Personal remittance inflows surged by 14.2 percent during the first quarter of 2024, reaching $310.5 million compared to $271.8 million received in the same period of 2023.
This increase was bolstered by mass emigration and the ease of sending money back home.
Senior Westpac Economist, Shamal Chand, noted that mobile digital wallets have now taken the lead over Money Transfer Operators (FXDealers).
In his latest quarterly report, Chand highlighted that the share of remittance sent through mobile digital wallets rose to an average of 43.6 percent during the first quarter of 2024, compared to 37.7 percent for Money Transfer Operators. In contrast, remittance via commercial banks fell to an 18.7 percent share.
“We anticipate an overall positive outlook for remittances in the near term,” Chand added.
Conversely, non-residents working in Fiji sent approximately $33.9 million back to their home countries last year, comprising $17.1 million in employee compensation and $16.8 million in personal transfers.
Meanwhile, Westpac maintains Fiji’s economic growth forecast at 2.5 percent for 2024, with an anticipated rebound to 3 percent in the near term.
The Macroeconomic Committee has revised the growth outlook for 2024 down from 3.4 percent to 2.8 percent, citing similar factors behind lower growth forecasts.
Despite the tourism sector surpassing expectations with record arrivals in the first half of the year, risks remain tilted to the downside.
Fiji is still struggling with high inflation, population decline due to emigration, an underperforming primary sector, and a construction sector that remains in negative territory.
Construction activity in the first quarter of 2024 declined by 16.9 percent compared to the same quarter last year and registered a 21.7 percent decrease from the December quarter, with a lower value of $122 million in work put in place.
With a slight moderation in the growth outlook, the Government is likely to remain cautious about its impact on revenue collection. Any buffer from the VAT rate hike in the previous budget will diminish once the new financial year begins.
This means government finances will increasingly depend on broad-based economic expansion. Overall, growth remains neutral to the recent budget announcement as most reforms were operational, with less emphasis on capital development, creating job opportunities, and increasing productivity.
Regarding Fiji’s major trading partner economies, Westpac Economics forecasts that both Australia and New Zealand will continue to experience subdued economic growth in 2024 before rebounding next year.
While inflation has moderated, it remains above the central bank’s target range, making an interest rate cut unlikely in 2024. This presents challenges for consumers, who remain cautious with their spending.