Asian Development Bank chief economist warns against inflation subsidies

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Asian Development Bank chief economist warns against inflation subsidies

SUVA - The Asian Development Bank's chief economist has highlighted 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 substantial role played by energy and food prices in inflation trends in developing countries, Park said.

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

The rich and the poor frequently benefit from such subsidies, which make them less efficient in addressing the needs of the most vulnerable, he said.

It's better to really monitor who were hurt by price changes 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 forecasted at 3 percent for the current year, down from an earlier estimate 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 the 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 growth this year, the sectoral performance remains weak due to industry-specific issues.

Investor activity in the real estate sector has continued to see a steady recovery, driven by higher cement sales and strong demand for credit, he said.