Fiji’s economy will be hit hard by the escalating situation between Russia and Ukraine, according to academic Dr Neelesh Gounder.
The lecturer in economics from the University of the South Pacific said rising global tensions following the Russian military’s invasion of Ukraine mainly posed external risks to the Fijian economy.
He said an immediate implication was the impact on the price of crude oil which rose above $100 a barrel.
“The increase is expected to negatively affect the global economy,” Dr Gounder said.
“For Fiji, any rise in global crude oil prices, particularly through higher average refined product prices in the Singapore trading market, poses inflationary risks due to an increase in gasoline and oil prices. diesel.
“For Fiji, he said, given the expected economic consequences, one option would be to remove the 20 cents per liter tax levy on diesel and unleaded fuel which was put in place in 2020.
“While this will reduce government revenue, the removal would however provide direct savings to consumers and also reduce inflationary pressures from rising fuel prices in the future.
“Companies are facing shipping costs and supply chain issues related to COVID-19, which continue to put pressure on prices for goods and raw materials.
“With additional sanctions against Russia and if the conflict escalates, pressures on already strained supply chains will increase further, causing uncertainty and creating a drag on the ongoing economic recovery.
“Just before COVID-19, imports from Europe accounted for nearly 18% of total imports. If supply chain challenges in Europe worsen, we could expect delivery delays, higher input prices and supply shortages.
According to international media, Russian President Vladimir Putin last week launched a full-scale invasion of Ukraine.
Questions sent to Acting Prime Minister, Attorney General and Economy Minister Aiyaz Sayed-Khaiyum remain unanswered.
Meanwhile, Mr Sayed-Khaiyum tweeted last week that Fijians were praying for the people of Ukraine and for peace.
He also called for an end to all hostilities and any violation of the international rule of law and called for a return to the diplomatic table, as called for by the UN Secretary General.