Westpac has cut its forecast for Fiji’s economic growth in 2026 to 2 percent, down sharply from an earlier projection of 3.3 percent, citing rising global risks and mounting cost pressures tied to an ongoing Middle East conflict. The bank’s Wave Fiji Economic Update and Outlook, released in April 2026, says growth should recover to about 3.2 percent in 2027 if external pressures ease.
The revision reflects a jump in fuel, transport and shipping costs that is lifting Fiji’s import bill and pushing up input costs across the economy. Westpac warns those higher costs will be felt most strongly in sectors that depend heavily on fuel and logistics, flattening overall activity next year. The bank singled out fertilizer and other agricultural inputs as being particularly exposed to the recent cost rise.
Tourism — a central engine of Fiji’s economy — is facing renewed uncertainty despite a strong start to the year. Westpac notes visitor numbers were robust in the first quarter, but it expects arrivals to be largely flat for the remainder of 2026 as rising jet-fuel prices and the risk of supply disruptions weigh on seat capacity and airfares. The report also flagged the broader risk that slower growth, or even recession, in Fiji’s major source markets such as Australia, New Zealand and the United States could further dampen travel demand.
Government spending is likely to provide some offset to the weaker private-sector momentum, Westpac says. Officials are expected to outline cost-of-living measures in the June Budget — presented ahead of a general election — that could support household incomes and demand in 2026. The update notes that recent revenue gains and a reduced fiscal deficit have left the government with some room to deploy support if needed, but cautions that fiscal space is not unlimited.
Westpac’s senior economist in Fiji, Shamal Chand, described the downgrade as reflecting a combination of imported cost shocks and an uncertain external environment that have reduced near-term momentum. He warned that if fuel-related disruptions persist, the consequences would cascade across transport, tourism and agriculture and could significantly strain economic activity.
The bank’s outlook therefore presents a narrow path for 2026: limited public support and resilient services such as tourism could prevent a sharper slowdown, but sustained global price shocks or a deterioration in demand from key markets would increase the risk of a more pronounced pullback. The expectation of a rebound in 2027 hangs on an easing of those pressures and a recovery in travel and trade flows.
Policymakers face a difficult balancing act ahead of the June Budget. Westpac’s update underscores the importance of measures that cushion households and firms from higher energy and input costs while preserving fiscal sustainability, even as external developments — many outside Fiji’s control — will largely determine whether the forecasted 3.2 percent recovery materialises in 2027.
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