The Reserve Bank of Fiji has reported that financial conditions in the country are favorable for growth, as outlined in its August assessment of the Overnight Policy Rate. The RBF noted that high banking system liquidity, reaching $2.2 billion as of August 28, along with almost historically low lending rates, underpin this positive outlook.
Commercial bank lending is on the rise, leading to a notable 11.6 percent increase in private sector credit as of July. The RBF also highlighted a boost in domestic economic activity, particularly with visitor arrivals exceeding predictions. In July alone, Fiji welcomed 98,332 visitors, marking the highest monthly total ever and bringing the year’s total to 545,487 visitors, a 6.7 percent increase compared to the same period in 2023.
Consumption is reportedly strong, driven by robust tourism, rising income levels, and remittances. Furthermore, recent indicators suggest a gradual improvement in investment activities. The RBF anticipates that the impact of the 2023 VAT rate increase will diminish, leading inflation to stabilize between 4.0 percent and 5.0 percent by the end of the year.