Westpac has revised its forecast for the Fijian economy’s growth in 2024 to 3.0 percent, an increase from the previous projection of 2.5 percent. This adjustment is attributed to stronger-than-expected 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 benefited from a robust tourism sector, heightened industrial activity, and a rebound in consumer spending, even with ongoing labor issues.
The report indicated that this positive performance is paving the way for the economy to return to its historical growth trajectory in the medium term.
According to Westpac, the tourism industry continues to grow at a healthy pace, with visitor arrivals increasing by 6.9 percent during the first three quarters of 2024. The bank anticipates that by the end of the year, total visitor arrivals will reach approximately 990,000, just short of the one million mark.
Additionally, the introduction of a new non-stop flight service between Fiji and Dallas, set to launch in December, is expected to open new opportunities for tourism, potentially bringing in around 1,000 additional passengers each week. Fiji Airways is also exploring new routes to support further growth.
Despite these positive developments, Westpac acknowledged that consumers have faced challenges due to rising prices, with annual inflation averaging 5.3 percent in August, primarily driven by increases in food and non-alcoholic beverage prices. Nevertheless, the bank expects domestic inflation to align with declining headline inflation in advanced economies, although prices will remain high by historical standards.
Westpac further noted that the government recorded a significantly lower net deficit of 3.4 percent for the fiscal year 2023-24, thanks to careful spending controls, while the debt-to-GDP ratio stood at 78.3 percent in July 2024. The government also achieved strong revenue collection, nearly meeting its original targets, and implemented savings on expenditures through vigilant oversight.
The fiscal stimulus measures announced in the last budget are aimed at stimulating consumption growth, while encouraging the private sector to spearhead investment-driven economic growth.