July has seen a record number of tourist arrivals, bringing the total for the year to 545,487 visitors, which is a 6.7 percent increase compared to the same period in 2023. This growth highlights the robust performance of the tourism sector, which is bolstering domestic economic activity. In response to these positive developments and improvements in production across various sectors, the Reserve Bank of Fiji (RBF) has decided to maintain the monetary policy rate at 2.5 percent.
In July alone, Fiji welcomed 98,332 visitors, marking the highest number ever recorded for a single month. The RBF noted that the ongoing consumer demand is being fueled by strong tourism activity, increased income levels, and remittances. Additionally, data indicates a gradual rise in investment activity.
Financial conditions in the country remain favorable for growth, supported by a high liquidity level in the banking system amounting to $2.2 billion and lending rates that are near historical lows. The lending from commercial banks has also increased, contributing to a private sector credit growth of 11.6 percent in July.
However, inflation rates reached a second peak in July at 6.8 percent, primarily driven by costs related to food, beverages, tobacco, transport, and housing. As the impact of the VAT rate increase from 2023 begins to diminish, inflation is anticipated to decrease to a range of 4.0 to 5.0 percent by the end of the year.
Foreign reserves are currently around $3.7 billion, sufficient to cover six months of imports. The RBF is committed to closely monitoring ongoing economic developments and will adjust monetary policy as necessary.