The Reserve Bank of Fiji has reported that financial conditions in the country remain favorable for growth, as indicated in its August assessment of the Overnight Policy Rate. The bank noted that the banking system liquidity was a robust $2.2 billion as of August 28, complemented by nearly historically low lending rates.
According to the Reserve Bank, commercial bank lending has been on the rise, with private sector credit increasing by 11.6 percent in July. The domestic economy is showing signs of momentum, particularly in tourism, which has exceeded expectations. July saw a record 98,332 visitors to Fiji, bringing the total for the year to 545,487, marking a 6.7 percent increase compared to the same period in 2023.
Consumer demand remains strong, supported by vigorous tourism activity, rising income levels, and incoming remittances. The latest indicators suggest a gradual increase in investment activity as well. The Reserve Bank also mentioned that the impact of a VAT rate hike in 2023 is starting to diminish, with inflation projected to decrease to around 4.0 percent to 5.0 percent by the end of the year.