The Reserve Bank of Fiji reported that July 2023 saw a record 98,332 visitors to Fiji, the highest number of arrivals for that month, bringing the total number of visitors for the year to 545,487, which is a 6.7 percent increase compared to the same period in 2022.
Consumption remains strong, largely driven by robust tourism activity, increased income levels, and remittances. Recent indicators also show a gradual improvement in investment activity.
Financial conditions are favorable for growth, supported by a substantial banking system liquidity of $2.2 billion as of August 28 and lending rates that are near historical lows. Commercial bank lending has been on the rise, resulting in an 11.6 percent expansion in private sector credit in July.
Annual headline inflation reached its second peak of 2024 in July, recorded at 6.8 percent, primarily due to increases in the prices of food and non-alcoholic beverages, alcoholic beverages, tobacco and narcotics, transportation, and housing and utilities. As the impact of the 2023 VAT rate increase subsides, inflation is anticipated to decrease to around 4.0 percent to 5.0 percent by the end of the year. Foreign reserves are approximately $3.7 billion as of August 29, which is sufficient to cover 6.0 months of retained imports and are expected to remain adequate in the medium term.
The Reserve Bank of Fiji will continue to assess incoming information and its effects on the economic outlook, adjusting monetary policy as needed. Additionally, the Bank’s Board decided to maintain the Overnight Policy Rate at 0.25 percent during its August meeting. Domestic economic activity shows signs of increased momentum, especially with visitor numbers exceeding expectations and recent improvements in various production sectors.