Westpac has revised its growth forecast for the Fijian economy to 3.0 percent for 2024, an increase from the earlier estimate of 2.5 percent. This adjustment is attributed to unexpectedly robust key economic indicators.
In its latest quarterly economic update, Westpac highlighted that despite challenges such as rising prices and sluggish growth in partner countries, Fiji’s economy has been supported by a strong tourism sector, increased industrial activity, and a recovery in consumption, despite ongoing labor issues.
The report indicated that the tourism industry is experiencing healthy growth, even with lackluster performance from its traditional source markets. Visitor arrivals have risen by 6.9 percent during the first three quarters of 2024, with projections for total visitor numbers to reach approximately 990,000 by the end of the year, just shy of a one million milestone.
The upcoming direct flight service between Fiji and Dallas, set to begin in December, is expected to open new opportunities for the tourism sector by adding around 1,000 additional passengers weekly. Fiji Airways is also exploring new routes to facilitate further growth.
However, consumers have faced challenges due to high prices, with the annual inflation rate hitting 5.3 percent in August, largely driven by rising costs in food and non-alcoholic products. Westpac expects domestic inflation to align more closely with declining inflation in advanced economies, although prices are likely to remain higher than historical averages.
The government has registered a significantly lower net deficit of 3.4 percent for the fiscal year 2023-24, primarily due to underspending. As of July 2024, the debt-to-GDP ratio stood at 78.3 percent. Last fiscal year, the government achieved nearly its revenue collection target while controlling expenditures through prudent oversight.
The fiscal stimulus outlined in the last budget aims to promote growth in consumption, while encouraging the private sector to boost investment growth.