The ANZ bank's senior international economist Jasmine Robinson has predicted a tough year ahead for Fiji as the uncertainty surrounding recent political events adversely affects consumption and investment.
Fiji Live reports the Reserve Bank of Fiji has forecast the economy will decline by around 2 to 2.5 per cent in 2007.
However Ms Robinson expects a modest pick up in the economy in 2008 of 1 to 1.5 percent, due to a recovery in tourism.
She says some improvement is expected in the current account deficit position as tourism receipts recover and import demand eases but this still remains high.
Ms Robinson says that Fiji's top two exports, sugar and garment, were already facing challenges over the past year which were expected to persist this year.
She also says the mining sector will also be a drag on the economy with the potential for a decline in output