The Reserve Bank of Fiji (RBF) is diligently observing new external risks that could affect its optimistic economic forecasts. In a statement issued after a recent board meeting, the bank announced that it will maintain the Overnight Policy Rate at 0.25 percent. Governor Ariff Ali emphasized concerns regarding rising geopolitical tensions and increased global trade tariffs, which could influence Fiji’s trading relationships.
Despite these potential obstacles, the RBF identified opportunities within the changing global landscape. For instance, Fiji could benefit from competitive import prices for goods displaced from countries facing higher tariffs. However, the bank cautioned that rising costs in the United States may reduce demand for Fijian exports.
The overall outlook for Fiji’s economy remains positive. In January 2025, private sector credit surged by 11.8 percent, largely supported by robust investments in the real estate sector, indicating increased investment activity. The labor market is also showing signs of improvement, bolstered by a greater presence of foreign workers and fewer local job departures.
Tourism is rebounding as well, with visitor arrivals reaching 70,794 in January, reflecting a modest growth rate of 0.7 percent. This resurgence in tourism, alongside increased wages, consumption loans, and remittances, has led to strong domestic VAT collections.
Although inflation rose to 4.0 percent in January—primarily due to one-time price shocks from flooding in December—the RBF anticipates a moderation in inflation rates in the coming months. The country’s foreign reserves remain healthy at approximately $3.6 billion, which is sufficient to cover about 5.8 months of retained imports.
The RBF’s proactive approach to monitoring both global and domestic economic trends showcases its commitment to adapting monetary policy as needed. This strategy aims to encourage economic growth while maintaining stability, instilling confidence in the resilience of Fiji’s economy as it navigates emerging challenges. Overall, the ability to turn potential risks into opportunities underscores a hopeful outlook for Fiji’s economic landscape.
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