Fiji has emerged from a remarkable post-pandemic revival led by the tourism sector. However, the sustainability of this upswing is challenged by room shortages and tighter financial conditions in source markets.
Despite these challenges, it is expected that Fiji will reach the milestone of one million visitors this year. This growth will significantly contribute to GDP, positively impacting key sectors such as Accommodation and Food Services, along with Transport.
Other areas of the economy are also showing growth. Sectors reliant on consumer demand, including Wholesale and Retail trade, Information and Communication businesses, and Manufacturing, are experiencing moderate growth. This growth is supported by remittances from families abroad, often referred to as the ‘family bank.’ Traditionally, these remittances come from permanent migrants, but recently, temporary jobs in Australia and New Zealand have significantly contributed to the surge in money transfers. These countries’ labor mobility programs are expected to continue supporting consumer demand growth in Fiji.
Private money transfers into Fiji, categorized as remittances or the ‘family bank,’ have surpassed a billion-dollar mark, providing substantial support to household service industries.
The Tuvatu gold mine is expected to ramp up production this year, contributing positively to the economy. The agriculture sector remains a steady contributor, consistently adding 0.5 percentage points to GDP.
There is also optimism about the construction sector. Currently, construction activity is down 32 percent from its peak of $311 million reached in 2019. However, with several significant projects slated to begin in the latter half of the year, construction is expected to start contributing to GDP. The high multiplier effect of construction will benefit other areas of the economy.
Overall, a GDP growth of 3.4 percent this year is achievable. However, caution is advised. It is anticipated that Fiji should prepare for a moderate growth decade, returning to pre-pandemic GDP growth rates of about three percent per year. Some years will see slightly higher growth, while others may fall slightly below. Stronger growth is expected later in the decade when Tourism, with increased capacity, becomes the primary driver of jobs and GDP once again. The development of new industries, such as a fully-fledged BPO industry, could further support economic growth in the late 2020s.