Fiji’s Financial Sector Holds Steady Amid Robust Growth

Fiji’s financial sector continues to foster domestic growth as the Reserve Bank of Fiji (RBF) has decided to keep the official interest rate at an all-time low of 0.25 percent for the fifth straight year. This decision reflects a stable banking system liquidity level, currently at $2.2 billion, while lending rates remain at a historic low.

The RBF attributes last year’s growth to the impressive performance of the tourism sector, which has had widespread positive effects across related industries. Additionally, production from resource-based sectors has also seen generally positive results, with gains expected in 2024 for commodities such as gold, sawn timber, and woodchips despite facing specific challenges.

Consumer spending has remained steady, buoyed by robust tourist demand, increased household incomes, and incoming remittances. There are signs of a slight uptick in investment activity facilitated by a rise in the imported labor supply and a reduction in building material costs noted in the latter half of the previous year.

Private sector credit noted a significant rise of 11.4 percent, bolstered by the strong liquidity present in the banking system, while the RBF’s monetary policy objectives continue to remain within manageable confines. Furthermore, the annual headline inflation rate saw a considerable drop to 1.3 percent in December 2024, down from 5.1 percent in December 2023. Foreign reserves are currently adequate, quantified at around $3.7 billion, which is enough to cover approximately 5.9 months of retained imports.

The RBF has indicated that it will remain vigilant in monitoring both global and domestic economic developments, adjusting monetary policy as required to ensure financial stability and growth. This commitment is encouraging for economic observers and stakeholders looking forward to sustained growth in Fiji’s economy.

Overall, the continued support from Fiji’s financial sector offers an optimistic outlook for the country’s economic resilience and growth prospects moving forward.