The devastating effects of tropical cyclone Tomas has led to a lower than expected forecast for economic growth this year.

Chairman of the Macroeconomic Policy Committee and Governor of the Reserve Bank of Fiji Sada Reddy has revealed that the domestic economy is now forecast to expand by 1.8 percent in 2010 compared with the 1.9 percent growth announced in November last year.

Reddy said this marginal downward revision to the GDP growth is largely due to Cyclone Tomas earlier this year which greatly affected agriculture in the Northern Division and Eastern Maritime areas.

He said the contraction in the economy projected for 2009 has also been revised to a 2.2 percent decline from the forecast 2.5 percent decline announced in the 2010 National Budget.

Reddy said the improvement is due mainly to better than expected performances in the transport & communication, wholesale & retail trade, public administration & defence, health & social work, education, manufacturing, real estate, other community, social personal services, mining & quarrying, electricity & water and financial sectors.

The RBF Governor said the real GDP growth projections for 2011 and 2012 have been revised downwards to 1.7 percent from 2.4 percent in 2011 and 1.9 percent from 2.5 percent in 2012.

The 2 downward revisions for both years mainly arise from forecast weaker performances in the manufacturing, transport & communication, construction, wholesale & retail trade, real estate and other community, social & personal services sectors.

Speaking on trade Reddy said exports and imports are anticipated to rebound in 2010 by 9.5 and 12.5 percent, respectively.

He said the growth in exports is projected to be underpinned by a growth in re-exports of mineral fuels, gold, mineral water, garments and other domestic exports.

However, Reddy said imports are also expected to increase due to a pick up in domestic demand as growth prospects are expected to improve this year.

Official foreign reserves as at 14th May 2010 were $1.07 billion, equivalent to around 3.4 months of imports of goods and non-factor services.