The Reserve Bank of Fiji reported that in July, the nation welcomed a record 98,332 visitors, marking the highest number of arrivals for that month and increasing the total for the year to 545,487 visitors, which is a 6.7 percent rise compared to the same period in 2023.
Overall demand is bolstered by strong tourism activity, increased income levels, and inward remittances. Additionally, recent indicators related to investment suggest a steady recovery in economic activity.
Financial conditions are favorable for growth, with high liquidity in the banking system amounting to $2.2 billion as of August 28 and lending rates approaching historical lows. Commercial bank lending has been on the rise, leading to a notable 11.6 percent expansion in private sector credit in July.
Annual headline inflation reached 6.8 percent in July, marking its second peak of 2024, primarily driven by increases in food and non-alcoholic beverages, alcoholic beverages, tobacco, transport, and housing and utilities. As the effects of the 2023 VAT rate hike begin to diminish, inflation is expected to decrease to around 4.0 to 5.0 percent by the end of the year. Foreign reserves are currently at approximately $3.7 billion as of August 29, sufficient to cover six months’ worth of retained imports of goods and services, and are anticipated to remain stable in the medium term.
The Reserve Bank of Fiji will continue to assess new information and its impact on the economic outlook, adjusting monetary policy as necessary. Additionally, in its August meeting, the RBF Board decided to maintain the Overnight Policy Rate at 0.25 percent.
Domestic economic activity appears to be gaining traction, particularly as visitor arrivals exceed expectations and there are recent improvements in various sectors of production.