Personal remittance inflows surged by 14.2 percent during the first quarter of 2024, reaching $310.5 million compared to $271.8 million in the same quarter of 2023. This rise was propelled by mass emigration and easier mechanisms for sending money home.
Senior Westpac Economist Shamal Chand noted that mobile digital wallets have now become more prevalent than traditional Money Transfer Operators (FXDealers). Chand’s latest quarterly report highlights that the share of remittance through mobile digital wallets rose to an average of 43.6 percent in the first quarter of 2024, up from 37.7 percent previously held by money transfer operators. Conversely, remittance sent through commercial banks has fallen to 18.7 percent.
“We anticipate an overall positive outlook for remittances in the near term,” Chand stated. In contrast, non-residents working in Fiji sent approximately $33.9 million back to their home countries last year, which included $17.1 million in compensation of employees and $16.8 million in personal transfers.
Meanwhile, Westpac maintains Fiji’s economic growth forecast for 2024 at 2.5 percent, with an expected rebound to 3 percent in the near term. However, the Macroeconomic Committee has downgraded the 2024 outlook from 3.4 percent to 2.8 percent, citing similar factors behind the lower growth forecasts.
Despite a record number of arrivals in the tourism sector exceeding expectations in the first half of the year, risks to the economy remain skewed to the downside. Fiji is still grappling with high inflation, population decline due to emigration, underperforming primary sectors, and a construction sector that remains in negative territory.
Construction activity in the first quarter of 2024 fell by 16.9 percent compared to the same quarter last year and declined by 21.7 percent from the December quarter, with a lower $122 million value of work completed.
With a slight moderation in growth outlook, the government remains cautious about its impact on revenue collection. Any buffer from the VAT rate hike in the previous budget will diminish once the new financial year begins, implying that government finances will increasingly depend on broad-based economic expansion. Overall, growth remains neutral following the recent budget announcement, which focused more on operational reforms rather than capital development, job creation, and productivity enhancement.
Regarding Fiji’s major trading partner economies, Westpac Economics forecasts that both Australia and New Zealand will continue to experience subdued economic growth in 2024 before rebounding next year. Although inflation has moderated, it remains above the central bank’s target range, making an interest rate cut unlikely in 2024. This situation poses challenges for consumers, as they remain cautious with their spending.