The Reserve Bank of Fiji reported that Fiji welcomed a record 98,332 visitors in July, marking the highest number for that month and bringing the total for the year to 545,487 visitors, which is a 6.7 percent increase compared to the same period last year.
Consumer demand remains strong, bolstered by robust tourism activity, increased income levels, and remittances. Early indicators suggest an improvement in investment activity as well.
Financial conditions are favorable for growth, supported by significant banking system liquidity of $2.2 billion as of August 28 and lending rates that are near historic lows. Commercial bank lending is rising, contributing to an 11.6 percent growth in private sector credit in July.
Annual inflation reached 6.8 percent in July, influenced largely by the prices of food and non-alcoholic beverages, alcoholic beverages, tobacco, transportation, and housing utilities. However, with the impact of the 2023 VAT rate increase starting to diminish, inflation is anticipated to moderate to between 4.0 percent and 5.0 percent by the end of the year. Foreign reserves were approximately $3.7 billion as of August 29, enough to cover six months of imported goods and services, and are expected to remain sufficient in the medium term.
The Reserve Bank will keep monitoring incoming data and adjust monetary policy as necessary. Additionally, the RBF Board decided to maintain the Overnight Policy Rate at 0.25 percent during its August meeting. Signs of positive domestic economic activity are becoming apparent, especially as visitor arrivals exceed expectations and improvements are observed in various production sectors.