Personal remittance inflows rose by 14.2 percent in the first quarter of 2024, reaching $310.5 million compared to $271.8 million in the same period in 2023. This increase was supported by mass emigration and improved ease of sending money home.
According to Shamal Chand, Senior Westpac Economist, mobile digital wallets have now become more popular than traditional Money Transfer Operators (FXDealers). In his latest quarterly report, Chand noted that the share of remittances sent through mobile digital wallets rose to an average of 43.6 percent during the first quarter of 2024, compared to 37.7 percent via money transfer operators and 18.7 percent through commercial banks.
“We anticipate an overall positive outlook for remittances in the near term,” Chand stated. Conversely, non-residents working in Fiji sent around $33.9 million back to their home countries last year, including $17.1 million in employee compensation and $16.8 million in personal transfers.
Westpac has maintained Fiji’s economic growth forecast at 2.5 percent for 2024, with an expected rebound to 3 percent in the near term. However, the Macroeconomic Committee has downgraded the outlook for 2024 from 3.4 percent to 2.8 percent, citing similar factors behind lower growth forecasts.
Despite the tourism sector’s record arrivals in the first half of the year exceeding expectations, risks remain skewed to the downside. Fiji is dealing with high inflation, a declining population due to emigration, an underperforming primary sector, and a construction sector that remains in negative territory. Construction activity decreased by 16.9 percent in the first quarter of 2024 compared to the same quarter last year and saw a 21.7 percent drop from the December quarter, with a lower value of $122 million in work implemented.
With moderated growth outlooks, the Government is cautious about its impact on revenue collection. Any buffer from the previous budget’s VAT rate hike will diminish once the new financial year begins, making government finances increasingly reliant on broad-based economic expansion. Overall, growth remains neutral relative to the recent budget announcement, which focused more on operational reforms rather than capital development, job creation, and productivity increase.
Regarding Fiji’s major trading partner economies, Westpac Economics forecasts that both Australia and New Zealand will continue to experience subdued growth in 2024 before rebounding next year. While inflation has moderated, it remains above central bank targets, making interest rate cuts unlikely in 2024. This presents challenges for consumers, who remain cautious with their spending.