Reserve Bank of Fiji Governor, Ariff Ali has cautioned that Fiji’s economic outlook remains precarious, given the broad-based deceleration in the world economy and the continued global geopolitical tensions.
In the latest economic review, Ali states this can negatively impact Fiji’s monetary policy objectives and the economic recovery moving forward.
However, the Governor says given the comfortable outlook for inflation and foreign reserves, the current accommodative monetary policy stance remains appropriate to support economic recovery efforts.
The higher imported energy and food prices led to a pick-up in inflation to 5.4 percent last month.
Nonetheless, Ali says inflation is projected to subside to around five percent by year-end and drop to three percent by the end of 2023.
This comes as the constraints affecting global food and energy supplies are expected to dissipate.
Domestic economic activity continues to be resilient against global headwinds, supported by the impressive recovery in the tourism and service-related industries.
Visitor arrivals from January to October totaled 497,086 and were 66.1 percent of the same period in 2019.
The Governor added that “the associated rebound in aggregate demand remains solid, driven by the robust growth in employment and inward remittances”.
Latest partial indicators of consumption, such as net VAT, have surpassed pre-pandemic levels while PAYE and formal employment have almost recovered to pre-crisis levels.
Ali says the financial sector is also supportive of growth as a credit to the private sector continues to expand amid high liquidity levels and relatively low lending rates.
He adds that given these developments, the economy is projected to expand by 15.6 percent this year and six percent next year.