Personal remittance inflows increased by 14.2 percent in the first quarter of 2024, reaching $310.5 million compared to $271.8 million in the same quarter of 2023. This rise was driven by mass emigration and easier methods to send money home.
Senior Westpac Economist Shamal Chand noted that mobile digital wallets have become more popular than traditional Money Transfer Operators (FXDealers). In Chand’s latest quarterly report, he stated that the share of remittances sent through mobile digital wallets rose to an average of 43.6 percent in the first quarter of 2024, compared to a 37.7 percent share held by money transfer operators. Meanwhile, the share of remittances sent through commercial banks fell to 18.7 percent.
“We anticipate an overall positive outlook for remittances in the near term,” Chand said.
In contrast, non-residents working in Fiji sent around $33.9 million back to their home countries last year, comprising $17.1 million in employee compensation and $16.8 million in personal transfers.
Westpac maintains 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 2024 forecast from 3.4 percent to 2.8 percent due to similar factors contributing to lower growth projections.
Despite the tourism sector surpassing expectations with record arrivals in the first half of the year, risks remain tilted to the downside. Fiji continues to face high inflation, population decline due to emigration, an underperforming primary sector, and a struggling construction sector.
Construction activity in the first quarter of 2024 declined by 16.9 percent compared to the same quarter last year and registered a 21.7 percent decrease from the December quarter, with a lower $122 million value of work completed.
With a moderated growth outlook, the government remains cautious about revenue collection impacts. Any buffer from the previous budget’s VAT rate hike will diminish once the new financial year begins. This means government finances will increasingly rely on broad-based economic expansion. Growth remains neutral to the recent budget announcement as most reforms focused on operational aspects, with less emphasis on capital development, job creation, and productivity improvements.
Westpac Economics forecasts that both Australia and New Zealand, Fiji’s major trading partners, will continue to experience subdued economic growth in 2024 before rebounding next year. Although inflation has moderated, it remains above central bank targets, making interest rate cuts unlikely in 2024 and presenting challenges for consumers who remain cautious with their spending.