. but some are domestically generated and we should address them urgently. i have suggested some solutions to them i am sure many of you would have read this small book called “ who moved my cheese ” by spencer johnson. before i conclude, i would like to relate what we are going through economically and culturally to the lessons from this book. in brief, the story is about two mice and two small people who found plenty of cheese. the two small people came to assume that the cheese would always be there and they relaxed and enjoyed the cheese. suddenly one morning, the cheese was gone. the mice simply scurried off in search of new cheese and found them. however, the small people sat there moaning and complaining how unfair and unkind for someone to move their cheese. they refused to change and were afraid to move out to new grounds in search of new cheese. in many ways, someone has moved our cheese. like the two little people, would we complain and moan why things have changed and refuse to venture out in search of new ones? i hope that we can be like the mice, accept what has changed and set out in a new direction in pursuit of new opportunities. these opportunities are there for those that have courage to seek them out. i said i would end on a positive note. i always believe that dark clouds invariably have a silver lining. what goes down must come up. there is always light at the end of the tunnel. we are managing the economy reasonably well under severe pressure. our foreign reserves have stabilised. our inflation will come back down. our currency is stable. tourist arrivals are growing at over 10 percent. our national debt is within tolerable levels. with a coordinated policy effort i firmly believe that we can raise the growth rate beyond 2 percent in 2009. and if we undertake the necessary work now, we can raise growth to the 5 percent mark in future years. but as i said, we know what we should do. the problem is that we are not doing them. let ’ s therefore not delay. let ’ s act now. we owe it to our children and grandchildren. we can make a difference. i wish you well in your deliberations. i have much pleasure in declaring this symposium open. vinaka vakalevu and may god bless us all.

the wealth effect has been real and significant. thus, all else equal, a flattening of stock prices would likely slow the growth of spending, and a decline in equity values, especially a severe one, could lead to a considerable weakening of consumer demand. some moderation in economic growth, however, might be required to sustain the expansion. through the end of 1998, the economy continued to grow more rapidly than can be currently accommodated on an ongoing basis, even with higher, technology - driven productivity growth. growth has continued to shrink the pool of workers willing to work but without jobs. while higher productivity has helped to keep labor cost increases in check, it cannot be expected to do so indefinitely in ever tighter labor markets. despite brisk demand and improved productivity growth, corporate profits have sagged over recent quarters. this is attributable in part to some acceleration in labor compensation, but other factors have also been pressing, especially intensified competition and lower prices facing our exporters and those industries competing with imports. in these circumstances, businesses will feel under considerable pressure to preserve profit margins should labor costs accelerate further, or should the falling prices of commodity inputs, like oil, turn around. but, to date, businesses ’ evident pricing power has been scant. either that would change and inflation could begin to mount or, if costs could not be recouped, capital outlays might well be cut back. the recent behavior of profits also underlines the unusual nature of the rebound in equity prices and the possibility that the recent performance of the equity markets will have difficulty in being sustained. the level of equity prices would appear to envision substantially greater growth of profits than has been experienced of late. moreover, the impressive capital gains of recent years would seem also to rest on a perception of relatively low risk in corporate ownership. risk aversion and uncertainty rose sharply over the late summer and fall of 1998 following the russian default in mid - august, as evidenced by widening spreads among yields on debt of differing credit qualities and liquidity. the rise in uncertainty increased the discounting of claims on future incomes, and that reduced stock market prices even as the long - term earnings growth expectations of security analysts continued to rise. as risk aversion subsided after mid - october, stock prices returned to record levels. markets have doubtless stabilized significantly after the turbulence of last fall but they remain fragile, as the repercussions of the recent brazilian devaluation attest. moreover, our chronic current account deficit