Fiji’s economic growth expected to normalize post-pandemic

March 6, 2024 12:33 pm

The World Bank in its latest Pacific Economic Update says Fiji’s output surpassed pre-pandemic levels in 2023 despite a notable deceleration, with growth rates halving from 20 percent in 2022 to eight percent in 2023.

It says Fiji made an impressive rebound after severe contractions in 2020 and 2021.

Rising tourism, household consumption and remittances bolstered growth.

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As the economy recovered, fiscal policy shifted towards revenue-based fiscal consolidation to reduce the high level of debt accumulated during the pandemic.

After reaching its pre-pandemic Gross Domestic Product levels in 2023, Fiji’s growth is expected to normalize toward its long-term rate.

The World Bank says in Fiji, the trajectory of recovery is linked to the outlook for tourism.

It says despite experiencing a robust rebound, growth is poised to decelerate to just over three percent in the medium term.

The World Bank further states that this deceleration comes as the initial post-COVID-19 demand boost for tourism gradually subsides and new source markets are constrained by limited hotel capacity.

However, it states that strategic measures such as diversifying beyond tourism, enhancing infrastructure resilience and adaptation, investing in human capital, and harnessing talent are expected to be drivers of sustained growth.

The World Bank says economic recovery will be crucial in supporting poverty reduction efforts.

It says in Fiji, during the early stages of the COVID-19 pandemic, the poverty rate (measured by the upper-middle-income poverty line of $6.85 per day in 2017 PPP), reached nearly 70 percent.

However, with a solid economic recovery, the World Bank says it is projected to return to the pre-COVID level of 50 percent by 2024.

By contrast, the World Bank says in Fiji, inflation is projected to temporarily accelerate to 5.5 percent in 2024 when the full impact of the increase in VAT and other taxes settles into final prices.

It says price pressures are projected to ease in 2025 and converge with the country’s long-term average trend as demand-side pressures moderate in line with softening growth.