Fiji’s balance of payments deficit narrowed in the March quarter, signaling signs of economic stabilization. The combined current and capital accounts registered a deficit of $362.6 million, down from $453.0 million in the same period a year earlier. Exports of mineral water and the re-export of fuels rose, grants from abroad increased, and investment income paid overseas declined, contributing to the improvement.
The financial account deficit also improved, closing at $173.8 million compared with $481.9 million last year. Equity and investment fund inflows rose, deposits and currency from abroad increased, and trade credit outflows fell. The current account posted a net outflow of $364.5 million, an improvement of 39.2 percent from December 2024. The capital account showed a net inflow of $1.9 million.
Direct investment recorded a net outflow of $23.8 million, while portfolio investment posted a net inflow of $43.2 million. Other investment outflows dropped sharply, and reserve asset outflows fell by $73.1 million. Net borrowing for the financial account amounted to $173.8 million, consisting of $38.7 million in equity outflows and $135.1 million in debt. The Fiji Bureau of Statistics noted that the data point to a more stable external position and to better trade and financial flows than in previous quarters.
What this means and context for readers
– The reduction in the overall deficit suggests improving external resilience, which can support a more stable exchange rate and financial conditions going forward.
– The rise in mineral water exports and fuel re-exports indicates ongoing diversification of export activity, while increased foreign grants and lower outflows for investment income help support the external sector.
– The mix of net inflows in the capital and financial accounts, along with a smaller current account deficit, may bolster investor confidence as Fiji continues to navigate global price pressures and supply chain dynamics.
Possible reasons to watch next
– The trajectory of grants and external financing, alongside commodity prices, will influence the pace of external stabilization.
– The balance between debt and equity inflows, and the level of imports required for ongoing growth, will shape Fiji’s ability to sustain improvements in the external position.
– Ongoing policy measures aimed at fiscal consolidation and export growth could reinforce positive momentum in the coming quarters.
In short, the March quarter shows clearer signs of external stabilization for Fiji, with a narrower deficit and more favorable composition of inflows and outflows, offering cautious optimism for the country’s near-term economic outlook.
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