SUVA, Fiji (8 Dec 2006) -- The military coup that toppled the government of Fiji is likely to take down the economy, too, as images of armed troops in the streets scare tourists away from its beaches and government upheaval sends foreign investors fleeing, experts and industry leaders warn. Airline and resort bookings feeding the Pacific island nation's Fiji dollars 860 million (US$516 million; €388 million) a year tourism industry — more than half its economy — plummeted as coup tensions rose in recent months, and have all-but dried up completely since Tuesday's takeover. The central Bank of Fiji slapped new capital controls and commercial loan limits on the country's banks this week to try to protect foreign reserves and prevent an exodus of capital. The tourism industry was down to 20-30 percent of capacity since September, when the longrunning dispute between military commander Commodore Frank Bainimarama and elected Prime Minister Laisenia Qarase escalated into coup fears, economics professor Biman Prasad of the University of the South Pacific said. He predicted the hit to tourism would drag Fiji into negative growth next year. "The crisis is going to add disastrously to the worsening economic situation of the past two years," Prasad told reporters. The current annual growth rate of around 3.5 percent would fall drastically, even if Bainimarama follows through on his promise to bring about fresh elections to restore democracy. "We are looking at a terrible negative growth rate for 2007," he said. It would be two or three years at least "recovering from this shock to the economy," he said. With all other sectors already performing badly, tourism has been keeping the economy afloat and "there is no fallback position," Prasad said. Already Fiji's tourism sector is reporting a fall of 75-80 percent in tourist arrivals, and the accommodation sector said it had hotel occupancy rates of just 20-30 percent — down from 80 percent. "It is devastating," said Fiji Hotel and Tourism Association chief executive Mereani Korovavala. "If the tourism sector falls, the whole economy and country will fall." The nation's biggest foreign exchange earner, tourism had a record 2005 year, earning some F$860 million as 549,000 tourists visited the South Pacific hideaway. Until October, when the crisis worsened ahead of the military coup, the industry had been on track for another record year, said Fiji Visitors' Bureau chief executive Bill Gavoka. Korovavala said most hotels had already cut work force numbers, laying off all casual and temporary staff — with some also beginning to cut permanent staff numbers. Investors were also pulling out, as "they have to look for better options," she said. Up to F$100 million (US$60 million; €45 million) of investor cash was reported to have abandoned Fiji for more stable markets in the past two months, with jittery investors putting "several hundred million" Fijian dollars of economic investment, much in the tourism sector, "on hold" till early next year in case the situation improved, said a person in the financial sector who did not want to be named for fear of antagonizing the new government. Officials at Fiji's Trade and Investment Board, a government agency, declined comment on the crisis situation facing the investment sector. But ANZ Bank general manager John Velegrinis said the coup means "there will be a marked economic downturn — it would be a brave investor who goes ahead now." | 
