Asian Development Bank chief warns against inflation subsidies

Asian Development Bank chief warns against inflation subsidies

SUVA - The chief economist of the Asian Development Bank has emphasised the need to pay special attention to specific commodities that can disproportionately impact vulnerable populations.

Understanding the price points affecting these groups is crucial and the significant role played by energy and food prices in inflation trends in developing countries, Park said.

According to the news website, Fiji Broadcasting Corporation news website, Park is advising against across-the-board subsidies, owing to their high cost and lack of targeted impact.

So far, such subsidies often benefit both the wealthy and the poor, making them less efficient in addressing the needs of the most vulnerable, he said.

It's better to monitor who were hurt by price changes and then create targeted kind of support programs that really reach the people who cannot manage these issues on their own, he said.

In Fiji, inflation rates were projected at 3 percent for the current year, down from an earlier forecast of 4.2 percent, and expected to remain at 3 percent next year, down from 3.5 percent.

In its recent economic review, the Reserve Bank of Fiji said inflation outlook for the year-end is around 6 percent.

In 2022, the Fijian economy grew by 20 percent. While the economy is on track for an 8 percent increase this year, the sectoral performance remains weak due to industry-specific issues.

He added that investment activity continued to see a stable recovery, driven by higher cement sales and strong demand for credit in real estate.