democracy – political stability and reengagement of our development partners. as a result, consumption and investment activity have been very robust. this is confirmed by trends in the various partial indicators. improved disposable household incomes from lower taxes, government financial support and remittance inflows from fijians abroad continue to underpin consumer spending. the vehicle industry has clearly benefitted under this climate and this has been further supported by favourable labour market conditions, as reflected in growing numbers of newly registered members with the fiji national provident fund and job advertisements placed in the daily newspapers. bis central bankers ’ speeches investment activity has expanded and continues to grow with momentum from both the private sector and government. in recent years the government has allocated sizeable budgets for infrastructure development, which benefit both the public and private sectors and which will gradually unlock previously untapped resources across our major islands as our local entrepreneurs begin to play their part to develop their businesses. this year, despite tropical cyclone ( tc ) winston and the april floods brought on by tc zena, the fijian economy is still forecast to grow by 2. 4 percent. this growth reflects expected strong activity in our tourism - related industries, including transport, wholesale, retail, accommodation & food services, which were relatively unscathed by the cyclones. in addition, with the on - going reconstruction and recovery efforts, construction activity is expected to remain strong, further boosting retail sales activity. ladies and gentlemen, we know that imports of investment and consumption goods are projected to pick up as the domestic economy strengthens and reconstruction efforts postcyclones continue. when we couple this with expected lower exports of agricultural products as a result of the natural disasters, it is possible that we will see a small dent in our foreign reserves towards the end of this year. nonetheless, at the moment, our official reserves continue to remain comfortable, at just under $ 2. 0 billion, or enough to pay for 5. 5 months of retained imports. inflation, another key macro - economic indicator which we monitor closely, spiked in june to 5. 3 percent on the back of price hikes in local agricultural market items following the cyclones. this effect will be temporary, and in the near - to - medium term, we forecast inflation to be stabilised by the existing low world commodity prices. our end - year number for inflation is closer to 3 percent. the medium term outlook for the fiji economy is expected to remain positive. notwithstanding any further adverse shocks, our

sada reddy : economic indicators and implications – where to from here? address by mr sada reddy, governor of the reserve bank of fiji, at the fiji institute of bankers ’ convention, suva, 23 october 2010. * * * introduction his excellency the president of the republic of the fiji islands, ratu epeli nailatikau, the attorney - general & minister for justice, anti - corruption, public enterprise, industry, tourism & trade and communications, mr. aiyaz sayed - khaiyum, the president of the fiji institute of bankers, mr. norman wilson, distinguished guests, ladies & gentlemen good morning and thank you for inviting me to speak to you on this occasion of the inaugural convention of the fiji institute of bankers ( fib ). the fib, which will turn 20 years soon, plays a very important role in the training and development of bank professionals in fiji. i must congratulate the fib for this excellent initiative in bringing together professionals and partners from the financial sector as well as stakeholders from the public and private sectors towards a common interest, that is, to establish a vision and strategic direction for the banking sector towards 2015 – the theme of today ’ s convention. i have great pleasure this morning to speak on the topic “ economic indicators and implications – where to from here? ” first i will provide an overview of the current state of the economy and its future outlook, before i move on to outlining the future policy direction for our economy. as bankers, we can attest to the prominent role played by financial institutions in the development of any economy. in fiji, the contribution of the financial sector to total real growth or total value added product of the economy is around 9 percent. as a measure of its size, total assets of the financial sector in fiji is around 180 percent of the country ’ s overall gross domestic product ( gdp ). this ratio has increased from about 150 percent five years ago and shows the increasing importance of the financial sector in our economy. in addition, the financial sector employs around 8, 800 people which accounts for around 7 percent of paid employment in fiji. an efficient and sound financial sector is essential for economic growth. the intermediation process which facilitates the transfer of funds from savers to borrowers, contributes significantly to raising investment, generating income, creating employment opportunities and supporting our economy. as someone said, credit is the oxygen on which businesses grow and survive. therefore, as would be true