The Fijian government has reported a fiscal surplus in the first quarter of the 2024-25 financial year, marking the first surplus since late 2019. According to Westpac’s latest economic update, this surplus is attributed to increased tax revenues and effective compliance measures that resulted in government revenue surpassing forecasts. Although expenditures rose compared to the previous year, largely due to an increase in civil service wages, government spending on capital and infrastructure remained below budgeted levels.
However, the tourism sector, a critical component of Fiji’s economy, faces challenges as visitor arrivals have fallen, particularly from New Zealand, which has experienced a recession. Concerns were noted regarding a continuous decline in arrivals from New Zealand over the past five months, and there was also a decrease in visitors from Australia. Furthermore, with the Australian elections approaching in May, uncertainty looms over future tourism numbers.
Despite the current fiscal surplus, Westpac has revised Fiji’s economic growth forecast for 2025 down to 2.7%, from an earlier estimate of 3.4%. Global economic growth appears to be slowing as well, impacting trade and inflation within Fiji, with the bank noting the need for cautious optimism in light of the challenges ahead.
Past reports highlighted that in 2024, Fiji’s economy was projected to grow by 3.0%, supported by strong performance in tourism and industrial sectors, despite inflation challenges. The introduction of a new direct flight between Fiji and Dallas set to launch in December could enhance tourism prospects and bring approximately 1,000 additional weekly visitors, potentially benefiting the economy.
This current mix of fiscal surplus and a challenging economic outlook underscores the resilience of Fiji. The government’s strategic focus on prudent financial management, along with developing opportunities in tourism, provides a cautious but hopeful perspective for the future of Fiji’s economy.
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