July witnessed a remarkable surge in tourist arrivals, bringing the total number of visitors to Fiji for the year to 545,487 from January to July, which is an increase of 6.7 percent compared to the same period in 2023. This strong performance in the tourism sector is fueling domestic economic activity, leading the Reserve Bank of Fiji (RBF) to maintain the monetary policy rate at 2.5 percent.
In July alone, Fiji welcomed 98,332 visitors, marking it as the highest total for any month to date. According to the RBF, the ongoing positive consumer demand is being bolstered by robust tourism activities, rising income levels, and incoming remittances. Recent indicators also suggest a gradual upturn in investment activities.
The financial conditions in the country remain supportive of growth, with banking system liquidity standing at $2.2 billion as of August 28, and lending rates close to historical lows. Private sector credit has surged, with commercial bank lending growing by 11.6 percent in July.
However, annual headline inflation reached its second highest point of 2024 in July at 6.8 percent, primarily driven by increases in food, non-alcoholic beverages, alcohol, tobacco, narcotics, transport, and housing utilities. As the impact of the 2023 VAT rate increase diminishes, inflation is projected to stabilize between 4.0 percent and 5.0 percent by the end of the year.
Foreign reserves are estimated around $3.7 billion as of August 29, adequate to cover 6.0 months of imported goods and services, and are expected to remain sufficient in the medium term. The RBF will continue to monitor economic developments and adjust monetary policy as needed.