The Reserve Bank of Fiji reported that in July, the country welcomed 98,332 visitors, marking a record for that month and bringing the total number of visitors for the year to 545,487, an increase of 6.7 percent compared to the same period in 2023.
Overall, consumption remains robust, driven by strong tourism performance, rising income levels, and remittances from abroad. Furthermore, recent indicators suggest a gradual increase in investment activity.
Financial conditions continue to support growth due to high liquidity in the banking system, which stood at $2.2 billion at the end of August, combined with lending rates that are near historical lows. Commercial bank lending is on the rise, resulting in an 11.6 percent growth in private sector credit in July.
In terms of inflation, the annual headline rate peaked at 6.8 percent in July, largely due to increases in food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transport, as well as housing and utilities. However, as the impact of the VAT rate hike introduced in 2023 begins to diminish, inflation is forecasted to decrease to approximately 4.0 percent to 5.0 percent by the end of the year. Foreign reserves are estimated at around $3.7 billion, adequate to cover six months’ worth of imports, and are expected to remain stable in the medium term.
The Reserve Bank of Fiji will keep monitoring incoming data and adjust its monetary policy as necessary. Additionally, the Board maintained the Overnight Policy Rate at 0.25 percent during its August meeting. Domestic economic activity appears to be gaining momentum, particularly as visitor arrivals exceed expectations and improvements are seen in various sectors.