Fiji faces a number of very difficult economic challenges in the year ahead according to the World Bank’s first quarterly report released yesterday.
   
The World Bank notes that Economic recovery is expected in 2010, with growth of around 2 percent.

However, it said this growth outlook remains subject to substantial risks, largely due to Fiji's considerable vulnerability to external shocks, both economic and environmental.

The bank said this vulnerability has been illustrated yet again by the devastating cyclone damage suffered by the small islands of eastern Fiji in March 2010.

It said the cost of restoring essential services and infrastructure, rebuilding homes, and rehabilitating the agricultural and fisheries sectors in affected areas will be enormous.

The World Bank said foremost among the challenges facing Fiji is the need for major structural reforms to improve the performance of the agricultural sector.

It said there are three interrelated elements of this problem that need to be addressed.

Fiji's sugar industry - the backbone of the rural economy is vastly underperforming.

It also notes that incentive structures in the field, transport and milling segments all require an overhaul, to entice viable growers to remain in the industry and produce high quality cane, and to ensure that the management and operation of the transport system and mills improves dramatically.

The bank said the modest level of growth expected in 2010 is unlikely to be sufficient to make significant inroads into Fiji's unemployment which is now above 9 percent.