Fiji’s economy is projected to enter a phase of moderation following a significant recovery from the pandemic, as outlined in the latest Westpac Fiji Economic Update. After impressive growth rates of 17.7 percent in 2022 and 9.4 percent in 2023, the economy is expected to slow to a growth rate of 3.5 percent in 2024. This trend is set to continue with an additional expansion of around three percent in 2025, stabilizing at 3.3 to 3.4 percent in the medium term, closely aligning with Fiji’s historical growth averages.
The report highlights the shift from recovery to more sustainable growth, driven by essential sectors such as tourism and remittances. Despite a positive start in tourist numbers during August, September saw a downturn that may persist, leading to revised projections for visitor arrivals. Additionally, remittance growth forecasts have been adjusted down from ten percent to five percent, reflecting the evolving economic landscape.
An encouraging note in the report is the expectation of negative inflation at –1.3 percent in 2025, primarily due to decreasing food and transport costs. Inflation is anticipated to gradually return to positive levels by 2026, stabilizing between 2.5 and 2.8 percent as the economy adjusts.
Remittances continue to play a crucial role in supporting households, offering a steady stream of income and foreign exchange, while population growth is expected to stabilize, contributing to increased consumption. This dynamic is likely to stimulate labor market recovery over the medium term.
Looking ahead, the medium-term economic outlook remains optimistic, bolstered by substantial infrastructure investments. Energy Fiji Limited is set to invest nearly $2 billion in renewable energy projects over the next five years, addressing rising energy demands. Additionally, significant hotel developments in Suva and Nadi are expected to further support both tourism and construction sectors.
While government spending will remain essential for driving demand, the cautious but balanced growth forecast of three percent for 2025 reflects recent trends in tourism and remittance flows. Despite global challenges, the resilience of Fiji’s economy indicates a hopeful trajectory towards sustained growth, showing its capacity to adapt and diversify in response to shifting global dynamics.