Fiji has recently experienced a notable post-pandemic revival led by the tourism sector. While there is potential for continued growth in tourism, challenges such as room shortages and tighter financial conditions in source markets may make sustained growth difficult.
Despite these challenges, Fiji is expected to reach the milestone of one million visitors this year, which will positively impact key sectors like Accommodation and Food Services as well as Transport, thereby contributing to the nation’s GDP.
In addition to tourism, other sectors are showing moderate growth driven by consumer demand. Wholesale and Retail trade industries, information and communication businesses, and manufacturing are growing steadily. This growth is significantly supported by remittances, or what can be termed as the ‘family bank,’ with money sent from families abroad.
Historically, permanent migrants have been the primary source of remittances to Fiji. Recently, temporary job opportunities in Australia and New Zealand have also boosted these money transfers, indicating that these countries’ labour mobility programs will likely continue to support consumer demand growth in Fiji.
Currently, remittances have surpassed the billion-dollar mark, providing robust support for the household service industries. Additionally, the new Tuvatu gold mine is set to increase production this year, and the agriculture sector continues to be a stable contributor to GDP.
The construction sector also holds promising prospects. Though construction activity remains down by 32 percent from its peak of $311 million in 2019, several large projects set to begin in the latter half of this year are expected to bolster GDP. Due to the construction sector’s high economic multiplier, its growth will benefit other areas of the economy.
Overall, a GDP growth rate of 3.4 percent is achievable. However, caution is advised as the economy may return to a pre-pandemic routine with GDP growth around three percent per year. Some years may see growth slightly above or below this mark. More substantial growth is anticipated later in the decade as the tourism sector expands its capacity and potentially new industries such as a fully-fledged BPO sector emerge, contributing to sustained economic upswing.
Dr. Kishti Sen is ANZ’s international Pacific economist. The views expressed in this article are his and do not necessarily reflect the views of this newspaper.