Westpac has revised its forecast for the Fijian economy, projecting a growth rate of 3.0 percent in 2024, up from a previous estimate of 2.5 percent. This revision is attributed to stronger-than-expected performance in key economic indicators.
In its latest quarterly economic update, Westpac noted that despite challenges from rising prices and slow growth in partner countries, Fiji’s economy has been supported by a thriving tourism sector, increased industrial activities, and a resurgence in consumer spending, despite existing labor market difficulties.
The bank highlighted that the tourism industry continues to flourish, with visitor arrivals increasing by 6.9 percent in the first three quarters of 2024. Westpac anticipates that total visitor arrivals for the year will reach approximately 990,000, nearing the one million mark.
A new direct flight from Fiji to Dallas, set to launch in December, is expected to open up additional opportunities for the tourism industry, potentially adding around 1,000 extra passengers per week. Fiji Airways is also exploring new routes to capitalize on these growth prospects.
However, consumers have faced challenges due to rising prices, with the 12-month average inflation rate reaching 5.3 percent in August, primarily driven by increases in food and non-alcoholic beverage prices. Westpac expects local inflation to decline in alignment with easing inflation in advanced economies, although prices will likely remain high by historical standards.
The report indicated that the Fijian government recorded a significantly lower net deficit of 3.4 percent for FY2023-24, primarily due to reduced spending, while the debt-to-GDP ratio stood at 78.3 percent as of July 2024. The government achieved strong revenue collection last fiscal year, almost meeting its original targets, and managed expenses through effective oversight.
The fiscal stimulus outlined in the recent budget emphasizes consumption growth, while there is an effort to motivate the private sector to enhance investment growth.