Business

Fijian economy forecast growth revised upward

June 29, 2022 6:40 am

The Fijian economy is now expected to grow by 12.4 percent this year, up from the 11.3 percent growth envisaged earlier.

The Reserve Bank of Fiji in its latest economic review states, the ongoing tourism recovery and its flow-on effect on employment, tax collections and overall aggregate demand, as well as the absence of restrictions on economic activity relative to last year, will provide the required tailwinds to the recovery.

The broad-based economic recovery is envisaged to continue into 2023 and 2024, with the economy forecast to expand by 9.2 percent and 5.0 percent, respectively.

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Looking at the increasing number of visitor arrivals to our shores so far, the Tourism Industry is projected to fully recover by 2024.

The RBF has revised the 2022/2023 projection, stating that visitor arrivals will reach 55 percent of the 2019 level from the 50 percent projected earlier and recover fully by 2024.

Since the border reopened, arrivals totaled 143,399 visitors, equivalent to 44.6 percent of the arrivals recorded in the same period in 2019.

Governor, Ariff Ali says arrivals from Australia, New Zealand, and the United States dominate the tourism market, accounting for 91.7 percent of visitors in the first five months of the year.

Combined with the stronger-than-expected recovery in a number of other economic indicators observed to date and generally positive feedback from major stakeholders, Ali says the Macroeconomic Committee has upgraded the growth forecast for 2022.

Government’s tax revenue has also picked up, increasing by an annual 22.8 percent in the year to May.

RBF says the financial sector is also supportive of the economic recovery as private sector credit grew annually by 2.6 percent in May, driven by $1.3 billion in new lending disbursed by commercial banks.

Ample liquidity in the banking system, at above $2.2 billion, continues to place downward pressure on interest rates which are currently near historically-low rates.

RBF says the main sectors expected to contribute to the growth outlook are the transport and storage; accommodation and food services, manufacturing, finance and insurance, agriculture and education sectors.

Despite the growing optimism, the rising risk of stagflation across the globe is a significant downside risk to the outlook.

RBF says globally high inflation rates have led to aggressive monetary policy tightening in advanced countries, which will stall growth and possibly dampen demand for travel to Fiji.

On a positive note, demand for travel continues to rise globally, thus Fiji can still gain from the expanding pie of travel-ready tourists.

The next review of macroeconomic projections is scheduled for November.