The Reserve Bank of Fiji reported that in July, the nation welcomed 98,332 visitors, marking a record high for that month and bringing the total number of arrivals for the year to 545,487, which is 6.7 percent higher than during the same period in 2023.
Consumption remains robust, bolstered by strong tourism, rising income levels, and remittances from abroad. Additionally, recent indicators suggest a gradual increase in investment activity.
Financial conditions are favorable for growth, supported by high banking system liquidity of $2.2 billion as of August 28 and near-historically low lending rates. Commercial bank lending has been on the rise, leading to a private sector credit increase of 11.6 percent in July.
Annual headline inflation hit a peak of 6.8 percent in July 2024, primarily driven by increases in food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transportation, and housing and utilities. As the impact of the 2023 VAT rate hike diminishes, inflation is expected to decrease to approximately 4.0 percent to 5.0 percent by the end of the year.
Foreign reserves were reported around $3.7 billion as of August 29, enough to cover six months’ worth of imports of goods and services, with expectations of remaining adequate in the medium term.
The Reserve Bank of Fiji plans to keep an eye on new information and its potential impact on the current economic outlook, adjusting monetary policy as needed. In its August meeting, the Bank’s Board decided to maintain the Overnight Policy Rate at 0.25 percent.
Domestic economic activity appears to be gaining momentum, particularly as visitor arrivals exceed expectations and improvements are seen in sectoral production.