July has set a new record for tourist arrivals, bringing the total for the year from January to July to 545,487 visitors, which marks a 6.7 percent increase compared to the same period in 2023. This resurgence highlights the robust state of the tourism sector, which is significantly contributing to domestic economic activities. In light of these developments and other positive trends in production, the Reserve Bank of Fiji (RBF) has maintained its monetary policy rate at 2.5 percent.
The RBF reported that in July alone, Fiji welcomed 98,332 visitors, the highest number ever recorded for that month. The overall figures underscore strong consumption, fueled by robust tourism activity, rising income levels, and incoming remittances. Additionally, recent indicators suggest a gradual increase in investment activities.
The financial landscape remains favorable for growth, supported by a high banking system liquidity of $2.2 billion as of August 28, along with lending rates that are near historical lows. Private sector credit has expanded by 11.6 percent in July, driven by accelerating commercial bank lending.
In July, the annual headline inflation reached its second peak of 2024 at 6.8 percent, largely influenced by rising costs in food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transport, and housing utilities. However, with the impact of the VAT rate increase from 2023 diminishing, inflation is projected to moderate to between 4.0 percent and 5.0 percent by the end of the year.
The RBF reported that foreign reserves were approximately $3.7 billion as of August 29, which is enough to cover six months’ worth of retained imports for goods and services. These reserves are expected to remain sufficient in the medium term. The RBF will continue to assess incoming data and its impact on the prevailing economic outlook, adjusting monetary policy as necessary.