The Reserve Bank of Fiji (RBF) has opted to uphold its Overnight Policy Rate (OPR) at 0.25 percent, maintaining a supportive monetary stance that aims to keep inflation stable while ensuring foreign reserves remain at healthy levels. RBF Governor Ariff Ali highlighted a noteworthy drop in annual headline inflation to -3.5 percent in August, from -1.5 percent in July and a prior 3.8 percent last year. This significant decline is attributed to factors such as VAT reductions, bus fare subsidies, and lower costs for essential commodities like food, transport, and fuel.
Governor Ali also emphasized the potential risks stemming from global geopolitical tensions, which could influence worldwide commodity prices, and the impacts likely to arise from the impending cyclone season. Despite these challenges, Fiji’s foreign reserves are robust, standing at approximately $3.8 billion, which suffices for six months of imports.
Fiji’s economy has showcased its resilience with a growth rate of 3.5 percent projected for 2024. This follows a remarkable growth of 9.4 percent in 2023, primarily driven by the services, agriculture, and manufacturing sectors. While the growth forecast for this year shows a slight dip to 3.2 percent, varied sector performances remain robust.
The nation’s vital tourism sector has seen a recovery, with visitor arrivals climbing to 642,810 by August, buoyed by increased activity from the US, the Pacific region, the UK, and Europe. Recoveries from principal markets such as Australia and New Zealand have also bolstered tourism. The upswing in consumer activity, fueled by higher disposable incomes, remittance inflows, and an increase in lending, coincides with encouraging signs of investment, evidenced by a rise in building permits and construction material imports as prices ease.
Liquidity in Fiji’s banking system is currently at $2.2 billion, and low interest rates continue to promote economic expansion. Nevertheless, the RBF remains watchful amidst global uncertainties and is prepared to adjust its policies as needed to preserve economic stability.
Overall, Fiji’s outlook remains cautiously positive. The nation’s economic strength is buoyed by solid consumer confidence, a stable monetary position, and ample foreign reserves, equipping it to better withstand external disruptions. With positive fiscal trends and vigilant monitoring of international developments, Fiji is well-positioned to achieve steady economic advancement in the foreseeable future.