The Reserve Bank of Fiji has reported that in July, the country welcomed 98,332 visitors, marking a record for that month and bringing the total number of visitors for the year to 545,487, which is an increase of 6.7 percent compared to the same period in 2023.
Aggregate demand remains strong, bolstered by robust tourism activity, rising income levels, and incoming remittances. In addition, recent partial and leading indicators indicate that investment activity is gradually increasing.
Current financial conditions are favorable for growth, supported by high banking system liquidity amounting to $2.2 billion as of August 28, and lending rates that are near historic lows. Commercial bank lending is on the rise, contributing to an 11.6 percent expansion in private sector credit as of July.
Annual inflation reached 6.8 percent in July, driven primarily by increases in the prices of food, non-alcoholic beverages, alcoholic beverages, tobacco, narcotics, transportation, and housing utilities. As the effects of the 2023 VAT rate hike diminish, inflation is predicted to moderate to around 4.0 percent to 5.0 percent by the end of the year.
Foreign reserves are currently around $3.7 billion, sufficient to cover six months’ worth of retained imports of goods and services, and are expected to remain adequate in the medium term. The Reserve Bank of Fiji will continue to monitor incoming information to assess its implications on the economic outlook and adjust monetary policy as needed.
Furthermore, the Reserve Bank of Fiji’s Board decided to maintain the Overnight Policy Rate at 0.25 percent during its August meeting. Overall, domestic economic activity is showing signs of momentum, particularly with visitor arrivals exceeding expectations and improvements observed in various production sectors.