Fiji’s investment outlook shows tentative signs of revival, but progress remains slow as costs rise and global uncertainties cloud the horizon, the Reserve Bank of Fiji (RBF) says in its August 2025 Economic Review.
The central bank notes that partial indicators point to a gradual, subdued improvement in investment activity. New investment loans rose by 1.4% in the year to July, driven mainly by lending to the real estate sector and households for investment homes. This comes after earlier in the year when investment loans had shown stronger momentum, with a double‑digit rise through March, supporting gains in building and construction lending and a noticeable uptick in second-home purchases.
A mixed picture is evident elsewhere in the real economy. Cement sales, a key construction input, fell 14.4% in the first half of the year, largely due to a temporary shutdown of Pacific Cement Limited’s mill between March and June. This disruption likely slowed several ongoing projects, underscoring how supply-side shocks can blunt the investment rebound. Building activity data reflect this uneven landscape: new building permits issued rose 11.3%, yet the total value of those permits declined 21.5%, as a drop in private dwellings offset gains in commercial approvals.
Rising construction costs continue to weigh on the sector. The building materials prices index rose by 4.0% in the first half of the year, narrowing some opportunities for cost control but highlighting the persistent hurdle of higher inputs. In a counterpoint, the central bank notes that a recent VAT reduction could help bolster investor confidence and partially offset the cost pressures.
Despite these mixed signals, external headwinds remain a key factor. The RBF stresses that significant downside risks persist, including ongoing tariff tensions and wider geopolitical frictions that could dampen demand from Fiji’s major trading partners. A weaker external environment could translate into softer exports, remittances, and visitor arrivals, complicating the path to a robust investment recovery.
Contextual factors from earlier in the year show a more optimistic phase for investment. There were periods when new investment loans expanded healthily, with notable activity in building and construction lending and prominent investment in housing. Cement demand had also shown resilience earlier in the year, even as the market faced cost pressures. At the same time, policymakers remained vigilant about inflation and the need to support a sustainable recovery, with measures such as targeted tax relief helping to ease some of the pressure on households and firms.
What this means for investors and policymakers
– A cautious approach remains prudent. While the signals are improving, the pace of investment recovery is fragile and highly sensitive to global demand and input costs.
– Keep an eye on construction costs and supply chains. The 4% rise in construction input prices underscores the importance of cost management and potential incentives to streamline procurement.
– VAT relief could translate into relief at the ground level. If consumer and business costs ease, investment sentiment could improve further.
– External risk diversification matters. With tariffs and geopolitical tensions weighing on trade partners, strategies that diversify export markets and reduce exposure to single markets could help stabilize demand for Fiji’s goods and services.
– Tourism and infrastructure remain pivotal. The resilience of tourism and ongoing infrastructure plans could provide a constructive backdrop for a gradual investment upturn, even as the economy navigates higher costs and global uncertainties.
Summary
Investment in Fiji is showing early signs of revival but remains hampered by rising costs and global uncertainty. While some indicators point to gradual progress, notable headwinds—especially external demand and construction costs—keep the recovery uneven. The VAT relief provides a potentially meaningful offset, and the ongoing strength of tourism alongside infrastructure developments offers a hopeful foundation for a steadier investment path in the medium term.
Reflecting a balanced perspective, Fiji’s economy could gradually gain traction if cost pressures ease, global conditions stabilize, and reforms that streamline investment processes continue. The outlook remains cautiously optimistic, anchored by tourism resilience and strategic investments that could spur broader growth.
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