exports are expected to significantly decline in the short 26 Tropical Cyclone Winston, February 20, 2016
FIJI Post-Disaster Needs Assessment to medium term. Imports will be higher than previously expected with an inflow of machinery, equipment and materials for reconstruction for the replacement of infrastructure in the housing, telecommunication and transport sectors. Food imports are also expected to increase due to the loss of locally grown produce. These impacts will raise the trade in goods deficit by 18.5 percent this year, which, as a percent of GDP, is now estimated to increase from 27.3 percent to 32.4 percent in 2016. The cyclone had minimal impact on the tourism sector, which is expected to fully recover during 2016. Aid in-kind and cash grants have risen following the cyclone and reconstruction financing is expected to result in higher inflows during 2016 and beyond. Overall, Fiji’s Current Account deficit for 2016 is estimated to increase by 8.9 percent driven by lower export earnings and higher import payments. This will raise the Current Account deficit to 12.9 percent of GDP (at market price) in 2016. Table 6: Balance of Payments: Trade in Goods (F$ million) 2015 Baseline 2016 Baseline % change 2016 Postcyclone % Change: 2015 to 2016 Post- Cyclone Exports 2,004 2,356 17.5 1,980 -1.2 Imports 4,645 5,006 7.8 5,110 10.0 Balance on Trade in Goods Source: Estimations by Macro Assessment Team. -2,641 -2,651 0.4 -3,130 18.5 Fiscal Impact Government expenditure on disaster relief and early recovery activities are being funded through reprioritization of line ministry budgets. Notable reallocations included top ups for social welfare programmes and food ration distribution. In addition, around F$70 million will be set aside for the upcoming Help for Homes residential rehabilitation and assistance programme, and the diversion of funds into relief, recovery and reconstruction will reduce funds available for the government’s existing development programmes. Large additional expenditures are expected to be required once the reconstruction and recovery programmes are fully specified. In terms of the disaster impact on revenue collections, based on expected production flow losses for 2016 estimated in this PDNA, value added tax (VAT) collections are expected to decline by about F$61.9 million this year. In addition, there will be reductions in the Service Turnover Tax as a result of losses in the tourism sector. 2.2 Employment, Livelihoods and Social Protection 2.2.1 Summary TC Winston affected approximately 540,400 people or 62 percent of the national population of Fiji (estimated as 865,611 at the end of 2014). 19 TC Winston has resulted in the loss of 14,450,129 work days and F$351.45 million in personal income. Table 7 presents the distribution of the affected population by division. The largest proportion of the affected population was in the Western Division followed by the Central, Northern and Eastern Divisions. An estimated 263,000 women may have been affected by the disaster. 20 The affected populations comprise those who lost their lives, were injured or fell ill due to the cyclone (together accounted for about 0.03 percent); the displaced (those whose homes were totally destroyed accounted for about 10 percent); and those whose livelihoods were affected (accounted for some 89.75 percent) as a result of TC Winston. In terms of livelihoods affected, 57 percent relate to the agricultural sector, 17 percent to commerce, 10 percent to manufacturing, and 8 percent to tourism and transportation equally. 19 Population and Labour Force Estimates 2014. 20 Population and Labour Force Estimates 2014 reported that women comprise 48.8 percent of the population. Tropical Cyclone Winston, February 20, 2016 27
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Damage to Ovalau Resort Source: Min
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