Financial conditions in Fiji remain favorable for growth, according to the Reserve Bank of Fiji’s monthly assessment of the Overnight Policy Rate for August. The bank attributes this positive outlook to a substantial banking system liquidity of $2.2 billion as of August 28 and lending rates that are near historic lows.
The Reserve Bank noted that commercial bank lending continues to gain momentum, leading to a private sector credit increase of 11.6 percent in July. Signs of economic activity are encouraging, particularly with visitor numbers exceeding expectations. In July alone, Fiji welcomed 98,332 visitors, marking the highest number for that month and bringing the total for the year to 545,487, which is up 6.7 percent compared to the same period in 2023.
According to the Reserve Bank, overall demand is robust, driven by strong tourism, rising income levels, and remittances. Furthermore, recent indicators suggest a gradual rise in investment activity. The Bank anticipates that as the impact of the 2023 VAT rate hike diminishes, inflation will likely stabilize at around 4.0 to 5.0 percent by the end of the year.