The Reserve Bank of Fiji reported that July saw a record 98,332 visitors to Fiji, marking the highest visitor numbers for any month and bringing the total for the year to 545,487, a 6.7 percent increase compared to the same period in 2023.
Consumer demand remains strong, buoyed by robust tourism, rising income levels, and remittances. Recent indicators also point to a gradual rise in investment activity.
Financial conditions are favorable for growth, with the banking system holding high liquidity of $2.2 billion as of August 28, and lending rates remaining near historical lows. Commercial bank lending has intensified, leading to an 11.6 percent expansion in private sector credit in July.
Annual headline inflation peaked at 6.8 percent in July, driven by increases in prices for food, alcoholic beverages, tobacco, transport, and utilities. As the impacts of the 2023 VAT rate increase begin to lessen, inflation is expected to stabilize between 4.0 percent and 5.0 percent by the year’s end. Foreign reserves are projected at approximately $3.7 billion as of August 29, sufficient to cover 6.0 months of imported goods and services, with expectations of continued adequacy in the medium term.
The Reserve Bank of Fiji will remain vigilant in assessing incoming data and its effects on the economic outlook, and will adjust monetary policy as necessary. Additionally, the Board decided to maintain the Overnight Policy Rate at 0.25 percent during its August meeting. Overall, domestic economic activity is gaining traction, particularly with visitor numbers outpacing expectations and improvements in sectoral production.