The economy is now projected to contract by 3.1 percent this year, compared to the 2.5 percent economic decline expected earlier.

Governor of the Reserve Bank of Fiji, Savenaca Narube said all sectors, except manufacturing and mining, are now expected to record lower-than-expected performances, which have resulted in the relatively larger economic contraction.

Narube said lower spending for the community, social and personal services sector, which is measured by the government operating expenditure, and the stalling of certain major projects are the major contributors to this year's economic decline.

He also said the fall in visitor arrivals so far this year and the ongoing discounts provided by hoteliers will have a flow-on effect in the wholesale and retail trade and hotel, restaurant, transport and communications sectors. Moreover, the mining and quarrying sector is not expected to register any output in 2007, following the closure of the Vatukoula Gold Mine.

However Narube said on a positive note, the finance, insurance, real estate and business services, manufacturing, agriculture, fishing, electricity and water sectors are anticipated to contribute positively to growth in 2007, although at a lower level than previously anticipated.

The RBF said growth projections for 2008 and 2009 have also been revised. The economy is now projected to grow by 1.9 percent in 2008, largely on the back of an expected recovery in the tourism industry. Economic growth in 2009 is expected at 2.8 percent with the finance, insurance, real estate and business services sector expected to lead growth.