The Reserve Bank of Fiji has reported that financial conditions in the country remain favorable for growth in its August assessment of the Overnight Policy Rate. The high banking system liquidity, which stands at $2.2 billion as of August 28, combined with nearly historical low lending rates, contributes to this positive outlook.
According to the RBF, commercial bank lending is on the rise, leading to an 11.6 percent expansion in private sector credit as of July. The domestic economy shows signs of momentum, particularly in the tourism sector, where visitor arrivals exceeded expectations.
In July alone, Fiji welcomed 98,332 visitors, marking a record for that month and bringing the total for the year to 545,487, a 6.7 percent increase compared to the same period in 2023.
The RBF noted that overall consumption remains strong, buoyed by robust tourism performance, rising income levels, and incoming remittances. Additionally, recent data indicates a gradual increase in investment activity.
As the impact of the 2023 VAT rate increase begins to lessen, the RBF expects inflation to decrease to around 4.0 percent to 5.0 percent by the end of the year.