The Reserve Bank of Fiji reported that in July, the number of visitors to Fiji reached 98,332, marking a record high for that month. This brings the total visitor count for the year to 545,487, which is 6.7 percent higher compared to the same period in 2023.
Aggregate demand is showing positive trends, bolstered by strong tourism, rising income levels, and remittances. Recent indicators suggest a gradual increase in investment activities as well.
Financial conditions are favorable for growth, with banking system liquidity at $2.2 billion as of August 28 and lending rates near historical lows. Commercial bank lending continues to rise, with private sector credit expanding by 11.6 percent in July.
In terms of inflation, the annual rate peaked at 6.8 percent in July, primarily driven by increases in prices for food, beverages, transportation, and housing. The impact of the 2023 VAT rate hike is beginning to decrease, allowing inflation to potentially moderate to between 4.0 percent and 5.0 percent by the end of the year. Foreign reserves are approximately $3.7 billion as of August 29, which is adequate to cover six months’ worth of imports and expected to remain stable over the medium term.
The Reserve Bank of Fiji will keep a watchful eye on new information and adjust monetary policy as needed. In its August meeting, the RBF Board decided to maintain the Overnight Policy Rate at 0.25 percent. Domestic economic activity shows signs of improvement, particularly with visitor arrivals exceeding expectations and recent gains in production across various sectors.