Gulf conflict raises economic concerns for Fiji and Pacific Nations

The ongoing conflict in the Gulf region is creating growing global economic uncertainty, with concerns emerging over its potential impact on Fiji and other Pacific Island countries.

This has been highlighted by Fiji National University’s College of Business, Hospitality and Tourism Studies Acting Head of Department for Economic Development and Sustainable Studies, Ashwin Deo.

Deo warns that rising geopolitical tensions in the Gulf could disrupt global supply chains and place added pressure on food security across the Pacific.

He says that while Fiji is geographically far from the Middle East, it remains highly vulnerable to global disruptions due to its reliance on imported fuel, food, and essential goods.

Deo says Fiji’s strong dependence on tourism also increases its exposure to external economic shocks.

Deo adds that although Pacific countries source most of the fuel from Asia, particularly Singapore, the effects of any disruption in global oil supply routes could still be significant.

He points to the Strait of Hormuz as a key concern, noting that it is one of the world’s most critical routes for energy transportation.

Deo says any disruption in this region has the potential to drive global fuel prices higher, which will inevitably affect transport costs, trade, tourism, and overall economic activity in Pacific Island countries.

He further explains that Pacific nations import a large share of their staple foods and agricultural inputs, making them especially vulnerable to supply chain disruptions.

The Acting Head of Departments says rising fuel prices and shipping delays could worsen these challenges.

Deo stresses that Fiji must reduce its reliance on tourism by expanding sectors such as fisheries, domestic agriculture, digital services, and renewable energy.

He also suggests that flexible work arrangements, including working from home, could help reduce fuel demand, while digital connectivity could open new income opportunities that are less dependent on travel.

Meanwhile, Head of School of Economic Development and Border Management, Melvin Chand emphasises the need to strengthen domestic food and energy production.

He says Fiji should encourage local food production, diversify trade partnerships, and maintain sound fiscal and monetary policies to reduce external risks.

Chand adds that a coordinated approach involving governments, policymakers, producers and consumers is crucial in managing economic shocks.