Fiji has historically been a central hub for the economies, transportation, and academia of the South Pacific islands. With the tourism sector showing significant recovery and positively impacting other areas, Fiji’s economy, the second largest in the Pacific, has rebounded considerably from the pandemic’s effects.
Earlier this year, Deputy Prime Ministers and Ministers Biman Prasad and Manoa Kamikamica introduced Fiji’s National Development Plan (NDP) for the next five years. This plan is founded on the principle of fostering national unity among the Fijian people.
Prime Minister Sitiveni Rabuka stated, “The Coalition Government’s National Development Plan 2025-2029 and Vision 2050 serves as a framework for our nation’s advancement and prosperity. The plan is designed to empower our citizens through ‘unity,’ enabling all to thrive in a resilient and dynamic economy.”
The NDP report extensively outlines Fiji’s economic circumstances, indicating that while the economy is experiencing growth, it also faces challenges in a complicated global context.
According to the International Monetary Fund in the NDP report, global economic growth is projected at 3.2 percent for 2023; however, the World Bank has lowered its forecast for 2024 to 2.4 percent, marking a continual decline in growth for three consecutive years. This downturn is attributed to rising interest rates aimed at controlling high inflation, alongside ongoing geopolitical tensions and trade difficulties. The report highlights that conflicts, such as those in the Middle East and Ukraine, have increased geopolitical risks, which could lead to rising energy prices and broader implications for global economic activity and inflation.
Domestically, Fiji’s economy saw a strong rebound in 2022, with a remarkable growth rate of 19.8 percent. For 2023, growth is estimated at 7.5 percent, with a more modest 2.8 percent forecast for 2024. The government’s effective COVID-19 vaccination campaign allowed it to lift restrictions and reopen international borders in December 2021, significantly boosting the tourism sector, which contributes about 40 percent to Fiji’s GDP. In 2023, Fiji received nearly 930,000 visitors—a 46.1 percent increase from the prior year, primarily from Australia and New Zealand.
To further support the tourism sector, the government has reduced taxes and introduced various budget incentives. Despite these encouraging trends, there are inherent risks. The NDP points out that heavy reliance on tourism makes the economy susceptible to external shocks, such as international conflicts and rising commodity prices.
As the government looks to diversify and rejuvenate other industries, maintaining stability is essential. The labor market is also responding to this growth; job advertisements rose by 15.6 percent to 4,096 vacancies as of March 2024. Increased recruitment intentions are being observed in sectors including community services, construction, and transport.
However, persistent emigration poses challenges, resulting in shortages of skilled and semi-skilled workers. By January 2024, net VAT and PAYE tax collections saw significant annual increases, while new lending for consumption purposes declined, indicating cautious behavior among both banks and consumers.
Looking forward, the government aims for medium to long-term economic growth of 4-5 percent annually, as the immediate future presents both opportunities and hurdles. A careful balance will be essential for navigating the complexities of the global economy while striving for sustainable growth in Fiji.