Reserve Bank of Fiji governor Ariff Ali has warned that the duration of the war in the Middle East could determine whether Fiji avoids a recession this year, outlining three economic scenarios that range from a modest contraction to zero growth if the conflict persists. Ali made the remarks on Wednesday at the launch of the Asian Development Bank’s Asian Development Outlook April 2026, as the war entered its second month.
Ali said even an immediate end to the conflict would still leave Fiji facing a downturn, estimating the economy would contract by between 0.5 and 1.0 percentage points if the war were to stop “tomorrow.” He painted a bleaker picture if hostilities continue: a further three months of fighting would push growth sharply lower — from an assumed baseline of about 3 percent to closer to 1 percent, and possibly to as little as 0.5 percent. If the war extends beyond six months, Ali warned, “I’m worried that we may not have a growth this year unless a miracle happens.”
The governor attributed part of the inflationary pressure to elevated global fuel prices, and said the Reserve Bank is currently projecting consumer inflation of around 5 percent for the year. Higher fuel costs raise import bills and operating costs across the economy, feeding into prices for households and businesses and undermining growth prospects for the small, open Fijian economy.
Ali’s scenarios underscore how vulnerable Fiji is to external shocks. A prolonged Middle East conflict can push up energy and shipping costs, disturb commodity markets and reduce tourism confidence — channels that would sap demand and narrow the government’s fiscal room. While Ali did not lay out immediate policy moves in his remarks, his assessment signals the Reserve Bank’s concerns about downside risks to the outlook and the potential need for adjustments to economic planning.
The comments come as international economic forecasts become increasingly sensitive to geopolitical developments. The Asian Development Outlook event provided a platform for regional analysts and officials to discuss how global uncertainty is filtering down to Pacific island economies that depend heavily on imports, tourism and remittances.
With the war now into its second month, Ali’s three-tiered forecast offers a clear benchmark for what could follow: a short, contained conflict would still leave Fiji in recession; a medium-duration conflict of several more months would sharply curtail growth; and a protracted confrontation lasting beyond half a year could eliminate growth for the year. Policymakers and businesses will be watching global fuel markets and the course of the conflict closely as they reassess budgets, investment plans and contingency measures.
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