Financial conditions in Fiji are currently favorable for growth, as reported by the Reserve Bank of Fiji in its August assessment of the Overnight Policy Rate. The central bank noted that strong banking system liquidity, which stood at $2.2 billion as of August 28, along with historically low lending rates, are contributing factors.
The RBF indicated that commercial bank lending is on the rise, leading to an 11.6 percent growth in private sector credit in July. Signs of increasing domestic economic activity were also observed, especially as visitor arrivals exceeded expectations.
In July alone, Fiji welcomed 98,332 visitors, marking a record for that month and bringing the total for the year to 545,487, which is 6.7 percent higher than the same period in 2023.
The bank highlighted that overall demand remains strong, driven by robust tourism, rising incomes, and foreign remittances. Additionally, the latest indicators suggest a gradual improvement in investment activity.
With the impact of the 2023 VAT increase beginning to diminish, the RBF predicts that inflation will moderate to approximately 4.0 to 5.0 percent by the end of the year.