Fiji’s Economic Resilience: How Rising Risks and Optimism Are Intersecting

The Reserve Bank of Fiji (RBF) is closely monitoring emerging external risks that may impact its positive economic outlook. This was revealed in a statement following a board meeting where it was decided to maintain the Overnight Policy Rate at 0.25 percent. RBF Governor Ariff Ali noted the potential effects of rising geopolitical uncertainties and increased trade tariffs on global activity, which could influence Fiji’s trading partners.

The bank observed that Fiji’s economy could capitalize on competitive import prices for goods shifted from nations facing higher tariffs globally. However, concerns were raised about rising costs in the U.S. that could dampen demand for Fijian exports.

Despite these challenges, the RBF maintained an optimistic outlook for the Fijian economy. In January 2025, private sector credit grew by 11.8 percent, driven largely by investments in the real estate sector, suggesting enhanced investment activity. Additionally, the labor market has improved, with better supply trends due to higher foreign worker presence and fewer local departures.

Visitor arrivals showed growth, reaching 70,794 in January, indicating a continuing rebound in tourism, albeit at a slower pace (0.7 percent growth). The robust performance in tourism, combined with increased wages, consumption-related loans, and remittances, has resulted in strong domestic VAT collections.

Inflation rose to 4.0 percent in January, attributed to one-off price increases following flooding in December, which affected local crops. Nonetheless, the RBF expects inflation to moderate in the upcoming months, and foreign reserves remain solid at around $3.6 billion, covering approximately 5.8 months of retained imports.

The central bank’s ongoing commitment to monitor both global and domestic economic trends will be crucial in adapting monetary policy as necessary. This proactive approach reflects the RBF’s focus on fostering growth while ensuring economic stability, providing hope for the resilience of Fiji’s economy in navigating emerging challenges.