Tourist arrivals in July reached a record high, contributing to a total of 545,487 visitors for the year from January to July, marking a 6.7 percent increase compared to the same period in 2023. This surge highlights the robust performance of the tourism sector, which is boosting domestic economic activities. In response, the Reserve Bank of Fiji has maintained the monetary policy rate at 2.5 percent.
In July alone, Fiji welcomed 98,332 visitors, the highest number recorded for a single month. The Reserve Bank of Fiji (RBF) reported that consumption remains strong due to the vibrant tourism sector, rising income levels, and remittances from abroad. Furthermore, recent indicators point to a gradual increase in investment activities.
Financial conditions are favorable for growth, with a significant banking system liquidity of $2.2 billion as of August 28 and lending rates at near historical lows. Commercial bank lending is on the rise, leading to an 11.6 percent expansion in private sector credit in July.
The annual headline inflation rate peaked at 6.8 percent in July, primarily driven by increases in food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transportation, and housing and utilities. However, as the effects of the 2023 VAT rate increase begin to diminish, inflation is projected to stabilize between 4.0 percent and 5.0 percent by the end of the year.
Foreign reserves were reported at approximately $3.7 billion as of August 29, which is adequate to cover six months’ worth of retained imports. These reserves are expected to remain sufficient over the medium term. The RBF will continue to assess incoming data and adjust monetary policy as necessary.