The Reserve Bank of Fiji has reported that July saw a record-breaking 98,332 visitors arriving in Fiji, leading to a total of 545,487 visitors for the year so far, marking a 6.7 percent increase compared to the same period in 2023.
Consumption remains strong, bolstered by robust tourism activity, rising income levels, and remittances from abroad. Furthermore, recent indicators suggest a gradual increase in investment activity.
Financial conditions are favorable for growth, with banking system liquidity at $2.2 billion as of August 28 and lending rates at near historical lows. Commercial bank lending has accelerated, contributing to an 11.6 percent increase in private sector credit in July.
Headline inflation reached its second peak of 2024 in July at 6.8 percent, primarily driven by increases in food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transportation, and housing and utilities. As the impact of the 2023 VAT rate hike begins to diminish, inflation is anticipated to decrease to approximately 4.0 percent to 5.0 percent by the end of the year. Foreign reserves were reported to be around $3.7 billion as of August 29, which is enough to cover six months of imports, and these reserves are expected to remain sufficient in the medium term.
The Reserve Bank of Fiji plans to continue monitoring economic data and adjusting monetary policy as necessary. Additionally, the RBF Board decided to keep the Overnight Policy Rate steady at 0.25 percent during its August meeting. Overall, the domestic economy is showing signs of momentum, particularly with visitor arrivals exceeding expectations and improvements evident in various sectors.