The Reserve Bank of Fiji reported that July set a new record for visitor arrivals, with 98,332 tourists coming to Fiji, bringing the total for the year to 545,487 visitors, a 6.7 percent increase compared to the same period in 2023.
Consumption is currently robust, driven by strong tourism, rising income levels, and remittances. Additionally, indicators for investment suggest a steady increase in activity. Financial conditions are favorable for growth, with the banking system’s liquidity at $2.2 billion and historically low lending rates.
Commercial bank lending is on the rise, contributing to an 11.6 percent expansion in private sector credit in July. However, annual headline inflation reached 6.8 percent in July, marking its second peak of 2024, driven mainly by items such as food, non-alcoholic and alcoholic beverages, tobacco, transport, and housing.
As the impact of the 2023 VAT rate increase diminishes, inflation is anticipated to ease to between 4.0 and 5.0 percent by the end of the year. Foreign reserves are approximately $3.7 billion, enough to cover six months’ worth of imports, with projections indicating that these reserves will remain sufficient in the medium term.
The Reserve Bank of Fiji plans to keep a close eye on incoming data and adjust its monetary policy as needed. In its August meeting, the Board decided to maintain the Overnight Policy Rate at 0.25 percent. Domestic economic activity shows positive momentum, particularly with visitor arrivals exceeding expectations and notable improvements in various production sectors.